How to choose a legal business structure for your new business

How To Register A New Business

Choosing the best legal business structure for your El Paso Business.


When starting a new business here in El Paso, Tx, Las Cruces NM or anywhere else, you have many decisions to make. Of all the choices you make when starting your business, one of the most important is choosing a legal business structure for your new company. Below is a list of business registration types and a bit of information to help you make a better decision. This decision has very important financial implications because how a business is organized legally influences the risks that the firm’s owners must bear, how the firm can raise money, and how the firm’s profits will be taxed, personal finances, credit availability, and even what you can and not do as far as employee management and company culture. The three most common legal forms of business organization are the sole proprietorship, the partnership, and the corporation. Stop asking yourself which type of business is best or how to choose the best legal structure for my business – More businesses are organized as sole proprietorships (LLCs) than any other legal business form, but the largest businesses are almost always organized as corporations. Even so, each type of organization has its advantages and disadvantages. Here is the list:


El Paso TX Sole Proprietorship Business

A sole proprietorship is a business owned by one person who operates it for his or her own profit. About 61 percent of all businesses are sole proprietorships. The typical sole proprietorship is small, such as a bike shop, personal trainer, or plumber. The majority of sole proprietorships operate in the wholesale, retail, service, and construction industries. Typically, the owner (proprietor), along with a few employees, operates the proprietorship. The proprietor raises capital from personal resources or by borrowing, and he or she is responsible for all business decisions. As a result, this form of organization appeals to entrepreneurs who enjoy working independently. A major drawback to the sole proprietorship is unlimited liability, which means that liabilities of the business are the entrepreneur’s responsibility and that creditors can make claims against the entrepreneur’s personal assets if the business fails to pay its debts.

Sole proprietorship is a business owned by one person and operated for his or her own profit.

Business Partnerships

A business partnership consists of two or more El Paso business owners doing business together for profit. Partnerships account for about 8 percent of all businesses, and they are typically larger than sole proprietorships. Partnerships are common in the finance, insurance, and real estate industries. Public accounting and law partnerships often have large numbers of partners. Most partnerships are established by a written contract known as articles of partnership. In a general (or regular) partnership, all partners have unlimited liability, and each partner is legally liable for all of the debts of the partnership.

Limited liability company (LLC) are allowed in most states, the LLC gives its owners limited liability and taxation as a partnership. But unlike an S corp, the LLC can own more than 80% of another corporation, and corporations, partnership, or non-U.S. Residents can own LLC shares.

Limited liability partnership (LLP) partners are liable for their own acts of malpractice, but not for those of other partners. The LLP is taxed as a partnership and is frequently used by legal and accounting professionals.

Types of Business Corporations

A corporation is an entity created by law. A corporation has the legal powers of an individual in that it can sue and be sued, make and be party to contracts, and acquire property in its own name. Although only about 20 percent of all U.S. businesses are incorporated, the largest businesses nearly always are; corporations account for roughly 80 percent of total business revenues. Blue Pearl Bookkeeping can help you better understand what’s the best choice and how to register a new business in El Paso Texas. Although corporations engage in all types of businesses, manufacturing firms account for the largest portion of corporate business receipts and net profits. The owners of a corporation are its stockholders, whose ownership, or equity, takes the form of common stock or, less frequently, preferred stock. Unlike the owners of sole proprietorships or partnerships, stockholders of a corporation enjoy limited liability, meaning that they are not personally liable for the firm’s debts.  Their losses are limited to the amount they invested in the firm when they purchased shares of stock. For example, popular with startups, with the exchange of shares for investment Stockholders expect to earn a return by receiving dividends—periodic distributions of cash—or by realizing gains through increases in share price.  Because the money to pay dividends generally comes from the profits that a firm earns, stockholders are sometimes referred to as residual claimants, meaning that stockholders are paid last, after employees, suppliers, tax authorities, and lenders receive what they are owed. If the firm does not generate enough cash to pay everyone else, there is nothing available for stockholders. As you launch your business, consider the long term growth plan of your company and decide if your business will require substantial investment, property, equipment and or eventual partnerships with new or existing companies.


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Other Limited Liability Organizations

A number of other organizational forms provide owners with limited liability. The most popular are limited partnership (LP), S corporation (S corp), limited liability company (LLC), and limited liability partnership (LLP). Each represents a specialized form or blending of the characteristics of the organizational forms described previously. What they have in common is that their owners enjoy limited liability, and they typically have fewer than 100 owners. When you are ready to register a new business here in El Paso Texas, you can also feel free to contact me directly or sending me an email to

S corporation (S corp) is a tax-reporting entity that allows certain corporations with 100 or fewer stockholders to choose to be taxed as partnerships. Its stockholders receive the organizational benefits of a corporation and the tax advantages of a partnership.


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Blue Pearl Bookkeeping and tax accounting services in el paso texas Blue Pearl Bookkeeping and Tax Services is a full-service tax and accounting business located in El Paso, Texas serving clients throughout the El Paso and Las Cruces New Mexico region. I am dedicated to providing my clients with professional, personalized services, and guidance in a wide range of financial and business needs. Whether you are an individual or business, Blue Pearl Bookkeeping & Tax Services has years of valuable experience assisting professional with their accounting needs. Call me today for your first consultation and receive 15% off total monthly services for the first 3 months! 

Contact Your El Paso’s Best of The Border Bookkeeper

Perla Diaz at (915) 996-3387

  • Need Help To Register A New Business Here In El Paso?
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  • Contact Perla Diaz At Blue Pearl Bookkeeping (915) 996-3387