Does A Sol Proprietorship Need To Be Registered With The Sos

Selecting a Business Structure

Texas: America's Best State for Business

The decision regarding business construction is a determination that a person should make, in consultation with an attorney and auditor, and taking into consideration issues regarding taxation, liability, management, continuity, transferability of ownership interests, and formality of operation.

By and large, businesses are created and operated in one of the post-obit forms:

Sole proprietorship: The nigh mutual and the simplest form of business is the sole proprietorship. In a sole proprietorship, a single individual engages in a business action without necessity of formal organization. If the business organisation is conducted nether an assumed proper noun (a proper name other than the surname of the individual), and then an assumed name document (usually referred to as a DBA) should be filed with the office of the county clerk in the county where a business concern premise is maintained. If no business organization premise is maintained, then an assumed name certificate should exist filed in all counties where business organization is conducted nether the assumed name.
General partnership: A general partnership is created when two or more persons associate to carry on a business for profit. A partnership generally operates in accordance with a partnership understanding, but there is no requirement that the agreement exist in writing and no country-filing requirement. If the business of the partnership is conducted nether an assumed proper name (a proper noun that does not include the surname of all of the partners), then an assumed name certificate (commonly referred to as a DBA) should exist filed with the function of the county clerk in the canton where a business premise is maintained. If no business premise is maintained, and so an causeless proper noun document should be filed in all counties where business concern is conducted nether the causeless name.
Corporation: A Texas corporation is created past filing a certificate of formation with the Texas Secretary of Country. The Secretary of Land provides a form that meets minimum state law requirements. Online filing of a certificate of formation is provided through SOSDirect.

A corporation is a legal person with the characteristics of limited liability, centralization of management, perpetual duration, and ease of transferability of ownership interests. The owners of a corporation are called "shareholders." The persons who manage the business and affairs of a corporation are called "directors." However, state corporate law does provide for shareholders to enter into shareholders' agreements to eliminate the directors and provide for shareholder management. Choosing the best management structure for your corporation is a decision you make with the advice of an attorney. The Secretary of State cannot help you.

An "Due south" corporation is not a thing of country corporate law simply rather a federal taxation election. A for-profit corporation elects to be taxed as an "S" corporation by filing an election with the Internal Revenue Service. Please contact the IRS or competent revenue enhancement counsel regarding the conclusion to be taxed every bit an "S" corporation and the requirements for filing the election. This is not a thing with which the Secretary of State may assist.
Limited Liability Company: A Texas express liability company is created by filing a certificate of formation with the Texas Secretary of State. The Secretary of State provides a course that meets minimum country police force requirements. Online filing of a document of germination is provided through SOSDirect.

The limited liability company (LLC) is non a partnership or a corporation merely rather is a singled-out blazon of entity that has the powers of both a corporation and a partnership. Depending on how the LLC is structured, it may be likened to a general partnership with limited liability, or to a limited partnership where all the owners are complimentary to participate in direction and all have express liability, or to an "S" corporation without the buying and tax restrictions imposed past the Internal Revenue Code. Unlike the partnership, where the key element is the individual, the essence of the limited liability company is the entity, requiring for its creation more formal requirements. 1 William D. Bagley & Phillip P. Whynott, The Limited Liability Company, §ii.10, (2d ed. 2d rev. James Publishing, 1995).

The owners of an LLC are called "members." A member can be an individual, partnership, corporation, trust, and whatever other legal or commercial entity. Generally, the liability of the members is express to their investment and they may enjoy the pass-through tax handling afforded to partners in a partnership. As a upshot of federal tax classification rules, an LLC can accomplish both structural flexibility and favorable taxation handling. Nevertheless, persons contemplating forming an LLC are well brash to consult competent legal counsel.

A limited liability visitor can be managed by managers or by its members. The direction construction must exist stated in the certificate of formation. Management structure is a determination that is made by the LLC and its members. The Secretary of State cannot give communication almost management structure.
Limited Partnership: A Texas limited partnership is a partnership formed by two or more persons and having 1 or more general partners and one or more limited partners. The express partnership operates in accordance with a partnership agreement, written or oral, of the partners as to the affairs of the limited partnership and the acquit of its business. While the partnership agreement is not filed for public record, the limited partnership must file a certificate of germination with the Texas Secretary of State. The Secretary of Country provides a form that meets minimum state police requirements. Online filing of the certificate of formation is provided through SOSDirect.
Express Liability Partnership: In order to limit the liability of its general partners, a general or limited partnership may opt to register as a limited liability partnership. The Secretary of State provides a form for registration equally a limited liability partnership. Online filing of the registration is provided through SOSDirect.

The data on this page should non be considered a substitute for the communication and services of an attorney and tax specialist in deciding on the business structure.