Starting a business is a big step, and choosing the right business structure is a critical component of that process. Deciding between a corporation and a limited liability company (LLC) can be a difficult task, as both have their own unique advantages and disadvantages. In this article, we’ll explore the key differences between corporations and LLCs and help you determine which one is right for your business. Advantages and Disadvantages of a Corporation A corporation is a separate legal entity from its owners, which provides liability protection for shareholders. This means that shareholders are only liable for the amount they…
Category: Choosing the Right Business Entity
Sole Proprietorship vs LLC: Which is Right for Your Business?
Starting a business is a big decision, and choosing the right business entity is a critical step in that process. Two of the most common business structures are sole proprietorships and limited liability companies (LLCs). There are a number of pros and cons associated with each type. This article will help you understand the differences between the two and determine which one is the best choice for your business. What is a Sole Proprietorship? A sole proprietorship is a business structure where a single individual owns and operates the business. This type of business structure is simple to set up…
When to Issue Preferred Shares
Preferred shares are a type of equity security that represents ownership in a company. Businesses can use preferred shares to raise capital by issuing them to investors in exchange for money. The investors become shareholders in the company and are entitled to fixed dividend payments and potential appreciation in the value of their shares. By issuing preferred shares, businesses can raise capital quickly without incurring debt or giving up control to outside investors. Preferred shares can be a useful tool for businesses to raise capital, but they also come with some limitations and risks. For example, fixed dividend payments may…
Texas LLC Members Personal Liability (Explained)
If you are a member of a Texas limited liability company (LLC), it is important to understand that LLCs provide a level of liability protection to their members. This means that, in most cases, a member of an LLC cannot be held personally liable for the debts and obligations of the LLC. This principle was demonstrated in the case of Ingalls v. Standard Gypsum, Ingalls v. 70 S.W.3d 252 (Tex. App. 2001). Facts & Procedural History In this case, Ingalls, a construction company, sued Standard Gypsum, a manufacturer of gypsum wallboard, for injuries sustained by an Ingalls employee on a…
Does the Texas PLLC Bar Recovery for Attorney Malpractice?
As a business owner in Texas, you may be familiar with the concept of a professional limited liability company (PLLC). A PLLC is a type of LLC that is specifically designed for professionals, such as lawyers, doctors, and accountants, who want to take advantage of the liability protection provided by an LLC while still maintaining their professional licenses. It is important to note that operating as a PLLC, like the LLC, does not provide complete immunity from liability. This was demonstrated in the case of Bloodworth v. Aden, No. 01-05-00796-CV (Tex. App.–Houston [1st Dis.] 2007). Facts & Procedural History In…
About the Texas Registered Series LLC
Many people may be wondering what a registered series limited liability company (LLC) is and when it would be used, as Texas law does not currently require registration of a series LLC. A registered series is a type of series within a Texas series LLC that is created by filing a certificate of formation with the Texas Secretary of State and specifying the creation of one or more series within the LLC. Series LLCs that do not “register” like this are now referred to as “protected series.” Some businesses may find that a registered series offers certain advantages, such as…
Corporate By-Laws & the Forum Selection Clause
It is important for shareholders to carefully review and understand the terms of their corporate By-laws, including any forum selection clauses that may be included in the corporate By-laws. These clauses can have significant implications in the event of a dispute, as they determine where any legal proceedings will take place. A broadly worded forum selection clause can provide some protection against nuisance litigation. The recent Logicorp Mex. SA de CV v. Andrade, No. 13-21-00243-CV (Tex. App. Dec. 1, 2022) provides an example of how a party can include a broad forum selection clause in their corporate By-laws prior to…
