1.What types of partnerships does Texas recognize?
Texas recognizes several types of partnerships, including general partnerships (GPs), limited partnerships (LPs), and limited liability partnerships (LLPs).

2.Is it necessary to register a partnership in Texas?
General partnerships are not required to register with the state of Texas, but creating a partnership agreement is advisable. Limited and limited liability partnerships must also file their Certificate of Formation with the Texas Secretary of State.

3.What is a Certificate of Formation, and how do I file it for an LP or LLP in Texas?
A Certificate of Formation is a legal document that officially registers an LP or LLP with the state. You can file this document with the Texas Secretary of State's office, either online or by mail, along with the required filing fee.

4.Do I need a written partnership agreement for a Texas partnership?
While not legally required, having a written partnership agreement for any cooperation in Texas is strongly recommended. This document outlines the partnership's roles, responsibilities, and terms and helps prevent misunderstandings.

5.How are profits and losses taxed in a Texas partnership?
In a Texas partnership, profits and losses pass through to the individual partners, who report them on their tax returns. Texas does not impose state income tax on associations.

6.Can a Texas partnership have foreign partners or operate in other states?
Yes, a Texas partnership can have partners who reside outside the state and conduct business in other states. However, it may need to register as a foreign entity in those states if it meets specific criteria.

7.What are the liability implications for Texas partnerships?
In a general partnership (GP), partners have unlimited personal liability for the partnership's debts and obligations. There is no filing or written agreement required to form a GP and therefore it is the easiest to form but yet also the most dangerous because of the lack of any formality and the unlimited risk to each partner.
Limited partners in a limited partnership (LP) have limited liability, while general partners in an LP are personally liable. Limited liability partners (LLPs) enjoy little liability protection.

8.How do I withdraw or dissolve a Texas partnership?
The process for dissolving a Texas partnership depends on the type and terms outlined in the partnership agreement. Generally, it involves a partner vote and the distribution of assets and liabilities.

9.Are there any annual reporting requirements for Texas partnerships?
Texas does not require yearly reports for general partnerships. Limited and limited liability partnerships must file periodic reports with the Texas Secretary of State.

10.Can I convert a Texas partnership into another business structure, like an LLC or corporation?
It is possible to convert a Texas partnership into a different business structure. Partners must follow the specific requirements and procedures for conversion. Consulting with an attorney is also advisable.

11.Is forming a partnership advisable, whether it is a GP, LP, or LLP?
Due to the pitfall and liability issues, it is important to understand that people that associate to carry on a business for profit can fall into a partnership unintentionally.  It is important to speak to a Business Attorney and Tax Professional to understand the risks and benefits that may come with forming a partnership informally or through my formal means of filing for an LP or LLP.


Copyright by Cohoon Legal 2023.
DISCLAIMER: The information you obtain at this site is not, nor is it intended to be, legal advice. Any links to outside websites does not mean that Cohoon Legal endorses or is any way affiliated with the third-party website or company and no liability exists or is created through the link. You should consult an attorney for advice regarding your individual situation.

Forming a small business in Texas is an exciting endeavor filled with opportunities and potential for growth. However, it's essential to be aware of the various regulatory bodies and requirements that govern business operations in the state. In this blog post, we'll explore four crucial aspects that small business owners in Texas need to be aware of: the Secretary of State (SOS), the Office of the Attorney General (OAG), the Texas Comptroller of Public Accounts, and the Texas Workforce Commission (TWC).

1. Secretary of State (SOS): The Secretary of State in Texas can significantly affect small business owners by overseeing various aspects of business registration, compliance, and regulation. Their office is vital in facilitating the legal operation of businesses in the state, which can impact the ease of doing business. 

• Business Formation and Registration: The Secretary of State's office registers businesses in Texas, including sole proprietorships with an assumed name (DBA), partnerships, corporations, and limited liability companies (LLCs). Small business owners must register their interactions with the Secretary of State to operate legally. The ease of registration, the availability of online services, and the processing time for business filings can all affect small business owners' ability to start and operate their businesses.
• Business Records and Information: The Secretary of State maintains records and information related to businesses in Texas. Small business owners often rely on these records for various purposes, such as verifying business names, conducting due diligence on potential partners or investors, and accessing public information about other businesses.
• Trademark and Trade Name Registration: Small businesses often must protect their brand through trademark registration. The Secretary of State's office oversees the registration of business trade names and trademarks, which can impact small business owners' intellectual property rights and brand protection.
• Regulatory Compliance: The Secretary of State's office may ensure that businesses comply with various state regulations and requirements. Small business owners may need to navigate these regulations, and the Secretary of State can affect the ease or complexity of compliance processes.

2. Office of the Attorney General (OAG): Protecting Your Business and Consumers-
The OAG in Texas is vital in protecting businesses and consumers. Small business owners should be aware of several key areas the OAG oversees:

• Consumer Protection: The OAG enforces laws that protect consumers from deceptive trade practices, fraud, and unfair business practices. Small businesses must be transparent and honest in their customer interactions to avoid legal issues.
• Contractual Agreements: Ensuring your business's legally sound contracts are essential. The OAG can guide you in drafting contracts that protect your interests and comply with state laws.
• Collections and Debt Recovery: If your business faces difficulties collecting customer payments, the OAG can provide information on legal debt collection practices.

3. Texas Comptroller of Public Accounts: Managing Business Taxes-
The Texas Comptroller of Public Accounts oversees taxation and revenue collection in the state. For small business owners, understanding your tax obligations is crucial:

• Sales Tax: Depending on your business activities, you may need to collect and remit sales tax to the state. It's essential to calculate and report sales tax to avoid penalties accurately.
• Franchise Tax: Many businesses are subject to the Texas franchise tax based on the business's margin.  The deadline usually falls on or around May 15th but check the website for the exact deadline.  All businesses must file the Texas Franchise Tax Form, but there are No Tax Due reports if you fall under the minimum revenue; again, check the website as the threshold can change through legislation.
• Online Sales: If your business conducts online sales, be aware of the state's rules regarding sales tax on e-commerce transactions.

4. Texas Workforce Commission (TWC): Navigating Employment Regulations-
For businesses with employees, the Texas Workforce Commission is a critical agency to understand:
Unemployment Insurance: If you are an employer, you may be required to pay unemployment insurance taxes to supply benefits to eligible workers who become unemployed.

• Labor Laws: Familiarize yourself with Texas labor laws, including minimum wage requirements, employee classification (e.g., exempt vs. non-exempt), and workplace safety regulations.
• Workplace Discrimination: The TWC enforces laws prohibiting workplace discrimination, including race, gender, age, and disability. Small business owners should create an inclusive and respectful work environment.

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In conclusion, running a small business in Texas requires more than just a great product or service – it demands a thorough understanding of the regulatory landscape. The Secretary of State, Office of the Attorney General, the TWC, and the Texas Comptroller of Public Accounts all play essential roles in ensuring fair business practices, proper business forms and filings, taxation, and compliant employment policies. By staying informed and proactive, small business owners can navigate these aspects effectively and lay the foundation for a successful and sustainable business journey in the Lone Star State.


Copyright by Cohoon Legal 2023.
DISCLAIMER: The information you obtain at this site is not, nor is it intended to be, legal advice. Any links to outside websites does not mean that Cohoon Legal endorses or is any way affiliated with the third-party website or company and no liability exists or is created through the link. You should consult an attorney for advice regarding your individual situation.