The State of Texas generates many small businesses each year. One reason is that it is a friendly state for entrepreneurs. One example is the Texas Limited Liability Company Act which allows a business to be run through an asset protection entity known as a Texas limited liability company. This vehicle offers many advantages and benefits for business which are helpful to every person operating a business in Texas.

The most important benefit of a Texas LLC is that owners are not personally liable for the business debts and liabilities of the company merely because they are owners. This is not the case if you do not use an entity like this and run your business as a sole proprietor. Sole proprietors are 100% personally liable for whatever happens in their business. And, as recent lawsuits reveal, many lose their homes, savings and assets because of this.

But the Texas LLC protection takes this sole proprietor risk away as long as your Texas LLC is properly formed and used to operate a business. This is a huge advantage and makes it a no brainer if you are deciding whether to use one. The costs to form and maintain one is so low compared to the potential value you can measure of keeping your personal assets protected. In today's world where people sue for anything and small business lawsuits are an epidemic, this is an essential protection you need for business.

A second benefit of using this kind of vehicle for your business is that the Texas LLC is an official entity and the use of one automatically distinguishes you from all the non-legal entity businesses out there. Potential customers view official legal entity businesses as more trustworthy and professional so this can help with getting your business started and obtaining customers.

Federal income tax choices is the thir benefit of a Texas LLC. The IRS allows a limited liability company in Texas to only be subject to a single layer of taxation automatically. This is a tremendous advantage over C corporation taxation which involves profits being subject to taxation twice (double taxation). You do not have to worry about qualifying or meeting the requirements of S corporation taxation either. With a Texas LLC, you get pass through taxation period. Or, if your accountant finds that your business will be better off under a corporation taxation structure, the Texas LLC is eligible to change its structure by making an election.

Another benefit is that a Texas LLC is very simple to manage and operate. Unlike corporations, there are no legally mandated formalities or structures when it comes to management and operations. In fact, the law allows for the owners to decide what rules and processes will apply to their business.

Flexibility becomes a real benefit in an actual business setting. This is because every business is different and this allows a business to structure itself in accordance with its own needs and concerns versus having to fit in to a one size fits all structure. Simple and small businesses can have an extremely simple management structure while more complicated LLC businesses can adopt the necessary governance processes and rules to meet their needs.

In summary every business owner in Texas should form a Texas LLC as the first step when it comes to starting a business.