06 / 13 / 2015

Benefits to Incorporating in Texas Over Delaware

When Texas entrepreneurs look to incorporate their business they are often advised to incorporate in Delaware for a wide range of perceived benefits. But is incorporating in Delaware really any better than Texas? For the majority of businesses, filing a business entity in Delaware instead of Texas won’t save them any money and will only increase the amount of hassle involved.

Other than the fact that Texas has one of the strongest economies and largest volumes of LLC’s in the country, there are other benefits to incorporating in Texas over Delaware. We’ve listed some of the benefits that stand out to us.

Partnerships

Texas LLC members have the freedom to create contracts, customize job duties, and define liabilities how they please. Your Texas LLC agreement can waive or change nearly any provision in the Texas LLC Chapter. An LLC agreement “may expand or restrict any duties, including fiduciary duties, and related liabilities that a member, manager, officer, or other person has to the company or to a member or manager of the company.”

An LLC agreement can also define classes of membership that have varying powers, duties, rights, and voting interests. These membership classes can be implemented in everything from major billion dollar companies to small estate planning. Your LLC agreement can be created to accomplish nearly any goal you want.

Protection From Creditors

The Texas LLC Chapter protects its members from their creditors, preventing a creditor from foreclosing on a membership interest. However, the judgement creditor may obtain a changing order and “the judgment creditor has only the right to receive any distribution to which the judgment debtor would otherwise be entitled in respect of the membership interest.”

LLC members may also protect their control of an LLC from other members’ spouses and their own spouses, because while a membership interest may be community property under applicable law, a member’s right to participate in an LLC’s management is not community property.

Texas Series LLC

Texas is one of the few states that offers the benefits of a series LLC, which allows you to get multiple LLC’s for the price of one. That means you can create an unlimited amount of separate series within one LLC. All of the assets and liabilities of each series remain separated from each other. This can be very beneficial for oil and gas deals and multiple real estate holdings.

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