Under Texas law, a business may incorporate. If it chooses to do so, it is thereafter recognized as its own legal entity. An incorporated business acts in its own name, whether buying and selling property, assenting to contracts or exercising legal rights. To incorporate in Texas, a business must file with the Secretary of State in compliance with specific guidelines.

Benefits of Incorporation in Texas

A corporation enjoys benefits that unincorporated companies do not. Primarily, it cannot be held accountable for an amount of debt greater than the value of the assets that the owners have invested in it. If the business had remained a personal asset of the owners, they would run the risk of losing their personal property to pay for the company's financial liabilities in case of default. Also, creditors in the Jourdanton area generally prefer to deal with corporations, since a loan is an investment more easily evaluated when the credit-worthiness of various owners is not an issue. Finally, the ownership of a corporation is divided into an abundance of equal portions or "shares" of stock. Without this mechanism, transferring ownership of a business would be impractical.

Costs of Incorporation

These advantages come at a price. First, incorporation in Texas may require a filing fee. Second, a corporation pays taxes just like any other 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 Jourdanton lawyer.