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The State of Texas formed over 69,000 new limited liability companies in 2007 alone. This number is staggering. While every state has generally been experiencing LLC formation growth, the Texas increase is much more significant than others.
Consider that Texas is a big state, popular for entrepreneurs. Texas lawmakers have been careful to concentrate on steadily improving the laws for business organizations every year. They do this to be certain the limited liability company continues to be simple and flexible enough to assist all small businesses.
LIABILITY PROTECTION IS EXPLICITLY ADDRESSED IN THE TEXAS STATUTES
The main reason you should use a Texas LLC is for the personal asset protection it affords. Texas BOC law, Section 101.114, exempts a member or manger from the debts, liabilities or obligations of the limited liability company, unless otherwise stated in the LLC’s company agreement.
Sole proprietorships do not offer this same protection, making them risky. Without LLC protection, you place your assets and yourself at enormous financial risk. While the rewards of entrepreneurship can be great, the financial risks are also high.
Entrepreneurship can bring you financial freedom but it is not without risks. You can manage most of that risk through the use of a State of Texas LLC.
A SINGLE OWNER (VS. MULTIPLE OWNERS) CAN FORM A TEXAS LLC
Section 101 of the Texas Business Organizations Code confirms that only one member is required to start an LLC. There are no limits or caps on the number of members so this entity can handle everything from the solo owned business to the large complex business with hundreds of owners.
TYPES OF LIMITED LIABILITY COMPANIES ALLOWED IN TEXAS
Texas laws, specifically Sections 1-5 of the Texas statutes are unique in that they recognize several types of businesses specifically. One of these is the basic, traditional domestic LLC, the most common form of business incorporation for standard small business.
But there is also the Professional company that is often used to render licensed professional services such as law or medicine. Then there is the non-profit choice for charitable, benevolent and other nonprofit activities.
SUMMARY
The enormous growth in limited liability company formation in Texas gives testament to the clear benefits this unique legal entity can provide. Given the low cost of formation and the massive financial protection benefits a State of Texas LLC provides, this vehicle will continue to be a primary choice over other options for starting a business in Texas.
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