Types of Business Organization in Texas – Starting a Business in Texas

Not sure what type of commercial organization you should choose?

This video is part of the series of videos How to start a business in Texas to help entrepreneurs learn about different forms of business ownership.

Topics include how to form an LLC, corporation, partnership or sole proprietorship in Texas. It also includes information on how to form an LLC and a corporation by presenting the Certificate of Formation to the Texas Secretary of State. For more information and links to training documents, visit

Choosing the way your business is legally organized and structured is a fundamental step to start a business and one to start thinking ahead because it affects the process of business denomination, the application for licenses and permits and the way in which the business is taxed. deal.

The commercial organization is a type of commercial property or legal framework of an entity engaged in commercial activities. There are four main types of business organization from which a small business owner will choose, including the sole proprietorship, the partnership, the corporation or LLC. Each entity has its own set of pros and cons and each has some considerations that can make one better than another for you and your business. The considerations include the cost of forming the entity, the protection of the responsibility, the ability to obtain investment, the tax burden, the administrative requirements and the complexity of the training.

The sole proprietor is basically a person who decides to start a business on his or her own. There is no separate legal entity since the business is linked to an individual, which makes the business and the individual legally the same.
Form a single owner is quite simple. As there is no official presentation of the state, you can decide to start in the business immediately as a sole proprietor and participate in the business. We will cover other details to start a sole proprietorship in subsequent videos and on StartingYourBusiness.com that may have to be done such as registering a business name and requesting licenses and tax numbers.

The next entity is the company, which is a company owned by two or more people. The partnership is very similar to the sole property in that there is no legal entity and the owners have unlimited liability.

The corporation is the third of the four business entities and is completely different from the sole proprietorship or partnership because we now have a legal entity that is separate from the owners. The corporation has several pros and the most important professional is that a corporation is a distinct legal entity and the personal assets of the owner are separated from the assets of the business. This is useful because if the company is sued, the personal assets of the owner are usually safe. There may be some tax benefits, but the main reason for forming a corporation or LLC for that matter is liability protection. Another professional is that the corporation has an unlimited useful life that could be useful in situations where there are key contracts or licenses that would benefit from continuity among the owners. The corporation can also sell company shares and raise money from investors instead of relying solely on debt as a sole proprietorship or partnership. Corporations can be owned by a single owner or multiple owners.

The last entity we will talk about is the Limited Liability Company or LLC. Like the corporation, the LLC is a legal entity that is separate from its owners.

The LLC shares all the pros of the corporation as being a separate legal entity, unlimited life and investment capital, but with the LLC, it does not have to hold meetings, take minutes, etc., making the LLC easier to execute than the corporation.

It can be a bit overwhelming and confusing to choose the perfect entity for your business, but keep in mind that the entity you choose today does not have to be a decision forever, as it can change to a different entity later on.

We have a free printable comparison guide with some of the pros and cons of each entity to help you compare them all. The link for the guide is in

If you liked this video about Commercial Property Types in Texas, be sure to visit the other videos in our series of videos Starting a Business in Texas. Other videos include:
Registering a business name in Texas –
What business licenses are needed in Texas?

In addition to these videos, you have many free resources to help you start your business. If you have any questions, visit our site or ask questions in the comments and our team of business advisors will answer your questions at no cost.

Video credits to StartingYourBusiness.com YouTube channel

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    Types of Business Organization in Texas – Starting a Business in Texas

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