Starting a business involves more than a bold idea and a checklist. One of the most important early decisions is selecting the right legal structure. The choice impacts everything from taxes to liability exposure—and shapes the business’s future growth.

Texas businesses commonly organize as one of the following entity types:

• Sole Proprietorship
• Limited Liability Company (LLC)
• Corporation (S-Corp or C-Corp)
• Partnership

Each structure carries unique requirements, protections, and tax implications. The ROSENBLATT LAW FIRM Transactional Team helps entrepreneurs and business owners navigate these choices with confidence and clarity.

Sole Proprietorship

• Simplest structure to establish—automatically formed in Texas by default
• No legal separation between business and owner
• Owner personally responsible for debts, obligations, and liabilities
• Minimal paperwork and start-up costs
• Best suited for low-risk, low-asset ventures

While easy to launch, sole proprietorships expose owners to significant personal risk.

Limited Liability Company (LLC)

• Shields personal assets from business debts or lawsuits
• Flexible ownership—can have single or multiple members
• Management structure adapts to fit business needs
• Offers pass-through taxation by default
• Option to elect S-Corporation tax status for potential self-employment tax savings

An LLC provides critical liability protection while offering flexibility and favorable tax treatment.

Corporation (S-Corp or C-Corp)

• Operates as a separate legal entity, distinct from owners
• Provides strong liability protection
• C-Corporations: subject to corporate tax rates (possibility of double taxation)
• S-Corporations: pass-through taxation available for eligible companies
• Enables stock issuance and attracts capital investment
• More complex and costly to establish and maintain

Corporations are ideal for businesses seeking substantial investment or planning rapid growth.

Partnership

• Two or more individuals share ownership, profits, and decision-making
• General Partnership: all partners share liability
• Limited Partnership: offers liability protection for certain partners
• Flexible structure, particularly for co-founders or investors
• Requires strong internal agreements to avoid future conflicts

Partnerships offer ease of formation but demand careful planning and clear documentation.

Key Factors to Consider When Choosing a Business Entity

Selecting the right business structure requires evaluating several important factors:

• Personal Liability Exposure: How much personal risk can be tolerated?
• Tax Obligations: Which structure offers the most beneficial tax treatment?
• Ownership Dynamics: How many owners or investors will participate?
• Industry Risk and Anticipated Debt: Will the business face high liability risks or need to secure significant loans?
• Future Growth Plans: Does the business anticipate raising capital or expanding operations?

Overlooking these considerations often leads to costly legal and financial setbacks.

Start Smart with ROSENBLATT LAW FIRM

Building a strong business foundation starts with informed decisions. The RLF Transactional Team brings experience, insight, and strategy to every business formation.

Schedule a free consultation today or call (210) 562-2900 to start—or restructure—your business with confidence.