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Choosing the Right Business Entity
One of the most important decisions you'll make as a business owner is choosing your business structure. Each type has different tax implications, liability protections, and operational requirements.
LLC (Limited Liability Company)
Best For:
- Small businesses and startups
- Real estate investors
- Freelancers and consultants
Tax Treatment: Pass-through taxation (profits taxed on personal return)
Liability: Personal assets protected from business debts
S-Corporation
Best For:
- Businesses earning $60,000+ in profit
- Owners wanting to reduce self-employment tax
- Small to medium businesses with growth plans
Tax Treatment: Pass-through, but can pay yourself a salary to reduce SE tax
Key Benefit: Potential tax savings of $5,000-$15,000+ annually
C-Corporation
Best For:
- Businesses seeking investors or going public
- Companies wanting to retain earnings
- Large businesses with complex ownership
Tax Treatment: Double taxation (corporate tax + dividend tax)
Corporate Tax Rate: Flat 21%
Recent Texas Law Changes for New Entities
Texas has updated several requirements for business formation in 2025-2026:
- Franchise Tax Updates: New thresholds and reporting requirements
- BOI Reporting: Beneficial Ownership Information now required for most entities
- Annual Report Changes: Updated filing deadlines and fees
- Registered Agent Requirements: Stricter compliance standards
Not Sure Which Structure Is Right for You?
We'll analyze your situation and recommend the best entity type for your goals and tax situation.
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