Under Texas law, a business may incorporate. If it chooses to do so, it is thereafter identified as its own legal entity. An incorporated business acts in its own name, whether buying and selling property, agreeing 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 advantages 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. Had the business remained unincorporated, owners risk losing their personal property should the business become unable to pay its liabilities. A corporation also allows creditors in the Kirby area to assess the credit worthiness of the business as a whole rather than that of its owners, allowing the business to acquire loans more easily. Finally, a corporations charter requires that ownership be divided into stakes or "shares" of stock, all of equal size. This makes the process of transferring control much more practical.
Costs of Incorporation
Incorporation comes at a price. First, Texas might charge a filing fee to process applications for incorporation. Also, the corporation will pay taxes as its own entity. The individual incomes of the owners are still taxed also, and this can mean the same income is taxed twice, known as double taxation. With proper planning and assistance from a local Kirby lawyer, you can avoid this disadvantage.