A corporation is formed by filing the appropriate documents with the Texas Secretary of State. An S-corporation is a corporation that, once formed by filing with the Texas Secretary of State, files an “S” election with the internal revenue service to be treated as an “S-corporation.” By filing this election, the corporation pays no tax on its income. Instead, corporate income is treated as having been received by the shareholders, and they alone pay income taxes on it.
A partnership is an association of two or more persons to carry on a business for profit. Any person may be a partner in a partnership. A corporation, organization, estate, trust, partnership, or any other legal entity can be a partner in a partnership. A partnership can be one of the simplest, least expensive business entities to form because partners do not have to write or file any particular document. A partnership can be formed by simply writing up a partnership agreement, or a partnership can be deemed to exist by simply evaluating the “factors” promulgated by Texas statutes that indicate whether two people are partners or not.
A limited partnership is a partnership formed with one or more general partners and one or more limited partners and filing a certificate of limited partnership with the Secretary of the State of Texas.
Limited Liability Company
Limited liability companies are formed by filing the appropriate documents with the Texas Secretary of State. If properly structured, an LLC’s owners have both a corporation-style liability shield and the pass-through federal income tax benefits of a partnership.
Limited Liability Partnership
A limited liability partnership is a general partnership in which the individual liability of partners for partnership obligations is substantially limited. Texas limited liability partnerships have three requirements: 1) their name must include “limited liability partnership” or an abbreviation thereof, 2) they must file an application with the Texas Secretary of State along with an extra filing fee of $200.00 per partner, and 3) must carry at least $100,000.00 of liability insurance.