October 7

Doing Business As (DBA)

• Go to each county to do business

• Depends on what you’re doing for business

  • If you’re transacting a sale in that county, then you’ve done business in that county.

• If you’re a farmer and go to various farmer’s markets, and go to another county, operate as “Organic Farms” sole proprietorship

  • If services-based county, and you don’t actually go to Harris County (offices are in Travis County, envoiced and receive money at Travis County)

• Traveling and coming back vs actually conducting goods & services there

• Good for 10 years, renew them

• “Assumed Name” for more formal business corporations, file that with a state

  • Get an Assumed Name Certificate, allow you to do business in the entire state

Partnership

• A partnership is a form of business owned by two or more individuals who share management and profits. There is no limit to how many people can join in a business partnership, but a partnership must be for-profit.

  • Partnership nonprofit doesn’t exist in Texas legal code.

  • Can have up to 100 business partners.

  • Odd number of partnerships are ideal.

    • “Money covers a multitude of sins.”

  • Partnership dissolves if one partner can no longer operate.

• Advantages: Affordable to start, more available capital, ability to combine skills and resources, good choice for businesses with multiple owners or professional groups (like attorneys)

• Disadvantages: Possibilities of disagreements, unlimited liability, limited life

Limited Partnerships (LP)

• Only one general partner with unlimited liability

  • Assets (house, stocks, bank account, warranty collectable, luxury goods) → debt

  • Criminally liable

  • Civilly liable - product BPA first class action lawsuit

  • Personal guarantee: Promise to accept responsibility for other person’s debt

• All other partners have limited liability

• Partners with limited ability also tend to have limited control over the company, which is documented in a partnership agreement

  • Not involved in management & day-to-day operations by law

• Profits are passed through to personal tax returns, and the general partner must also pay self-employment taxes (Medicare, social security, regular income tax like sole proprietorship)

• Biggest advantage: Funding (easier access to capital)

  • They’re protected and shielded from debt, being sued

Limited Liability Partnerships (LLP)

• Limited liability to every owner

• Protects each partner from debts against the partnership

• Won’t be responsible for the actions of other partners

• They’re all paying full taxes

• Law firms like this

Corporations

• Advantages: Publicly owned, stakeholders, separate legal entity, no liability, capable of raising funds, continued life, many decision makers

• Disadvantages: Costlier, double tax, “big business” social reputation, shareholders , loss of control, formation costs

  • Double tax: Taxed as a corporation and taxed as an individual

    • Federal taxes, state taxes

    • $5M - Texas is not gonna make you pay taxes (business-friendly state!)

      • franchise fee, foreign entity fee to operate in texas

• Most complicated form of business ownership is a corporation. Business owned by stockholders, who share in profits and losses. Unlike partnerships and sole proprietorships, a corporation is legally separate from its owners which means the owners of a corporation have limited liability.

• In order to pierce that corporate veil, have a high burden of proof (unlawful, against contracts evidence, and intent to cause in negligent or malignant way)

• Shares → Dilution

  • Funding

  • Writing off expenses

  • Health insurance

• Income tax, capital gains tax

• Real estate

• Writeoff expenses (deductions, charity as company)

• Gross profit drops