A Texas corporation is created by filing a Certificate of Formation with the Texas Secretary of State.
Under Texas and United States Law, a corporation is considered to be a legal “person.” Doing business as a corporation, if all the rules are followed, will provide limited liability to the owners. Some other benefits of operating as a corporation are:
- continuation of operation if an owner dies or becomes incapacitated;
- ownership interests can be sold or transferred, in whole or in part, under the terms of the corporate charter; and
- the corporation can raise capital by selling additional shares.
Each owner of the corporation is a “shareholder.” A corporation is usually managed by the “Directors,” but Texas law allows shareholders to enter into shareholders’ agreements to eliminate the directors and to allow for management by the shareholders management.
Texas “S” Corporations
United States federal tax law allows a for-profit corporation to designate itself as an “S Corp” by filing an election with the IRS. The primary benefit of electing to be an S Corp is simplification of tax returns, which may be beneficial to some small businesses.
The Texas corporation attorneys at the Law Office of Derek R. Van Gilder can advise you as to the best business organization structure for your specific business. We can also prepare all legal documents and forms necessary to create your business organization and file it with the Texas Secretary of State, as required.