What are the advantages of a Texas LLC over a Texas corporation?
One of the advantages of forming an LLC in Texas over a corporation is protection against “outside liabilities.” As long as the LLC is distinct from its owners, is adequately capitalized, and is not used to perpetuate a fraud, then, the LLC as well as a corporation will protect its owners from inside liabilities and inside creditors (This means that the member cannot be held personally responsible for the LLC’s debts and obligations and the member’s personal assets are shielded from the LLC liabilities). The multi-member LLC also protects the LLC (and thus the other members of the LLC) from outside liabilities and outside creditors. See the Texas LLC section of our Website for a discussion on “inside liabilities” versus “outside liabilities.” An outside creditor with a judgment against one member of the LLC is only allowed to take whatever actual cash distributions are made by the LLC. Unlike the usual corporation, the outside creditor cannot force a distribution or demand any portion
