Becoming a business owner in Texas can be a liberating experience, but not without its pitfalls. It requires careful planning and preparation, yet once the necessary steps have been followed, the results can be very rewarding. 

The structure of a business determines everything; from how a business operates daily, to taxes and how much risk is involved. The choice of business structure provides the business owner with the right balance of benefits and legal protections. 

Once the best business structure is selected, the establishment of the business is rather straightforward, especially with online information available on the best LLC formation service in Texas.

Get Your Business Started on the Right Foot

When starting a new business it is important to first determine which is the right business structure to suit the venture. In Texas, the different types of business structures are: Sole proprietorship, partnership and corporation. Each business structure has distinct benefits and drawbacks. 

Sole Proprietorship

A sole proprietorship is the simplest form of business. It gives the operator complete control of the business and does not form a separate business entity. The business assets and liabilities are not separate from the personal assets and liabilities of the owner, resulting in them being personally liable for all the debts and obligations of the business. 

Though it may be challenging to raise funding for this type of business, sole proprietorships can offer the option of a  low-risk business. This is a good choice for entrepreneurs who are testing their business idea before establishing a more formal enterprise.


A partnership is a simple option for two or more people to own a business together. Within partnerships, there are: limited partnerships (LP) and limited liability partnerships (LLP). In a limited partnership, only one general partner has unlimited liability, while all other partners have limited liability and limited control over the company. Limited liability partnerships do indeed resemble limited partnerships, but limited liability is assigned to every owner in the business and therefore, partners won’t be responsible for the actions of other members. This option serves multiple owners well, and also those who wish to test their business concept first.

Limited Liability Company

An LLC (Limited Liability Company) has a business structure which protects the owner from personal liability. If the company faces bankruptcy or lawsuits, the owner’s assets cannot be attached. This means, in many ways, that an LLC enjoys the benefits of both the corporation and partnership business structures. 

In this model, members of the company are classified as self-employed.This means that the owners must pay self-employment tax contributions towards Medicare and Social Security. Two key things to look out for with LLCs is that they can have limited life and when anyone  joins or leaves an LLC, it may mean that the company will have to be dissolved and re-formed with new membership. 

LLCs are a good choice however, for medium- or higher-risk businesses, and protect the personal assets of the members while also enjoying a lower tax rate than a corporation.

Once an entrepreneur has selected the best structure, forming a Texas LLC can be done by following five key steps: 

Five Key Steps to Forming a Texas LLC

  1. Choose a name for your LLC
  2. Assign a registered agent
  3. File Your LLC Certificate of Formation ($300 filing fee)
  4. Create Your Texas LLC Operating Agreement
  5. Get an EIN 

Final Considerations

Once an LLC is formed, some of the risks of starting a business can be the scarcity of capital or funding for the business venture, inadequate skills of the the management team and staff, and unsuccessful marketing strategies. 

If the business owner has not put sufficient consideration into the right infrastructure or business model, then the business may be compromised from the start. This means, therefore, that business people should take the time to carefully consider their options while on the road to realizing their dreams.