Business Entity Formation:

A corporation is a business entity comprised of shareholders who own stock in the company. Shareholders are generally protected from liabilities of the corporation. Shareholders elect a board of directors who then designate officers to manage the operations of the corporation.

The shareholders of a Professional Corporation (PC) are licensed or authorized within the state to render professional services. Physicians, attorneys, architects, certified public accountants and veterinarians are examples of individuals who are able to form a PC. A PC operates similarly as a traditional corporation except shareholders of a PC are actively involved in the operations and management of the business. Non-licensed individuals are not allowed to own stock in a PC.

An LLC is a relatively new business entity. It is a hybrid between a corporation and a partnership. Owners of an LLC are referred to as members. An LLC is similar to a corporation in that it offers its members personal protection from liabilities of the entity. An LLC can elect to be taxed as a partnership or a corporation.

Similar to Professional Corporation, a Professional Limited Liability Company (PLLC) is comprised of professionals licensed by the State of Texas. A PLLC operates similarly as an LLC. Only licensed professionals can be members of a PLLC.

A limited partnership has one or more general partners and one or more limited partners. The general partner manages the business and is personally responsible for all of the partnership’s liabilities. The limited partner does not participate in the operations of the business. Limited partners contribute capital and receive a share of the partnership’s profits, but are generally shielded from personal liability relating to the debts of the partnership.

If you are looking to form a business entity or have questions about which entity best suits your needs, contact the Law Office of Ryan C. Solis to schedule a consultation to discuss your business entity needs.