Key points
- An entity protects personal assets only if it’s properly formed and maintained as separate from its owners.
- A Texas LLC can operate without a written company agreement, but then the Business Organizations Code’s default rules decide disputes, often in ways owners didn’t expect.
- Buy-sell provisions are the cheapest dispute insurance a business can buy.
- Real estate investors often benefit from series LLCs or separate entities per property.
Choosing the right structure
| Entity | Liability protection | Common uses |
|---|---|---|
| Sole proprietorship | None | Testing an idea. Not recommended once there’s meaningful risk. |
| General partnership | None for partners | Often formed unintentionally, which is a common source of disputes. |
| Limited partnership (LP) | Limited partners protected; general partner liable (often an LLC) | Real estate and investment funds, family holdings. |
| Limited liability partnership (LLP) | Partners protected from certain partnership obligations | Professional and service firms. |
| LLC | Members protected | Most small and mid-size businesses. Flexible management and tax treatment. |
| Series LLC | Each series can be shielded from the others’ liabilities | Real estate portfolios and multiple business lines. |
| Corporation (C or S election) | Shareholders protected | Raising outside capital, employee equity, eventual sale. |
| Professional entities (PLLC, PC) | Protection from other owners’ acts, not your own malpractice | Licensed professionals. |
| Nonprofit corporation | Members and directors protected | Charitable, religious and educational organizations. |
Our business formation services
- Entity selection, coordinated with your CPA on tax elections;
- Certificates of formation and Secretary of State filings, registered agent and assumed name certificates;
- Company agreements, partnership agreements, bylaws and shareholder agreements tailored to your owners;
- Buy-sell, drag-along and tag-along provisions, capital contributions, vesting, and deadlock resolution;
- Series LLC and multi-entity structures for real estate and multiple business lines;
- Founder, employment, confidentiality and IP assignment agreements; and
- Ongoing compliance: annual reports, minutes and consents, amendments and ownership changes.
Already formed online with a template?
We can review what you have and add the owner agreements that are missing, before a disagreement makes them impossible to negotiate. Book a discovery call.
Licenses, permits and compliance
Operating legally in Houston can require federal, state, county and city licenses and permits, depending on your industry. Common examples include Texas professional and occupational licenses, a sales tax permit from the Comptroller, City of Houston permits for food service, signage and occupancy, and Harris County requirements based on location. Texas entities must also keep up with franchise tax and public information reports. We help you build a compliance checklist so the business stays in good standing and the liability shield stays intact.
Why formation matters later
When owners disagree, the governing documents are the first thing every lawyer reads. Clear provisions on management authority, capital calls, distributions, transfers, buyouts and valuation turn what could be a lawsuit into a process. See partnership and shareholder disputes for what happens when those terms are missing.