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It is important to remember the business purpose during formation

| Sep 13, 2019 | Business Formation |

Starting a company takes a lot of work. Though many Texas entrepreneurs may be ready to jump right into the actual operational aspects of their companies, it is vital that the necessary paperwork is completed. This paperwork could include having a business purpose in the formation documents.

Though it may seem difficult to think of an overall purpose for a business, that does not have to be the reality of the situation. In fact, it is common for businesses to use a relatively vague statement as their purpose that indicates that the company intends to participate in any lawful business activity. Of course, some entrepreneurs may not feel that a general statement works for their companies and may want to have a more specific purpose. Plus, some state laws require more information.

While it may not be overly difficult to come up with a general business purpose, that purpose must still adhere to the company’s operations. If it becomes clear that the company cannot fulfill the purpose or if the purpose simply does not apply to the business, serious legal issues could arise. In fact, a company could end up having to dissolve if a court determines that a business has an unclear purpose or no purpose at all.

business purpose can have many uses in addition to meeting legal requirements. It can allow entrepreneurs to focus on how they want their companies to operate and what goals they hope to achieve that differs from their mission statements. In order to ensure that their statements adhere to Texas laws regarding these purposes, interested parties may want to discuss the matter with their legal counsel.