If you are going to form an entity, the only two potential states that should generally be considered when deciding where to form are your home state and Delaware.
If you are looking to disrupt a market and aspire to launch the next Facebook or Uber, then you should likely form a C corporation. In a previous post, Entity Formation Series Part II – When Type of Entity Should You Form?, I told you that a C Corporation should be used if you have a market-disrupting business model. But, why is this the case?
There are many different entity vehicles to choose from under Texas law. Although there are other options, the more commonly-utilized entities include: (1) limited liability companies (LLCs); (2) for-profit corporations; (3) limited partnerships (LPs); (4) general partnerships; and, (5) sole proprietorships.
After you have made the decision that it is time for you to form an entity, the next two decisions that need to be made are: (1) what type of entity should be formed; and, (2) in what state should the entity be formed? While these are two distinct questions, neither one of them can truly be answered without considering the other. This is because of the fact that entities are creations of state law, and state laws governing entities are not all the same.
Whether you are venturing off on your own or working with a group, one of the first decisions a business must make is when it should officially form an entity. This post provides some guidance on when to make this decision.
Today, we are launching a five-part Blog Post Series covering the questions that should be asked by anyone who is thinking about starting a business or who has already started a business but has not officially formed an entity with the Texas Secretary of State.
The first goal of this Series is to make potential business owners aware of some of the issues that they should be considering when first starting a business. The second goal is to equip potential business owners with information that will allow them to better navigate some of these initial issues concerning entity formation. The Posts are written in a general nature so that the Series will be applicable to a wide range of business types and are intended to be helpful even for those who are new to the world of entity formation.