Business Formation Attorneys
Starting a business is a milestone that requires careful consideration — and a hefty dose of courage. It can be immensely rewarding to see your ideas come to fruition. However, achieving prosperity requires laying a foundation of careful decision-making and hard work while your business is still in its infancy. At Adair Myers Stevenson Yagi, we help businesses make strategic choices from the outset. Our business formation attorneys represent both established entrepreneurs and startups throughout the Houston area. We believe that innovation is critical to a flourishing economy, and to that end, we invest a hands-on approach to help local businesses succeed.
We can help you understand each step of the business formation process, providing the professional analysis you need to make informed decisions on issues such as:
- Choosing the right business entity to suit your industry, goals, and governance structure
- Establishing corporate formalities such as bylaws and meeting minutes
- Obtaining financing and acquiring assets
- Pursuing franchising opportunities
- Structuring business transactions
- Determining members’ or shareholders’ rights
- Working through a business succession plan
- Addressing tax implications
Ensuring you have the right foundation for your business could mean the difference between success and failure. Since 1973, the Houston business attorneys at Adair Myers Stevenson Yagi have helped Texans get their businesses off the ground and on the path to success. No matter the industry, our attorneys can help you gain solid footing.
Once we help you get your business up and running, we can also help you address any of the countless business law concerns you face. Once we help set up your entity, our lawyers can continue to work with you by serving as general counsel on an ongoing basis to ensure your interests are always protected.
When you form a new business, you will need to decide what type of entity your business will be – each with their own set of pros and cons. To determine which entity is right for you, here are the most common types of entities.
Limited Liability Companies (LLCs)
Limited liability companies do just that – they limit your liability. In an LLC, your business assets and debts are separate from your personal finances and assets, and the assets of the business are exempt for creditors of the owners. LLC’s also allow ownership by nonresidents and entities, unlike Subchaper S corporations, and allow creative allocation of profits and losses among those owners putting up sweat equity and those putting up cash. Years ago, it was commonly believed that operating as an LLC inhibited growth by not being attractive to investors. In fact, as the corporate attorneys at Adair Myers Stevenson Yagi have learned through years of experience, it is actually easier to attract equity to LLC’s than it is for corporations due to the internal allocation options and easier procedures for perfecting security interests in the ownership.
Just like LLCs, C corporations also limit liability to directors, officers, shareholders and employees. The major drawback is potential double taxation. However, a C corporation is sometimes advisable in entities having foreign ownership. We do point out, however, that a corporation, whether taxed as a C corporation or S corporation is still a corporation and LLC’s also have the option to be taxed as a corporation.
S corporations are very similar to C corporations in that they limit liability and offer investment opportunities, but S corporations are not subject to the same double taxation as C corporations. Owners of an S corporation will report their share of profits and loss on their personal tax returns and income is only taxed once. But S corporations face several limitations. First, only entities wholly owned by legal U.S. citizens or permanent residents can file for S corporation status and S corporations can have no more than 100 shareholders. S Corporations will also be subject to higher IRS scrutiny and may face ongoing expenses to maintain S corporation status. And S corporations should never invest in real estate.
Partnerships are incredibly easy to form and operate, which makes them very popular with small business, but they have a few downsides. Partners remain personally liable for any company liabilities and business debts, even those incurred by another partner. Unfortunately, most partners never get around to signing a partnership agreement and when something goes wrong, the expenses involved in winding up the business can be huge. Before rushing into a partnership, think about how the liability could impact your business in the future.
Like partnerships, sole proprietorships are also easy to form and operate and do not require state filings (though county dba filings are required for an assumed name), but the owner will still be liable for any lawsuits or debts against the company. If you are starting a business by yourself, you might opt for a sole proprietorship because it is less expensive than other entities, but this could leave you vulnerable to more costly situations in the future.
Business Formation Attorneys in Houston
As an entrepreneur, you have likely sacrificed a great deal for your business idea. Protect your business with attorneys who are just as invested in your success as you are. When you partner with the business formation attorneys at Adair Myers Stevenson Yagi, you can be sure your business will be set up for success. Contact us today for an initial consultation to learn how one of our dedicated attorneys can help your business.