Starting a LLC or Corporation in Dallas
Starting a Business: LLC or Corporation?3 min read
When you're starting a business, one of the first decisions you need to make is whether to form a limited liability company (LLC) or a corporation. The structure you choose will have implications for the tax and legal liability that you and your business experience. Whether you're located in Dallas or anywhere in the US, understanding the basics of these business structures is important in order to make an informed decision.
When you form a business either as an LLC or a Corporation, you create an entirely new legal entity. This entity is usually separate from the individuals who form and own it, meaning that the business is responsible for its own liabilities and debts and that the owners' personal assets and finances are generally safe from creditors if the business isn't able to pay its bills. This is a key benefit of forming a business entity as it helps protect you from potential creditors who may come after your personal assets.
Aside from this limited liability protection, the main differences between an LLC and a corporation come down to tax and management structure. Both LLCs and corporations can offer limited liability benefits, but how they are taxed can vary slightly. Corporations are generally taxed more heavily than LLCs, as well as having to go through more administrative hurdles (such as filing the necessary paperwork to become a C Corporation or electing S Corporation status).
LLCs, on the other hand, are simpler to set up than a corporation and can provide more flexibility in terms of taxation. They are typically subject to pass-through taxation (where any taxes are paid based on the individual owners’ taxes rather than separately at the business level) and have less paperwork and reporting requirements. If there are only a few members in the LLC, they are treated similarly to a sole proprietorship or partnership.
Choosing between an LLC and a corporation is a highly-individualized decision and should be made with the help of an experienced business attorney. The particular laws of the state—in this case, Texas—also come into play as each state may have different requirements.
No matter which type of business you decide to form, an experienced attorney can help make sure you understand the process and requirements to ensure proper formation. At UpCounsel, you can access experienced business attorneys who can help you navigate the legal structure of your business. Whether you’re looking for a one-time consultation or an entire legal department, our attorneys have experience handling business formation in Texas, meaning they understand what’s required and how to best protect your interests.
UpCounsel’s attorney community understands the legal needs of businesses from small startups to larger, publicly-traded companies. With years of legal experience, our attorneys can help you understand the differences between an LLC and a corporation and ensure that you make the right choice for your business. Rest assured that you'll receive only the best in quality legal services with UpCounsel.
Regardless of where you are located, forming an entity is a complex process, and one that requires the help of a legal professional. When it comes to setting up your business in Dallas, reach out to UpCounsel to connect with experienced business attorneys who understand the local laws and regulations and can guide you in the right direction.
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