Under Texas law, a business may incorporate. If it chooses to do so, it is thereafter recognized as its own legal entity. After incorporation, buying and selling property, assenting to contracts and exercising legal rights are considered acts of the business itself and not its owners. A business seeking to incorporate in Texas must file with the Secretary of State in accordance with established guidelines.

Benefits of Incorporation in Texas

Certain benefits inure to a business in Texas that has incorporated over one that has not. First, a corporation's liabilities can never go beyond the amount invested in the business by the owners. With unincorporated businesses, personal property of owners can be liquidated in order to satisfy the liabilities of the business. A corporation may also find it easier to finance itself through loans, allowing creditors in the Colorado City area to evaluate their investment by assessing the corporation rather than the individual credit-worthiness of its owners. Lastly, a corporation's ownership stake is divided into equal slices or "shares" of stock, which make investments in the business much easier to transfer.

Costs of Incorporation

There are costs associated with incorporation, both short and long term. First, businesses in Texas may be charged a fee to incorporate. Also, a corporation is taxed as its own entity. The incomes of owners as individuals are also taxed of course, meaning that income to the corporation may be subject to double taxation. However, this disadvantage can be avoided with proper planning and help from a local Colorado City lawyer.