Legal Tips for Houston Businesses
Running a startup or small enterprise is an exciting prospect, but the business side of things can quickly become tedious and overwhelming. It is important not to let the business and financial aspects take away from the joy and control you feel running your own business the way you see fit. Below, we provide a few tips and tricks to keep in mind as a Houston business owner. Contact a Houston business law attorney with additional questions or for help with a Texas business law matter.
Choose the Right Type of Entity
If you are starting a new business in Texas, it is essential to carefully consider the right type of entity to form. The structure you choose has consequences ranging from individual and business liability, tax burdens, regulatory requirements, and employment considerations. Some of the possible entities include:
● Sole Proprietorships. A sole proprietorship means you, as an individual, are engaging in business directly, with no formal organization. There are limited formational requirements, but individual owners can be sued directly should the company face any debts or liability.
● Partnerships. A partnership involves two or more people jointly engaging in a business for profit. There are few formal requirements, but owners will be subject to pass-through taxation and direct liability.
● Corporations. Corporations are legal entities separate from the owners. They offer significant legal protection for the individual owners against debts and other liabilities. They are subject to more strict regulations, including management by a board of directors and responsibility to shareholders.
● Limited Liability Companies. An LLC is a popular type of entity that offers flexible taxation options and limitations on personal liability for business activities, much like a corporation. Forming an LLC requires filing a certificate of formation with the state.
Know What Regulations Apply to Your Business
Most businesses are subject to some agency regulation. Depending on your specific industry, you will be responsible for complying with rules issued by a variety of agencies, and you may face inspection and reporting requirements. There are at least 100 different state agencies in Texas, ranging from the Texas Commission on Environmental Quality to the Texas Department of Agriculture to the Texas State Board of Veterinary Medical Examiners. Speak with a knowledgeable Texas business attorney to know who your regulators are and what your responsibilities may be with each.
Get Your Permits and Licenses in Order
Texas businesses must keep proper permits and licenses in order to operate. In Houston, you will likely need to have, at the least:
● A sales tax permit from the Comptroller of Public Accounts
● Regulatory permits and licenses relating to construction, health, safety, and your specific industry
● Professional and occupational licensing, depending on your field
Be Wary of Investors and Securities Laws
If you are starting or expanding a business, you may turn to outside investors. Make sure that you choose your investors carefully and understand your responsibilities concerning the investors and shareholders based on contract and state and federal law. Be careful with the representations you make to your investors and shareholders to avoid violating any securities laws. You do not want to suddenly face a lawsuit because you and a principal investor disagree on the direction of your business, or because they allege that you misled them about an aspect of your business.
For assistance with a business law issue in Texas, contact Leigh Meineke with Stephens | Domnitz | Meineke PLLC at 832-706-0244.