When you are selecting a structure for your business, various options are available under Texas law. One choice that makes a lot of sense for small-to-medium-sized operations is a limited liability company (LLC). This structure combines some of the best aspects of corporations and partnerships.
Understanding the benefits of an LLC in San Antonio is the first step toward creating the ideal structure for your new business. It is important to have the support of a dedicated business attorney such as our managing partner, Sasha Begum, throughout this process.
One positive aspect of LLC formation in San Antonio is that it is a relatively simple procedure. While creating a partnership is a more informal process, forming an LLC is much less complex than creating a corporation. Your first step in creating an LLC is filing a document known as a certificate of formation with the Texas Secretary of State, which you could do on their website.
Another upside to an LLC is that there are limited restrictions on who is allowed to have an ownership stake in it under Texas law. There are no age or residency requirements, and owners—who are referred to as members—could be individuals, corporations, partnerships, trusts, or any other type of legal entity.
If you structure your San Antonio company as an LLC, you could enjoy some of the most significant benefits that a partnership offers while avoiding many of its drawbacks. The best example of this is that LLCs provide protection from personal liability. Texas law holds an operator of a partnership or sole proprietorship liable on a personal level for any claims made against their company. Creditors are able to reach the owner’s assets, which could be devastating for most people.
An LLC’s members have limited personal liability. When their company is accused of negligence, the owners are not at risk of collection efforts if a judgment is ultimately entered. While these claims might mean the end of the business, creditors are generally unable to reach the company owners’ homes and other property.
For some people, the primary upside to creating a San Antonio limited liability company is the availability of pass-through taxation. This means the LLC’s members are taxed the same way a sole proprietorship or partnership is. With pass-through taxation, there is no requirement to pay income tax at the corporate level.
This is a more favorable tax status than the corporation model’s. A corporation’s income is taxed at the company level, and shareholders are also taxed individually for the income they receive. Having a pass-through tax entity could lead to significant financial savings.
Another benefit to structuring your San Antonio business as an LLC is flexibility. The number of members in an LLC may vary, and each member may have different rights concerning decision-making or profit distribution. The only significant limitation is that an LLC is allowed to have no more than 100 members.
The many benefits of a LLC in San Antonio are combined with some downsides. Besides the cap on an LLC’s number of members, this type of business does not offer the same flexibility and control that some others do.
Before you decide how to structure your business, let our attorneys at Begum Peláez-Prada PLLC review your needs and create a plan for your future. You have a lot of important decisions to make—so schedule a private consultation with us today. We proudly serve San Antonio and the surrounding areas, including Dreamhill Estates, Los Jardines, Olmos Park, Prospect Hill, Terrell Hills, and Tobin Hill.
