A look at the benefits of forming a limited liability company

This article looks at the advantages of forming a limited liability company (LLC) in Texas.

Those starting a new business or planning on changing the structure of an existing business have a number of options when it comes to business structures. One of the most popular business structures in Texas is the limited liability company (LLC). An LLC is popular because it is, in many ways, a mix of the advantages enjoyed by corporations and partnerships, but with few of the drawbacks. While LLCs are not right for every business, they present a number of financial and operational benefits that make them extremely appealing.

Asset protection

As its name suggests, a limited liability company provides protection of one's personal assets if a judgment is issued against the business. While the liability protection of an LLC is not as extensive as it would be with a corporation, it is better than what one would enjoy with a partnership or sole proprietorship. If an LLC is a party to a lawsuit then the business assets can be pursued by the other party, but not the personal assets of the members of the LLC.

Tax benefits

As the Houston Chronicle points out, an LLC enjoys many tax advantages. Operating costs, expenses, and the depreciation of business assets can all be deducted from the business' gross revenues. Texas law also allows a great deal of flexibility when choosing a tax structure for an LLC.

Paperwork

Corporations are legally required to keep minutes and maintain records. LLCs, on the other hand, have to take relatively few records, especially when compared to corporations. This lack of paperwork gives LLCs much more flexibility in how they operate and reduces the operational costs that corporations otherwise have to absorb to stay on top of their record-keeping obligations.

Brand protection

Finally, LLCs must register with the Texas Secretary of State. Registration allows businesses to protect their company's name. Once that name is registered with the Secretary of State then no other business operating in Texas can use that same name. As a result, LLCs can help ensure that their unique brand is protected from potential imitators. Registration also means that the LLC enjoys protections laid down in state law, such as in the Texas Business Corporation Act.

Business law help

Forming or changing the structure of a business is a major undertaking with significant financial and operational implications. When choosing the right structure for one's own business, it is essential to get advice from an experienced business law attorney. An attorney can help business owners understand the legal benefits and drawbacks of each business structure so as to ensure that their clients make the choice that is in their best interests.