New Business Formation /
Estate Planning

New Business Formation

Business Representation

The type of business structure you choose affects your taxes, your state reporting, your powers, and oftentimes your bottom line. There are substantial differences between Corporations, LLCs and Limited Partnerships. Chaile can help guide you to decide which business model to choose and structure your new or existing business to best protect you and your company’s bottom line.
There are various types of business organizations, each with their own advantages and disadvantages.

Types of Texas Business Organizations:

Sole Proprietorship

A business is considered a sole proprietorship when only one person engages in business and owns all the assets of the business. The sole proprietor (owner) is also personally liable for any claims against the business.

General Partnership

A general partnership exists when two or more people engage in business subject to a partnership agreement. The partnership agreement does not have to be in writing or filed with the State of Texas. In general partnerships, the partners are all personally liable for any claims against the business.

Limited Partnership (LP) and Limited Liability Partnership (LLP)

A Limited Partnership is a business that generally has one general partner and two or more limited partners. In limited partnerships (LPs), at least one of the owners is considered a “general” partner who makes business decisions and is personally liable for business debts. But LPs also have at least one “limited” partner who invests money in the business but has minimal control over daily business decisions and operations. The advantage for these limited partners is that they are not personally liable for business debts. In order to form an LP, a Certificate of Formation must be filed with the Texas Secretary of State.

The limited liability partnership (LLP) is a similar business structure but it has no general partners. All of the owners of an LLP have limited personal liability for business debts. For an LLP, registration with the State of Texas is necessary.

Corporation

A corporation is a business that is considered an individual legal entity. Corporations are owned by shareholders and managed by directors. Shareholders and directors have limited liability for claims made against the company. There are many formal requirements involved in the formation of a corporation, the first being the filing of a Certificate of Formation with the Texas Secretary of State. Articles of Incorporation and bylaws must also be executed during the formation of a corporation.

The State of Texas recognizes various types of corporations. An S-corporation is one that is taxed only at the shareholder level when profits are being distributed. A C-corporation is subject to double taxation, meaning that it is taxed at the corporate level and at the shareholder level. A non-profit corporation is one in which the profits of the corporation are not distributed to its shareholders or directors. Non-profit corporations can be exempt from Federal and state taxes with the prerequisite that the appropriate forms are filed with the IRS.

Limited Liability Company (LLC)

An LLC is a business that combines the characteristics of a partnership and a corporation. The owners of an LLC, called members, have many options when it comes to the business structure, management and tax treatment, making this business organization a preferable option for small and large companies alike. The largest benefit of the LLC is limited liability for members.

Contracts

Contracts are a critical part of every business. They govern sales, rent, services and everything in between. A well written contract can save your business time and money that would have to be spent on a poorly written contract. Chaile can help you draft a new contract or review a proposed contract to make sure you avoid any potential pitfalls and future legal disputes.

Estate Planning

Planning for the future is critical to ensuring your estate, no matter how large or small, is handled according to your wishes after you die. Chaile can provide a comprehensive estate plan to give you peace of mind that your family will be taken care of and your wishes are met. Chaile offers the following estate planning services:

  • Last Will and Testament
  • Medical Power of Attorney
  • Statutory Durable Power of Attorney (also known as a Financial Power of Attorney)
  • HIPAA Releases
  • Advance Directives (sometimes known as a Living Will)
  • Revocable and Irrevocable Trusts
  • Declarations of Guardians
  • Special Needs Trusts and Supplemental Needs Trusts
  • Planning Deeds
    • Ladybird Deeds
    • Transfer on Death Deeds
    • Deeds retaining Life Estates

The following is a brief explanation of some of the services Chaile offers to meet your estate planning needs:

Last Will and Testament

A Last Will and Testament (Will) is a document that outlines how you would like your assets to be distributed after your death. A will is especially important for any person with children under the age of 18 so that a clear path of guardianship for your children is in place in the event you die unexpectedly.

Trust

There are many different types of trusts that can be used to accomplish several preservation goals. Living Trusts are created during a person’s lifetime to appoint someone to manage or assist in managing their assets, as well as distribute these assets after their death. Testamentary trusts are used to distribute assets and come into effect only after a person’s death. Trusts can also be created to protect assets. Trusts are often used to guard against the expensive and time-consuming probate process following one’s death. For a Trust to function appropriately, it must be properly established, funded and regularly reviewed by an attorney to ensure its effectiveness and relevance given changes in the law and family dynamics.

Power of Attorney

A Durable Power of Attorney allows you to appoint someone to make personal and financial decisions for you in the event of your incapacity. The powers given can be as broad or as narrow as you desire.

Medical and End of Life Planning

Advance directives and other end of life planning documents are becoming increasingly popular. A Medical Power of Attorney allows you to choose someone to make health care decisions for you in the event of your incapacity. These documents allow you to make your medical and end of life wishes known to family and providers who are bound to abide by them when the time comes.

Estate Tax

The estate and gift tax exemption is $11.4 million per individual, up from $11.18 million in 2018. That means an individual can leave $11.4 million to heirs and pay no federal estate or gift tax, while a married couple will be able to shield $22.8 million.

If your estate is not exempt for the Federal Estate Tax, Chaile will draft your estate plan with the goal that your beneficiaries are subject to the least amount of tax liability.

Even if you don’t have a taxable estate, you still need an estate plan to make sure the distribution of your assets and care for your children meets your wishes in the unfortunate event of your death or incapacity.