Texas Business Organizations Code is one of the oldest laws in Texas. It was originally written in 1975 to govern how Texas businesses are organized and operated.
However, it is actually much older than many of the new state laws that have been passed over the years. The Texas Business Organizations Code was first adopted as a result of a landmark case in Dallas County called Texas Standard Oil Co. v. Shapiro.
The plaintiffs in this case brought suit against the US Federal government for violating the Sherman Antitrust Act when it sued them for alleged monopolistic practices. They charged that the US Department of Justice had illegally pressured them into surrendering control of their business and merging with another corporation. That case made it illegal for companies to compete with each other by eliminating all their competition.
Because of this decision, the law was amended to include the phrase “business organizations code” in order to refer to a broader category of businesses than just “corporations.” If a business was a corporation, they could not be considered part of the “business organizations code” or be forced to register under it. However, if the business was a partnership, partnership interest, limited liability company, unincorporated association, etc., they were included in the umbrella of that code.
As a result, the original Texas Business Organizations Code was changed to reflect that there are different types of businesses in Texas. What follows is a basic description of the different types of business organizations in Texas.
Limited Liability Partnership – A partnership is a business organization that allows a group of people to form a business and use one business name instead of two. As an example, if a business is called Bear, there can only be one Bear. However, if the business is called Deer, it can have a name that includes both “Bear “and “Deer.” In this type of business, there is no separate entity for each business name.
Cooperative Limited Partnership – This type of business organizations in Texas is different from a partnership. Unlike a partnership, this type of business organization has two owners (Cooperative Limited Partners) who own the business, and whose individual interests are divided among their partners.
Corporation – This is the largest type of business in Texas, which is commonly referred to as a “C corporation.” Under Texas law, a C corporation is a business that is owned by the stockholders of a corporation. This type of business organization is treated differently than an LLC or LLLP because of the similarity of the names.
Limited Liability Company – While this type of business organization is not as popular as an LLC, it is a similar structure. The difference between the two types of business organizations is the fact that it allows members to control their business directly instead of having to share it with others.
Limited Liability Partnership – A partnership is a business organization that does not have all of the same restrictions as a corporation. While a partnership cannot be controlled by any one person, an LLC is one that can have more restrictions than a partnership. That is because an LLC can have a limited liability company with as many members as it wants.
Individual Retirement Account – IRAs are specifically intended to allow an individual to make tax-free contributions to his or her account. One common exception to this is that an IRA can also be used for your business, as long as you have the necessary tax identification numbers.
Texas Business Organizations Code can be complicated and difficult to understand. If you’re going to file a business ownership form, or anything that has to do with your business, make sure you get the right help with your Texas Business Organizations Code.