Starting Your Business
Our firm has extensive experience in this area of law and possess the knowledge and resources to handle all issues related to corporate formation, including issues of taxation, liability and financing.
You can rely on our proven legal professionals to make sure you understand the potential benefits and drawbacks to any entity choice so that you can make an informed decision about what is best for you and your business.
We can help you with all legal aspects of your business startup, including:
Our firm can provide counsel to clients in structuring, organizing and maintaining entities to develop, operate and manage business operations and to acquire and hold real estate.
We are knowledgeable about corporations, partnerships, joint ventures, limited liability companies, limited partnerships as well as all other types of company formations and can provide advice regarding the most effective business structure for our client’s individual needs.
When either an individual or a company functions with limited liability this means that assets attributed to the associated individuals cannot be seized in an effort to repay debt obligations attributed to the company.
Funds that were directly invested with the company, such as with the purchase of company stock, are considered assets of the company in question and can be seized in the event of insolvency.
Any other assets deemed to be in the company’s possession, such as real estate, equipment and machinery, investments made in the name of the institution, and any goods that have been produced, but have not been sold, are also subject to seizure and liquidation.
Our experienced business formation lawyers can help you in the creation of any of the following:
Professional corporations or professional service corporation (abbreviated as PC or PSC) are those corporate entities for which many corporation statutes make special provision, regulating the use of the corporate form by licensed professionals such as attorneys, architects, engineers, public accountants and physicians.
The general category of the PC or PSC can be as S-corporation, C-corporation, or LLC, but with subcategorization as a PC or PSC. Legal regulations applying to professional corporations typically differ in important ways from those applying to other corporations. Unlike a traditional corporation, operation as a professional corporation does not insulate a professional for personal liability for her own negligence or malpractice.
The principal reason why groups of professions choose to organize as a professional corporation is that, unlike a general partnership, an owner is not personally liable for the negligence or malpractice of other owners. In some states a limited liability partnership offers the same benefit and thus should be considered as a possible business entity by professionals who are forming a business.
Subchapter S (S Corporation) is a form of corporation that meets specific Internal Revenue Code requirements. The requirements give a corporation with 100 shareholders, or less, the benefit of incorporation while being taxed as a partnership. The corporation may pass income directly to shareholders and avoid double taxation. Requirements include being a domestic corporation, not having more than 100 shareholders which include only eligible shareholders and having only one class of stock.
A C corporation is a corporation in which the owners, or shareholders, are taxed separately from the entity. C corporations, the most prevalent of corporations, are also subject to corporate income taxation. The taxing of profits from the business is at both corporate and personal levels, creating a double taxation situation.
A limited liability partnership is a general partnership in which the individual liability of partners for partnership obligations is substantially limited. Texas limited liability partnerships have three requirements: 1) their name must include “limited liability partnership” or an abbreviation thereof, 2) they must file an application with the Texas Secretary of State along with an extra filing fee of $200.00 per partner, and 3) must carry at least $100,000.00 of liability insurance.
The limited liability company, or LLC, is a relatively new type of business entity. An LLC can be formed by only one owner, unlike the LLP that requires more than one owner. Owners of an LLC are called members. The members of an LLC are protected from the liability incurred by the LLC. An LLC can be managed by the members or by a separate group of managers.
Limited liability companies are formed by filing the appropriate documents with the Texas Secretary of State. If properly structured, an LLC’s owners have both a corporation-style liability shield and the pass-through federal income tax benefits of a partnership.
A professional limited liability company (“PLLC”) is a business entity designed for licensed professionals, such as lawyers, doctors, architects, engineers, accountants, and chiropractors. While many businesses choose to form a limited liability company (“LLC”) because of the tax, limited liability, and other benefits, some states don’t allow LLCs to be owned by professionals whose occupation requires a license. In these states, licensed professionals who want the benefits of an LLC must form a PLLC instead.
A partnership is an arrangement where parties, known as partners, agree to cooperate to advance their mutual interests. The partners in a partnership may be individuals, businesses, interest-based organizations, schools, governments or combinations. Organizations may partner to increase the likelihood of each achieving their mission and to amplify their reach. A partnership may result in issuing and holding equity or may be only governed by a contract.
A limited partnership (LP) is a form of partnership similar to a general partnership except that while a general partnership must have at least two general partners (GPs), a limited partnership must have at least one GP and at least one limited partner.
The GPs are, in all major respects, in the same legal position as partners in a conventional firm: they have management control, share the right to use partnership property, share the profits of the firm in predefined proportions, and have joint and several liabilities for the debts of the partnership.
As in a general partnership, the GPs have actual authority, as agents of the firm, to bind the partnership in contracts with third parties that are in the ordinary course of the partnership’s business. As with a general partnership, “an act of a general partner which is not apparently for carrying on in the ordinary course the limited partnership’s activities or activities of the kind carried on by the limited partnership binds the limited partnership only if the act was actually authorized by all the other partners.”
Family Limited Partnerships (commonly called FLPs) are frequently used to move wealth from one generation to another. Partners are either General Partners (GP) or Limited Partners (LP). One or more General Partners are responsible for managing the FLP and its assets. Limited Partners have an economic interest in the FLP, but typically lack two noteworthy rights: control and marketability. Limited Partners have no ability to control, direct, or otherwise influence the operations of the FLP. They can neither buy additional assets, nor sell existing assets, and they cannot act on the Partnership’s behalf. They also substantially lack the ability to sell their interest, with one typical exception: transfers to immediate family members (spouse, siblings, and direct lineal descendants and ascendants). FLPs are partnerships limited to family members, hence the name.
FLPs are typically holding companies, acting as an entity that holds the property (business interests, real estate investments, publicly traded or privately held securities) contributed by the members. FLPs have several benefits. They allow family members with aligned interests to pool resources, thus lowering legal, accounting, and investing costs. They allow one family member, typically the GP, to move assets to other family members (often children who are LPs), while still retaining control over the assets. Because the LPs have no rights of control, they cannot liquidate their partnership interest. The timing and amounts of distributions is the sole and exclusive prerogative of the GP. That is, a distribution cannot be made to one partner (GP or LP) unless all partners receive their pro rata portion of any disbursements.
FLPs also allow for favorable tax treatment relating to the transfer of the assets, relating to the lack of control, and lack of marketability of LP interests discussed above. Taxes are paid on the fair market value of assets bought or given. Fair Market Value is the value that would be received (paid) to sell (buy) an asset between a hypothetical willing buyer and hypothetical willing seller, both acting in their own best interest and with reasonable knowledge of the relevant facts when neither is acting under compulsion.
A joint venture (JV) is a business entity created by two or more parties, generally characterized by shared ownership, shared returns and risks, and shared governance. Companies typically pursue joint ventures for one of four reasons: to access a new market, particularly emerging markets; to gain scale efficiencies by combining assets and operations; to share risk for major investments or projects; or to access skills and capabilities.
Most joint ventures are incorporated, although some, as in the oil and gas industry, are “unincorporated” joint ventures that mimic a corporate entity. With individuals, when two or more persons come together to form a temporary partnership for the purpose of carrying out a particular project, such partnership can also be called a joint venture where the parties are “co-venturers”.
A sole proprietorship, also known as the sole trader or simply a proprietorship, is a type of enterprise that is owned and run by one natural person and in which there is no legal distinction between the owner and the business entity. The owner is in direct control of all elements and is legally accountable for the finances of such business and this may include debts, loans, loss, etc.
The sole trader receives all profits (subject to taxation specific to the business) and has unlimited responsibility for all losses and debts. Every asset of the business is owned by the proprietor and all debts of the business are the proprietor’s. It is a “sole” proprietorship in contrast with partnerships (which have at least two owners).
A sole proprietor may use a trade name or business name other than his, her, or its legal name. They may have to legally trademark their business name if it differs from their own legal name, the process varying depending upon country of residence.
Corporate Documents & Agreements
We have experience and expertise in negotiating and preparing a variety of corporate documents and agreements including, general business contracts and employment agreements, non-competition agreements, severance agreements, articles of incorporation, company bylaws, operating agreements, shareholder agreements and a variety of other legal agreements used by companies.
Galmor, Stovall PLLC, helps aspiring business owners turn ideas into viable business opportunities. We accomplish this by seeking on-going relationships with our clients, advising clients on a variety of business formation issues, and routinely helping clients throughout the course of their business.
Once we have helped you select the appropriate tax-conscious entity for your business, we assist you with your business’s formation. We are experienced with all aspects of incorporation, including drafting and reviewing documents involved in the organization and structuring of your new business entity, which may include: