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Business Formations and Succession Planning in Texas:

The Essential Guide

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Corporations are separate legal entities that provide limited liability to their owners (shareholders). Corporations offer strong personal asset protection but are subject to more complex regulations, paperwork, and double taxation.
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The Lone Star State is known for its vibrant economy, attractive business climate, and a diverse range of industries. As businesses continue to thrive in Texas, it is crucial for entrepreneurs and business owners to understand the importance of business formations and succession planning. The business and estate planning attorneys at McCammon Law in Boerne, TX can help you plan for the longevity and success of your Texas business.

Business Formations in Texas

Texas offers a variety of business structures, including sole proprietorships, partnerships, limited liability companies (LLCs), and corporations. Each structure has its own set of advantages and disadvantages that business owners should carefully consider before making a decision.

  1. Sole proprietorships are the simplest form of business structure, offering ease of formation and complete control over business decisions. However, the owner is personally liable for all debts and liabilities.
  2. Partnerships involve two or more individuals joining together to operate a business. General partnerships provide equal rights and responsibilities to each partner, while limited partnerships have at least one general partner with unlimited liability and one or more limited partners with limited liability. Partnerships offer flexibility, but partners are personally liable for the business's debts and liabilities.
  3. Limited liability companies (LLCs) combine the limited liability benefits of a corporation with the tax flexibility of a partnership. LLCs offer personal asset protection, but may require more paperwork and ongoing compliance than other structures.
  4. Corporations are separate legal entities that provide limited liability to their owners (shareholders). Corporations offer strong personal asset protection but are subject to more complex regulations, paperwork, and double taxation.

Some of the steps you’ll need to follow to set up business in Texas include:

  1. Choosing a business structure.
  2. Registering a unique business name with the Texas Secretary of State.
  3. You may need to obtain an Employer Identification Number (EIN) from the IRS to pay federal taxes, hire employees, open a bank account, or apply for business licenses and permits.
  4. Register with the Texas Comptroller of Public Accounts for state tax purposes.
  5. Obtain any necessary licenses and permits.
  6. Comply with state and federal tax laws.

The exact steps you need to take will depend on your individual circumstances, including your business structure, the type of business you are conducting, and your location. The experienced Texas business attorneys at McCammon Law can guide you through the process.

Business Succession Planning in Texas

Business succession planning is essential for the long-term success and stability of a business. Failure to have a proper success plan in place can result in unnecessary tax consequences, loss of control or even the dissolution of your business. 

There are several types of succession plans available for business owners in Texas. Choosing the plan that’s right for you will depend on your individual circumstances and your ultimate goals. Most plans will fall under one of the these three categories: 

  1. Buy-sell agreements: These agreements outline the terms under which ownership interests will be bought and sold upon the occurrence of specific events, such as retirement, disability, or death.
  2. Family succession plans: These plans involve transferring ownership and control of the business to family members.
  3. Key employee succession plans: These plans identify and prepare key employees to assume leadership roles within the business.

Factors to consider when developing a succession plan include the size and structure of the business, the owner's personal goals, and the needs of the business's employees and customers. These are all topics to bring up during a consultation with your business attorney.

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If you are a Boerne small business owner and have questions about how to appropriately plan to protect a family or small business or need legal guidance in the creation of a new business, Request a Consultation With McCammon Law Today
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Estate Planning Law Firm in Texas

Boerne/San Antonio Office

138 Old San Antonio Rd.
Suite 504
Boerne, TX 78006

McCammon Law, P.C.

138 Old San Antonio Rd., Suite 504
Boerne, TX 78006

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