Many small business owners are used to taking the bull by the horns to get things done. They have gotten this far because of their own tenacity. However, when choosing a business entity for a company, small business owners should seek help in making sure they choose the right entity for their specific needs, and that they don’t make any mistakes along the way. 

Because the limited liability company (LLC) has become the most popular legal structure for small businesses in recent years, many business owners attempt to set up an LLC on their own after reading articles and conducting research on how to set up an LLC. 

While some small business owners can complete this in a few hours, others with more complex situations may make mistakes from which a Texas business entity lawyer could steer them clear.  

Some mistakes when setting up an LLC include:

  • Setting up an LLC in another state, such as Nevada. Although business owners may be tempted to do this to avoid state taxes, they need to know that tax laws in most states generally will require them to pay state income taxes where they earn their money. This means it is best for a small business to incorporate in the state in which it mainly does business. If a company does not have an office presence in Nevada, then it should not establish an LLC there. 
  • Choosing to be taxed like a C Corporation. Because many small business owners know that an LLC can choose how it wants to be taxed, business owners often chose a C Corporation. However, this election is not good for most LLC owners, as it creates an additional level of taxation. In a C Corporation, the business is taxed on its profits. Then, profits are re-taxed when they are distributed to the shareholders.
  • Deciding to be treated as an S Corporation too soon. While there are many benefits and savings of being treated as an S Corporation, it can cost the business owner big money in payroll taxes by choosing this entity selection too early.

For your business entity needs in Texas, call an experienced Texas business attorney at the Posey Law Firm today. As our way of introducing the firm, we will offer you a complimentary case consultation just for calling us toll-free at 888.269.1962 or locally at 512-646-0828.