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Business

A business is an organization engaged in the selling of goods and services, and may include for-profit businesses that distribute profits to the owners of the business, and non-profit businesses organized under rules that prohibit distribution of profits to the owners of the business.

In Texas, businesses can operate as for-profit entities or non-profit organizations. For-profit businesses are established with the intent to earn profits for their owners or shareholders and can include various forms such as sole proprietorships, partnerships, limited liability companies (LLCs), and corporations. These profits can be distributed to the business owners in the form of dividends or other distributions. Non-profit organizations, on the other hand, are created for a public or mutual benefit other than the pursuit or accumulation of profits for owners or investors. Texas non-profits are governed by the Texas Non-Profit Corporation Act and must adhere to specific regulations that prohibit the distribution of profits to their members or directors. Instead, any surplus funds must be reinvested back into the organization's mission and activities. Both for-profit and non-profit entities are required to comply with state statutes, which include registration with the Texas Secretary of State, adherence to tax obligations, and other regulatory requirements specific to their business type and industry.



Texas Statutes & Rules

Federal Statutes & Rules

Internal Revenue Code (IRC) - Title 26 of the United States Code
The IRC is relevant to businesses as it governs federal tax obligations, including how different types of businesses are taxed.

The Internal Revenue Code (IRC) is a comprehensive federal statute that outlines the rules for taxation in the United States. It defines how various entities, including for-profit and non-profit organizations, are taxed on their income. For-profit businesses, such as corporations, partnerships, and sole proprietorships, are subject to income taxes and must report their profits and losses. The IRC also provides guidelines for deductions, credits, and other tax benefits that businesses can claim. Non-profit organizations, on the other hand, are typically exempt from federal income taxes under Section 501(c) if they meet certain requirements, such as being organized and operated exclusively for religious, charitable, scientific, or educational purposes. However, they must adhere to strict rules regarding their operations and the distribution of profits to maintain their tax-exempt status.

Sarbanes-Oxley Act of 2002
This Act is relevant to for-profit businesses as it sets standards for all U.S. public company boards, management, and public accounting firms.

The Sarbanes-Oxley Act of 2002 (SOX) was enacted in response to major corporate and accounting scandals to protect investors by improving the accuracy and reliability of corporate disclosures. It applies to all public companies in the U.S. and includes provisions for corporate governance, auditing, and financial reporting. Key aspects of SOX include the establishment of the Public Company Accounting Oversight Board (PCAOB), requirements for internal control assessments, and enhanced financial disclosures. It also imposes strict penalties for fraudulent financial activity and requires top management to individually certify the accuracy of financial information. While SOX primarily affects publicly traded companies, its principles of transparency and accountability can influence the operations and reporting practices of private companies as well.

Uniform Commercial Code (UCC) - Adopted by individual states
The UCC is relevant to businesses as it standardizes commercial transactions, including the sale of goods and secured transactions.

The Uniform Commercial Code (UCC) is a set of laws that provide legal rules and regulations governing commercial or business dealings and transactions. The UCC regulates the transfer or sale of personal property. It is important for businesses as it standardizes interstate commercial transactions. This includes provisions related to the sale of goods, leases, negotiable instruments, bank deposits, funds transfers, letters of credit, bulk sales, warehouse receipts, bills of lading, and investment securities. While the UCC has been adopted by all 50 states, there may be variations in the code from one state to another. Businesses engaged in the sale of goods or secured transactions must comply with the UCC provisions adopted in the states where they operate.

Federal Trade Commission Act (FTC Act) - 15 U.S.C. §§ 41-58
The FTC Act is relevant to businesses as it promotes consumer protection and the elimination and prevention of anticompetitive business practices.

The Federal Trade Commission Act (FTC Act) established the Federal Trade Commission (FTC) and granted it the authority to prevent unfair or deceptive acts or practices in commerce. Under the FTC Act, businesses are prohibited from engaging in unfair methods of competition and unfair or deceptive acts or practices. This includes false advertising, fraudulent business practices, and antitrust violations. The FTC enforces antitrust laws to promote competition and protect consumers from monopolistic practices. The Act also provides the FTC with the power to investigate corporate behavior and enforce actions against companies that violate its provisions. Compliance with the FTC Act is essential for all businesses to ensure fair competition and to avoid penalties.

Small Business Act - 15 U.S.C. §§ 631-657
The Small Business Act is relevant as it defines what constitutes a small business and establishes the Small Business Administration (SBA).

The Small Business Act was enacted to aid, counsel, assist, and protect the interests of small business concerns. It established the Small Business Administration (SBA), which provides support to small businesses through loans, loan guarantees, contracts, counseling sessions, and other forms of assistance. The Act defines what constitutes a small business and sets the parameters for government support. The SBA also helps small businesses in securing government contracts and provides guidance on meeting compliance with federal regulations. The Act aims to ensure that a fair proportion of federal contracts, grants, and cooperative agreements are directed to small businesses, thereby supporting the vitality of the small business sector in the economy.

Does Choosing the Right Entity for Small Businesses Matter?
While it might be tempting to bypass the formalities and just do business under your name or a chosen business name, there are several compelling reasons why establishing a legal entity is critical.
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