Thinking of registering your new business in Texas?
Are you wondering whether this is the right state for doing so? Then we can tell you Texas offers plenty of benefits for business owners. Those include limited liability, privacy, and a favorable tax climate.
Besides that, it is also home for an environment conducive for businesses, especially SMEs. In fact, those modest-sized organizations are driving a massive part of the Texan economy.
We thought we’d lend you a hand and describe what the process of starting a business entails. So, get right on to form your own business in Texas with these tips:
Begin with a plan
Many experts on the subject still undervalue this step to starting a business. But we won’t make that mistake — and neither will you! Begin by forming a business plan and not just because you need investors for your new venture.
A business plan comes with another huge benefit. When you create the roadmap to where you want to go, you pluck great ideas out of your entrepreneurial head. Then you translate those on paper as you visualize ways of getting to your destination.
Don’t overcomplicate this task. Just iron out the important stuff before moving on to this step…
Choose the structure
You’ll need to consider two main things when selecting a business entity type in Texas. Firstly, as a potential business owner, how big a hand does you want in governing the operation of your organization? For small-sized organizations where one individual owns the whole enterprise, a sole proprietorship or single-member LLC will be a great choice.
However, if you dream of starting a larger organization and are working with others, then we’d suggest the traditional corporate form. Regardless of choice, you make now; you can always convert your business type later.
The second consideration would the type of tax treatment. You’re looking at double taxation with a traditional corporation but not with an LLC. Getting legal help in the initial stages of Texas Business Formation will lead you to better choices.
Picking the name
So, you have decided on the entity type, and you are armed with a plan. Now, you need a name – one that will make your business distinguishable from many others existing in the file with the Texas Secretary of State (SOS).
You can do a name search on the SOS website. Select one out of the available names that speak to you the most and reserve it. SOS allows you to ponder on the issue for 120 days, provided you submit an Application for Reservation.
We’ll cover the issue of securing a domain below – a must for online businesses. But whether online or not, run a federal and state trademark search. Check if the name of your choice is too similar to one that a business is already using. If it is, we’d recommend going with another one!
Form the business
By registering your company, so that it becomes a Texas business entity, you will gain many advantages. It increases your credibility, which is precisely what a newcomer needs. Moreover, it will protect from personal liability if someone sues your business.
However, failing to register means you will be personally responsible for any liabilities and debts associated with your business. Unregistered business owners may also need a DBA or a Trade Name.
Secure a domain
Online businesses will significantly benefit if they register their business name as a web domain. Just like with the latter, you will have to carry out a search to check for availability.
Additionally, say that you plan to go online but not for many years. We’d still suggest that you acquire the URL with your business name. Build a website when you’re ready, but having the URL will prevent others from acquiring it.
Once you have the domain name, set up a professional email account that ends each email address with @yourcompany.com. Google’s G Suite can make the process much easier for you.
Register for taxes
There may be some exceptions, but it is likely that your organization will require a Tax ID or Employer Identification Number (EIN). This number will be useful in identifying your business when you file for federal tax. Not having it will also mean that you won’t be able to open a business bank account or hire employees!
Other taxes that could apply to your company include the Texas Sales Tax – for those who sell a physical product – and Unemployment Insurance Tax – for those hiring employees in Texas. Register for those, if you’ll need them.
Acquire permits and licenses
Instead of a general business license, you may have to need a specific license or permit. The Department of Licensing and Regulation can guide you best.
Honor other obligations
These can include disability insurance — for your employees and registration with the Texas Workforce Commission (TWC).
After all this, you will be good to go and may begin hiring your first employees!