Starting a business can be exciting but also involves a great deal preparation and finances. You will be expected to have an awareness of all areas of your new business from target market to projected revenue and beyond. Unfortunately, that involves a bit of clairvoyance and the ability to predict the future. We will make that easier by showing you how to get corporation set up in Houston.
1. Do I Need a Corporation?
The short answer is yes. Most businesses will need to set up a corporation for a number of reasons.
- Corporations pay fewer taxes – This may seem unfair, but such is the tax business. Unfortunately, even if you are only a business of one, you will pay fewer taxes as a corporation than as an individual.
- Employee Benefits – Corporations can also get better rates on benefits such as health/dental insurance, retirement contributions, and more.
- Protect Your Assets – A corporation set up can help you separate your personal and business assets should the business fail. Your creditors would have a much easier time going after your personal assets without a corporation.
- Better Reputation – Even if you are only a business of one, you will still need to incorporate for many different reasons. For example, a client may not want to hire someone they can’t bill as a corporation. In other cases, having your own corporation makes you look more reputable overall.
2. Types of Corporations
We strongly recommend getting the services of a qualified bookkeeper or professional in your area to help you navigate what type of corporation to set up. Here is a short rundown of all the corporations available in Houston and the entire state of Texas.
- A Sole proprietorship – This is the most common form because it can be the most simple. Only one individual is recognized as the owner.
- General partnership – Similar to the above, two or more individuals are recognized as the owners. The ownership may be split in any percentage, i.e. 50%/50%, 75%/25%, 90%/10%, or whatever the owners agree to.
- S Corporation – The S forms to comply with federal tax regulations, more than state. It also has its own advantages and disadvantages by state.
- LLC – A Limited Liability Company is a distinct type of business with the powers of a corporation and partnership. The LLC members can be an individual, other corporation or partnership, a trust, or any legal entity.
- Limited Partnership – A limited partnership in Texas is formed by two or more individuals with one or more general partners and one or more limited partners. The limited partnership has a detailed agreement on the roles and benefits of each partner.
- Limited Liability Partnership – An LLP is often formed to limit the liability of its partners which can be advantageous in certain scenarios.
Read more on the official site of the Texas Secretary of State.
Corporation Set Up in Houston
Finally, does your Houston-based business need answers on corporations and which works best for you? Our professional bookkeeper will help you select and apply for your corporation the right way. Feel free to contact us to learn more on how our team can help with your small business’s needs.