According to a recent article in Forbes Magazine, the third quarter of 2020 saw the highest number of applicants for new business formations ever seen. While the U.S. economy lost over 23 million jobs from March to May, nearly 1.4 million new startups were founded between June and September.
While there are many types of businesses that have been launched, many new startups are pivoting to accommodate online interaction, especially online retail. With the enormous success of CEO’s of the biggest tech-based companies during this time, and the painful realization that big corporations will sacrifice their workers on the altar of profit to stay afloat, many are turning to old-fashioned entrepreneurship for new opportunities.
Starting up a new business in Dallas
Starting up a new business in Texas should involve several considerations as to business formation. The entrepreneur will want to factor in management and operational structure, liability and ownership interests, as well as tax considerations.
The most common types of business structures are:
- Sole proprietorship, where a single person runs a business without any formal organization.
- General partnership, when two or more people work together to operate a business for profit. This arrangement does not require state filing of the business and is usually outlined with a partnership agreement.
- Limited Partnership, where one or more persons having one or more general partners with one or more limited partners, enter into a partnership agreement that outlines the conduct of business. A Limited Liability Partnership will limit the liability of its general partners.
- Corporation, where the entity is considered to be a legal person in which the owners are shareholders and the people who manage the business are directors. Deciding the best type of structure and shareholder agreements is best examined with the help of an attorney. An S corporation elects to be taxed according to federal law.
It is important to note that a Limited Liability Corporation (LLC) is a unique structure that requires its certificate of formation with the Secretary of State and must meet minimum state law requirements.
Part of having a solid foundation when starting up new business venture means having a skilled business law attorney review and draw up essential documents to make sure the business is on the right track.