Business Law Frequently Asked Questions
Why do I need to incorporate my business or form a limited liability company?
Incorporating your business or forming a limited liability company allows you to protect yourself from individual liability. Meaning, if someone sues your company they should not be able to sue you personally. Also, if that person receives a judgment in their lawsuit for a large amount of money, your personal belongings will not be subject to that judgment. It is important to think about protecting you and your family and everything you have worked for in the event that someone does sue your company. Incorporating your business or forming a limited liability company allows for that protection. There are also several tax advantages to incorporation depending on what type of entity you create.
What are anti-trust laws?
There are several different anti-trust laws that have been created by both the federal and state governments. These laws allow the government to regulate business and ensure that they are conducting fair and honest transactions. The government wants healthy competition but does not want this competition to negatively affect you as a consumer. For instance, a power company uses unfair and deceptive tactics in your home city to put all other power companies out of business. Now, because they are the only option for you to receive needed power, they raise their rates. This traps you and every other member of your town in a contract where you are paying twice as much for power than what you should be. This is where anti-trust laws come in. The government would regulate that power plant and not allow them to put other power plants out of business by using unfair and deceptive practices. That power plant is forced to be competitive by offering you and your family a lower rate or things like promotions to get your business.
What are Texas Deceptive Trade Practices?
The Texas Deceptive Trade Practices Act is an act that was made law by the Texas legislature. The act is designed to protect you from businesses who would try and use false or misleading practices to get your business and leave you with a product or service that is less than what you expected when making the decision to purchase. There is a very long list found within the Act itself that states exactly what would be considered a “deceptive trade practice”. Primarily, this list states that a business or a person can not lie to a consumer about what they are receiving, whether it is a product or a service. For example, you go to a repair shop and leave your vehicle with them to be repaired. They call you and say you need $3,000.00 worth of parts they had to purchase brand new from another company. They even present you with an invoice showing they paid that amount for those parts. Somehow you discover that not only was the invoice fake but they used parts they salvaged from a salvage yard. This is a deceptive trade practice and you can bring a suit against them under this Act. Now, that is an extreme example, but many things can fall under the Act. If you have a question about whether or not your situation is covered under this Act, contact a lawyer right away.
What is LLC formation?
Formation of an LLC or a limited liability company is advantageous in that it protects you from personal liability in the event the LLC is sued and provides certain tax advantages. Formation of an LLC requires the proper form to be submitted to the Texas Secretary of State. Upon receiving that form and the proper filing fee, the LLC is considered formed (unless you request a different formation date). Some important steps in the process of forming an LLC are to first check with the Secretary of State to ensure that the name you want to use for your LLC is available. The Secretary of State will not allow two LLC’s with the same or similar name to operate within the same geographic location because it would be confusing to consumers. Once you have discovered the name is available, the next step would be to begin filling out the forms for formation and submitting them to the Secretary of State’s Office.
What is an EIN number?
When forming a business, a person must also apply for and receive an EIN number. EIN stands for Employer Identification Number. This number is a unique number assigned to your corporation by the IRS in order for the IRS to identify the business. This number is commonly seen on an Employee’s W-2 and makes the filing of taxes easier on the IRS and the employee.