3. Limited Liability Company (LLC)
A limited liability corporation in Texas is created when a certificate of formation is filed with the Secretary of State. An LLC is not an official corporation but a distinct entity with the powers of both a corporation and a partnership. Depending on how it’s structured, the LLC may be like a general partnership with limited liability or a limited partnership where all owners are free to participate in management and have limited liability. It can also be like an S corporation without the taxes and ownership requirements from the IRS. The owners are called members and can be an individual, another corporation, partnership, and any other entity. The liability of each member is limited to their investment. An LLC can have structural flexibility and favorable tax treatment, but each member should seek legal counsel.