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Should I Incorporate My Business In Texas?

16 August, 2018

Not sure if you should incorporate your business in Texas? Well, there are many business owners who launch their company as sole proprietorships in Texas in which they and their businesses are regarded the same. This means that if you are the sole proprietor of the company, you are the company. However, changing the formation of the business to corporation or an LLC can offer an ample number of advantages to the entrepreneurs.

As a matter of fact, a recent survey conducted by the US small business administration reveals that more than three-fifths of the small-scaled businesses are not incorporated in Texas. Well, they are running a profitable and prosperous business. But if a company is not incorporated, they do not seem as professional and licensed as you feel when you are incorporated in Texas.

So, whether you are starting a new startup or transforming a sole proprietorship or an existing general partnership, in order to incorporate the organization, every startup have to take two critical decisions. The owner would need to ask themselves the following questions:

  • What type of organization you are running?
  • And, where you should incorporate your business?

In case you are wondering why Texas is the right place to incorporate, well the answer is simple - there are many significant benefits for those who choose to incorporate their business in Texas.

By incorporating the company in Texas, you can avail numerous advantages that the state offers to the startups such as consistency, deductible employee profits, lawsuit protection, tax savings, as well as the protection of the personal assets. Moreover, you can also choose a separate person for the legal affairs.

In addition to it, the incorporation process is speedy as compared to the other states. It usually takes about three or four days, at most. Hence, before incorporating the business in Texas, it is essential to understand what it means to incorporate and its benefits.

What does it mean to have your Business Incorporated?

Quite merely, incorporating the business is turning your general partnership or sole proprietorship into a company formally recognized by the state of incorporation in Texas. Well, there are three primary business structures for the entrepreneurs who are willing to incorporate their business: a corporation, limited liability company (LLC), or an S corporation. In fact, in each corporation, the owners of the organization can protect their assets because they are viewed as a separate identity from their business.

Benefits of incorporating the business in Texas

The primary benefit of Texas incorporation is that it allows the entrepreneurs to separate their liability for corporate debts from themselves individually. And the corporation is solely responsible for the startup's debts and will help you in assisting the rights of directors, officers, and shareholder's personal assets.

In short, a separate legal entity is created, and as long as the entity is operated correctly, it will continue to exist. Moreover, most of the new startups are likely to be interested in either an LLC or an S-corporation due to the several advantages as mentioned below:

  • Tax Climate

    Tax climate is one of the principal advantages of incorporating a business, and you can only enjoy this benefit when you incorporate your business in Texas. In fact, the business tax in Texas is quite low as compared to the other states, which is why Texas is said to have a business-friendly tax climate.

  • Texas Enterprise Fund

    It is a practical benefit for the business owners who incorporate their business in Texas. It basically helps in strengthening the origins of the startups by providing a cash reward to the company. In fact, it is a fiscal incentive device which supports you in providing the cash for those projects that are important for capital investment as well as for job creation.

    Moreover, the Texas Enterprise Funds will also help you in managing the programs such as self-sufficiency funds and the skills developments with more ease! So, if you are still deliberating on the decision whether to incorporate your business in Texas or not, then this is the game changer benefit.

  • Limited Personal Liability

    The most significant benefit of incorporating your small business in Texas is the protection to the personal assets. In fact, it will also protect the members of a corporation from liability and credibility. In most of the cases, the shareholders are protected from personal liability for their business decisions and actions of the LLC as long as the corporation is formed correctly with the proper documentation and operated properly.

    However, if Texas LLC Company undergoes a lawsuit, while the creditor or personal filing charges against the company can track the possessions of the business, but the prosecution cannot touch the personal assets of the Limited liability companies.

  • Name Protection

    Once you have registered your company as LLC in the state of Texas, the name chosen by the startups receives the protection from the use of that name by any other company. In addition to it, an LLC keeps other companies away from using your reputation and hard work for their own profit and will also help you in protecting your brand's image.

  • Added Credibility & Professionalism

    Incorporating your small business In Texas as LLC will also provides you the benefits like credibility and professionalism. As a matter of fact, LLC is relatively easy to operate and possess minimal recordkeeping requirements. So, whether you are forming an organization with your business associates, signing contracts with vendors, hiring employees. An incorporated business in Texas will always have a significantly positive influence on the plan of your business.

  • Tax Advantages

    Forming an LLC corporation in Texas will also provide the tax benefits. In fact, LLCs are not taxed as separate business entities as compared to the two corporations(c-corporation or s-corporation). Because being LLC incorporation, you can diminish your legitimate business payments from your corporation's income, which can significantly lower the profits reported to the IRS.

  • Hire The Best Talent

    The most important aspect of incorporating your small business in Texas is that it will help your business in opening the doors for recruiting top talented members without having to worry about losing profit.

  • Pass-Through Taxes

    In the state of Texas, while incorporating your business, you will also get the benefits of passing through taxes to each shareholder, members or partners. In fact, all the information of the pass-through taxes is collected on the LLC members' personal federal tax returns of the Texas, and you don't have to pay any personal income taxes at the business levels.

  • Ownership Transfer

    The owners who sell or leave behind an incorporated business can easily transfer ownerships to their name, as it is the most significant benefits of incorporating small businesses in Texas. Moreover, Texas doesn't possess any state tax, but enterprises need to register with the state of Texas for the Texas Franchise Tax. In addition to it, Texas allows an LLC incorporated companies to select a federal tax structure that works as partnerships or as a corporation.


As a matter of fact, the benefits of incorporating the business in Texas are never-ending. So, if you are thinking about registering your startup in Texas, you might be on the right path.

But before that, make sure you are taking all the credibility or protection that is usually offered by the LLC or an S corporation in order to avoid any hassle! After all, determining a company structure is not always cut and dry. In order to best serve themselves and their company, owners can consult with the IncParadise to discuss this issue.

Tags: Business

About the Author


IncParadise offers incorporation services in all 50 states in the USA since 1999. Because of our great experience in incorporation business we are able to offer high-quality services at an affordable price. We do formation of Corporations, LLC, Registered Agent Service, Mail forwarding, Virtual Office and the other kind of filing services in all 50 states. Visit our website: www.incparadise.net


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