Forming a Texas Business Corporation
A corporation is a legal entity that is granted a charter recognizing it as a separate legal entity having its own privileges, and liabilities distinct from those of its shareholders. When it is formed it becomes a separate entity from the people who own the stock of the corporation. For this reason, a corporation’s actions are made by the corporation and not by an individual person. This legal distinction is what separates the liability of the Texas corporation from the individual and is a major consideration in deciding to form a corporation.
Anyone can form a corporation in Texas. A corporation can form another corporation. Once the corporation is formed, the entity formed is responsible for all actions done in the corporate name. The new entity is required to file state and federal taxes and acquire any licenses to do business in the name of the corporation. The corporation can purchase insurance, own real estate and cars and other assets or personal property as if were a natural person. It is responsible for actions both good and bad done in its name. If a corporation fails, shareholders normally only stand to lose their investment, and employees will lose their jobs, but neither will be further liable for debts that remain owing to the corporation’s creditors.
Corporations can exercise human rights against real individuals and the state, and they may be responsible for human rights violations. There are five core characteristics of a business corporation:
•Legal personality
•Limited liability
•Transferable shares
•Centralized management under a board structure
•Shared ownership by contributors of capital
Generally, the corporation files articles of incorporation with the government, laying out the general nature of the corporation, the amount of stock it is authorized to issue, and the names and addresses of directors. Once the articles are approved, the corporation’s directors meet to create bylaws that govern the internal functions of the corporation, such as meeting the procedures and officer positions.
•Some of the advantages of a corporation are as follows:
•Shareholders have limited liability for the corporation’s debts or judgments against the corporation.
•Generally, shareholders can only be held accountable for their investment in stock of the company.
•A Texas corporation may deduct the cost of benefits it provides to officers and employees.
•A corporation pays 15% federal income tax on taxable income up to $50,000; 25% tax on income from $50,001 – $75,000; 34% tax on income from $57,001 – $100,000; 39% tax on income from $100,001 – $335,000; and 34$ tax on income over $335,001
There are some disadvantages to a corporation. The process of incorporating a business in Texas may require more time and money than other forms of organizations and the corporation may be monitored by federal, state and some local agencies and as a result require have more paperwork to properly comply with regulations. Incorporating may also result in higher overall taxes in some circumstances.
For answers to your questions on forming a business corporation in Texas, contact Dallas business attorney Mark Nacol with the Nacol Law Firm, P.C.
Civil Litigation in Texas – Do You have a Case
Have you been harmed by the actions of another person or business in Texas? The Nacol Law Firm PC, in Dallas TX, represents clients in a broad scope of civil disputes, including:
Business Litigation,
Contract Disputes,
Real estate litigation and disputes,
Corporate litigation,
Probate and Will contests,
Employment agreements,
Breach of contract,
Breach of non-disclosure agreements,
Violation of fair-trade practices,
Breach of fiduciary duty,
Home-builder and seller warranty disputes,
Construction litigation,
Fraud.
Oral Contracts and Quantum Meruit
Oral contracts do exist and are legally enforceable in Texas, as a matter of law, if they meet necessary legal requirements and specificity.
Adequate consideration must be given between the two parties of a verbal contract to make it binding. Adequate consideration is defined in two ways:
(1) having a mutual reciprocal exchange [bargained for exchange] or
(2) having legal value [an individual must do something that he is not legally obligated to do].
If adequate consideration is given between both parties and all other legal requirements are met, then a verbal contract may be held valid in a court of law.
In contract law, quantum meruit is a doctrine that states there is an inferred promise to pay a fair amount for work and the materials provided, even without a lawful, enforceable agreement between the parties.
Having issues with a contract or oral agreement in Texas?
Contact Dallas TX attorney, Julian Nacol of the Nacol Law Firm P.C.
Tel: (972) 690-3333
Your Trust Fiduciary/Trustee—-Friend or Foe??
With the financial conflicts facing individuals and families today and the aging of the general population, more trust beneficiaries and family members are becoming concerned with the fiduciary duties of the trustees of their individual trusts.
The fiduciary duty is a legal relationship, obligation and trust to act in the best interest of the beneficiary. The fiduciary or trustee, must employ undivided loyalty to the beneficiaries concerning all matters related to their trust and will be held accountable if he or she acts adverse or contrary to the interest of this relationship.
The duties of a Trustee Fiduciary include the following:
- The Trustee must be loyal to and administer the trust solely for the benefit of the beneficiaries. The trustee can never take advantage of his or her position for personal gain.
- The Trustee must deal impartially with all beneficiaries, if more than one exists. This can sometimes be difficult, since each beneficiary may have their own agenda and needs to be met.
- The Trustee must obtain possession of the trust assets immediately and keep these assets under his or her control through the entire term of the trust. The Trustee must also enforce claims and defend actions against the assets in the trust.
- The Trustee must keep the trust assets separate and segregated from his or her own personal assets and from assets or funds of any other trust instrument unless the trust itself provides otherwise.
- The Trustee must administer the trust personally and responsibly at all times and only delegate responsibilities that would be in the best interest of the trust, such as a tax advisor or accountant.
- The Trustee must keep the assets productive to pay income to the beneficiaries. The duty of the trustee is to keep trust property invested so it produces income.
- The Trustee must make full disclosures and furnish information to the beneficiaries about the administration and status of the trust. An annual report is standard with an accounting of income, expenses, gains, and losses. Upon request, the Trustee must provide for the beneficiary, complete and accurate information on the nature and amount of the trust property and permit the beneficiary to inspect the accounts and other documents related to the trust.
A Trustee must be honest, responsible, have a high degree of integrity, and a genuine interest in the welfare of the trust and the beneficiaries. It is also very important that the Fiduciary has experience in the investment of assets and management of property to keep the trust income producing.
There can never be a conflict of interest between a Trustee and the beneficiary. The law forbids a Trustee from acting in an adverse manner contrary to the interest of the beneficiary or from acting in his own benefit in relation to the trust.
The Nacol Law Firm PC
Law office of Attorney Mark Nacol
Serving clients in the Dallas – Fort Worth Metroplex area for over 30 years
Tel: 972-690-3333
NACOL LAW FIRM P.C.
8144 Walnut Hill Lane
Suite 1190
Dallas, Texas 75231
972-690-3333
Office Hours
Monday – Thursday, 8am – 5pm
Friday, 8:30am – 5pm
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Attorney Mark A. Nacol is board certified in Civil Trial Law by the Texas Board of Legal Specialization
