How to Choose a Business Structure for a Successful Business


You have finally decided to start your own business. You have saved up the required funds, searched for commercial properties, and even thought of your business’s name.

But what kind of business structure should you choose for your new baby? Is one business structure better than all the others? Is it possible for a business structure to offer protections to your personal assets?

In this multipart series, we will address these questions and many more to help you decide which business structure is the best for your new business.

What Business Structures are Available?

In Texas, there are many different business structures available:

  • Sole Proprietorship — The simplest form of business in which a single individual engages in a business activity without the necessity of formal organization.
  • General Partnership — Created when two or more persons associate to carry on a business for profit.
  • Limited Partnership — Formed by two or more persons having one or more general partners and one or more limited partners, and the limited partnership must file a certificate of formation with the Texas Secretary of State.
  • Limited Liability Partnership — A general or limited partnership may opt to register as a limited liability partnership in order to limit the liability of its general partners.
  • Corporation — Created by filing a certificate of formation with the Texas Secretary of State, and is a legal person with the characteristics of limited liability, centralization of management, perpetual duration, and ease of transferability of ownership interests.
  • Limited Liability Company — Created by filing a certificate of formation with the Texas Secretary of State and is a distinct type of entity that has the powers of both a corporation and partnership.

We will feature a separate blog on each of these business forms in the coming weeks.

What Do I Look for When Selecting a Business Structure?

This is one question that does not have an easy legal answer. You should consider whether ease of formation or protection from liability is more important. Think about whether you want your business to have active, managing partners, or silent, investing partners. Do you want tax protections, or the ability to wind up easily?

These questions have different answers in every business. It is essential that no matter which structure you choose, partner with an attorney who is knowledgeable about business law in order to help you beset decide how to achieve your goals.

When Should I Choose a Business Structure?

It is best to choose your business structure while you are still in the planning phase of your business. Considering what you want in a business structure should be a part of your business plan. In fact, you should have your business structure formed before signing any contracts or hiring employees.

Starting your business with tons of forethought and preparation is the best way to help ensure your business is successful. Remember to check back for the other blogs in this series and start considering what you want out of a business structure.

–Authored by Carrie A. Harris, Esq.,

Matthew Harris Law, PLLC – Business Law Division

1101 Broadway, Lubbock, Texas, 79401-3303

Tel: (806) 702-4852 | Fax: (800) 985-9479

[email protected]