Buy-Sell Agreements: Protecting Your Business When an Owner Exits
Every multi-owner business will eventually face a departure. An owner dies, becomes disabled, retires, gets divorced, goes bankrupt, loses a professional license, or simply wants to leave. Without a buy-sell agreement, the remaining owners and the departing owner (or their heirs, their creditors, or their ex-spouse) are left to negotiate the terms of the buyout in real time, under pressure, with no agreed framework and no predetermined price.
Read MoreForeign Qualification: When Your Business Needs to Register in Other States
A business formed in one state that conducts business in another state must register in the second state as a "foreign entity" before transacting business there. This requirement applies to LLCs, corporations, limited partnerships, and most other entity types, and it applies regardless of whether the business has a physical office in the other state.
Read MoreFounder Equity, Vesting, and What Happens When a Co-Founder Leaves
Most co-founder relationships end before the company does. Research across venture-backed startups shows that roughly 65 percent of companies experience a co-founder departure before Series B. When that departure happens and there's no vesting schedule, no buyback provision, and no written agreement addressing what the departing founder keeps, the remaining founders discover that the equity structure they skipped at formation is now the most expensive problem in the company.
Read MoreLLC or Corporation: How to Choose the Right Entity for Your Business
Every business needs a legal structure, and the choice between a limited liability company and a corporation is the first decision most founders face. Both provide limited liability protection, meaning the owner's personal assets are shielded from business debts and obligations.
Read MoreNoncompete Clauses in LLC Operating Agreements
Your LLC's members have access to its most sensitive information. They know the customer relationships, the pricing strategy, the vendor terms, and the operational methods that make the company work. When a member leaves and takes that knowledge to a competing business (or launches one), you and the remaining members face a problem that's hard to solve after the fact.
Read MoreSeries LLCs in Texas: How They Work and When They Make Sense
A series LLC is a single limited liability company that can create multiple internal divisions, each holding its own assets, conducting its own business, and shielding its liabilities from every other division and from the parent company. Texas Business Organizations Code Chapter 101, Subchapter M authorizes the structure, and it's popular with real estate investors and business owners who want the protection of separate entities without the cost and paperwork of forming dozens of individual LLCs.
Read MoreThe Texas Franchise Tax: Who Owes It, Who's Exempt, and How to Stay in Good Standing
Texas doesn't impose a state income tax on individuals or businesses, but it does impose a franchise tax (sometimes called a margin tax) on most legal entities for the privilege of doing business in the state. Every LLC, corporation, limited partnership, limited liability partnership, professional association, and business trust organized in Texas or doing business in Texas is subject to franchise tax reporting, even if it owes nothing.
Read MoreWhy Texas Companies Form in Delaware and When They Shouldn't
Delaware is the default state of incorporation for venture-backed startups, and it has been for decades. Over 68 percent of Fortune 500 companies are incorporated there. Most venture capital term sheets assume a Delaware C corporation. Attorneys, investors, and acquirers are familiar with Delaware's corporate statute, and that familiarity reduces transaction costs at every stage from formation through exit.
Read MoreWhy Your Single-Member LLC Needs an Operating Agreement
Texas doesn't require single-member LLCs to have operating agreements, and that's exactly why so many owners skip them. The consequences show up when a creditor challenges the LLC's separateness, the owner becomes incapacitated, or a bank refuses to open a business account.
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