Texas Business Law

The Four D’s of Business

Our law of corporations goes back 500 years. The first ships that brought settlers to the New World from Europe sailed under corporate charter. Claimants have had a long time to pierce corporate veils and to establish corporate director and officer liability of corporations. The typical Incorporation carries with it laws that can impose personal liability on owners, directors and officers.

Business 101: Despite vulnerability of corporations, most business owners and their professionals remember only what they learned in about three types of business forms: sole proprietorship, partnership and corporation. All of these forms carry with it the problem of:

However, there’s a fourth D. Business owners spend so much time worrying about their business that they don’t think about losing their interest in the business itself – “decapitation” –  through a divorce, through a judgment against them or through other means by failing to properly organize their business.

Incorporate? Fortunately, over the last 10 years or so, a legal expansion of available business structures, which help with the issues faced by business owners, have become available. Some of these are:

Conversion: By conversion to the correct business structure, you can see a dramatic reduction in personal liability. Taxes at the company level may be avoided and you have much more ability to deal with the four D’s.

Painless conversion allows you to keep the same EIN number and your status with vendors, banks, credit, and other favorable business relationships. If you desire, you may keep your same tax positions as you have now or you can change the form of how you are taxed in most cases. In addition to business structuring and conversions, our attorneys also handle:

 

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