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Arboretum Plaza One, Suite 500 9442 Capital of Texas Highway North (at 183) Austin, Texas 78759 Phone: 512-343-3645 Fax: 512-401-2036 Services available in Chinese and Japanese.

Texas Business Entities Comparison Chart

Form of Business	Cost to Register	Owner Personally Liable (If Adequately Funded)	Who Governs Business	U.S. Taxes	Texas Taxes
Sole Proprietorship	$25	yes	self	on personal tax form (1040)	not taxed
Limited Liability Company (one individual)	$300	no	self	on personal tax form (1040)	see note 1
Limited Liability Company (one business member)	$300	no	member	taxed like business member	see note 1
Limited Liability Company (multiple members)	$300	no (manager may be liable)	members or manager	can choose to be taxed as a corporation (LCC is taxed and members are taxed on distributions to them) or as a partnership (only members taxed)	see note 1
General Partnership (general partner + one or more limited partners)	$200-$750	general partner only (unless limited partner acts like a general partner)	general partner (limited partners may vote on some questions)	limited partners taxed on distributions; general partner taxed according to its form of business entity	exempt if all partners are individuals; if not, see note 1
Limited Liability Partnership (general partner + one or more limited partners)	$200-$750	no	passive; receives funds from others	limited partners taxed on distributions	exempt if passive limited family partnership, see note 2
S Corporation (shareholders must be US citizens or permanent residents)	$300	no	shareholders elect directors; directors appoint officers	corporation not taxed; shareholders taxed on distributions	see note 1
C Corporation	$300	no	shareholders elect directors; directors appoint officers	corporation taxed; shareholders taxed on distributions	see note 1

Notes
1. 1% tax on gross annual income after deducting either "cost of goods sold" or "compensation" and deductible benefits for federal tax purposes is $300,000 or more; .5% tax rate for certain low margin businesses. Corporations and parnerships (and businesses taxed as corporations and parnerships) are required to calculate their "gross annual income in different ways.See "The New Texas Margin Tax" for further clarification.
2. Passive limited family partnership must derive 90% of its gross income from interest, dividends, partnership allocations, capital gains and royalties.