Business Law

What is the best type of business entity for me to form in Texas?

Choosing a business structure is one of the most important decisions you'll make. The most common types in Texas are sole proprietorships, partnerships, Limited Liability Companies (LLCs), and corporations (C-Corps and S-Corps). Each has different implications for liability, taxation, and administrative requirements. An LLC is often a popular choice for small business owners because it provides personal liability protection without the complexity of a corporation. The best option for you depends on your specific business goals, the number of owners, and your risk tolerance. A business attorney can help you weigh these factors.

Do I need a lawyer to start a business in Texas?

While not always legally required, it's highly recommended. A business lawyer can help you navigate the complex legal landscape of forming and operating a business in Texas. We can assist with selecting the correct entity, drafting and filing formation documents with the Texas Secretary of State, creating an effective operating agreement or bylaws, and ensuring compliance with all local, state, and federal laws. This upfront legal guidance can save you from costly mistakes down the road.

What is an Operating Agreement, and why is it important for my LLC?

An Operating Agreement is a crucial legal document for an LLC that outlines the company's ownership, management structure, and the rights and responsibilities of each member (owner). It serves as a contract among the members and can prevent future disputes by clearly defining how the business will be run. While not required by the State of Texas, an operating agreement is a best practice that establishes internal governance rules and strengthens the legal separation between the business and its owners.

What are the key differences between a C-Corp and an S-Corp?

The primary difference is taxation. A C-Corporation is a separate taxable entity from its owners, meaning the business pays corporate income tax on its profits, and shareholders pay taxes on dividends received (this is known as "double taxation"). An S-Corporation is a "pass-through" entity, where profits and losses are passed directly to the owners' personal tax returns, thereby avoiding the double taxation that C-Corps are subject to. S-Corps have specific eligibility requirements, such as a limit on the number and type of shareholders.

What does it mean to "pierce the corporate veil"?

This is a legal concept where a court disregards the limited liability of a corporation or LLC and holds the shareholders or owners personally liable for the company's debts or actions. This can occur if the owners fail to maintain a clear legal separation between themselves and the business, such as by commingling personal and business funds, failing to hold regular meetings, or undercapitalizing the company. Maintaining corporate formalities is crucial to protect your personal assets.

How can a business lawyer help with contracts?

A business lawyer can help you in all phases of the contract lifecycle. This includes drafting clear, legally sound contracts tailored to your specific needs, reviewing contracts to identify risks and potential issues before you sign them, and negotiating terms to ensure they are favorable to your business. We also assist with contract disputes, including issues of breach of contract, to help you enforce your agreements or defend against claims.

How do I protect my intellectual property (IP)?

Intellectual property is a valuable business asset. The primary forms of IP protection include trademarks (for branding, names, and logos), copyrights (for original works of authorship, such as software, books, and art), and trade secrets (for confidential business information, including formulas or client lists). A lawyer can assist with the registration process for trademarks and copyrights and help you create policies and agreements, such as non-disclosure agreements (NDAs), to protect your trade secrets.

What is "employment at-will" in Texas, and how does it affect me?

Texas is an "at-will" employment state, which means an employer can fire an employee for any reason, or no reason at all, as long as it's not an illegal one (e.g., discrimination based on race, religion, or gender). While this gives employers flexibility, it's not a free pass. Employers must still comply with a range of federal and state labor laws, including those governing wages, overtime, workplace safety, and anti-discrimination measures. A business attorney can help you draft a clear employee handbook and implement policies to minimize legal risk.

What should I do if my business is facing a lawsuit?

The first and most important step is to contact a business litigation attorney immediately. Do not ignore the lawsuit; instead, seek professional assistance to handle it effectively. A lawyer will review the complaint, advise you on your options, and represent you in court or through alternative dispute resolution methods like mediation or arbitration. The sooner you seek legal counsel, the better your chances of achieving a favorable outcome.

What is a "non-compete agreement" in Texas?

A non-compete agreement is a contract that prevents an employee from working for a competing business or starting a competing business for a specified period within a particular geographic area after leaving their job. In Texas, these agreements are enforceable, provided they are reasonable in scope, duration, and geography. They are commonly used to protect a company's confidential information and customer base. An attorney can help you draft a non-compete that is likely to be upheld in a Texas court.