Business Transactions · FAQ
Business Transactions — Frequently Asked Questions
Common questions from Texas small-business owners and founders. Educational only — not legal advice.
- An LLC is a legal entity; an S-corp is a federal tax election. You form the LLC first, then decide separately how it should be taxed. Most Texas small businesses start as default-taxed LLCs and consider an S-corp election only once profits reach a level where the payroll-compliance cost is justified. Model it with your CPA.
- Before the problem. Before signing a vendor or customer contract, before bringing in a partner, before hiring your first employee, before responding to a regulatory letter, and before buying or selling a business. Calling early is almost always cheaper than calling in a crisis.
- It is a contract among business owners governing what happens when an owner dies, becomes disabled, divorces, goes bankrupt, is terminated, or wants out. Without one, a triggering event can force the remaining owners into an involuntary partnership with an ex-spouse, an heir, or a bankruptcy trustee. Every business with more than one owner needs one.
- You can, but you often should not. Templates rarely match your actual ownership, decision-making, and contribution arrangements, and they are silent on the scenarios you most want governed. A poorly fitted operating agreement can be worse than none, because it creates rules you did not intend.
- It is an ongoing relationship — often a monthly retainer covering a defined bundle of work — where a business has a lawyer available regularly instead of calling a new firm each time something comes up. It gives a small company real legal judgment without the cost of in-house counsel.
- Texas enforces non-competes that are reasonable in scope, geography, and duration and supported by consideration. Overly broad or indefinite non-competes are often narrowed or struck down. Rules in this area continue to evolve at both the state and federal level — have any non-compete reviewed before relying on it.
- In an asset purchase the buyer acquires specific assets and assumes specific liabilities; in a stock or equity purchase the buyer acquires the ownership interests and steps into the entity with all its assets and liabilities. Asset deals are more common for smaller acquisitions because they let the buyer leave unwanted liabilities behind. The right structure depends on tax, liability, and operational factors.
- A Texas series LLC is a single LLC that can establish separate series under one umbrella, each with its own assets and liability shield. Real estate investors use them to hold multiple properties without forming a separate LLC for each. Tax and banking treatment of series varies, so structure carefully.
- For defined-scope matters — entity formation, operating agreements, contract review, buy-sell agreements — yes, quoted after an initial conversation. Ongoing advisory work and complex transactions are better suited to hourly or monthly-retainer arrangements.
- Standard filing with the Texas Secretary of State is usually processed within a few business days; expedited filing is available. A complete formation, including the operating agreement and EIN, typically takes one to two weeks.
The information on this page is for general educational purposes only and is not legal advice. Reading this page does not create an attorney-client relationship. For advice about a specific matter, consult a licensed attorney.
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