What is the cost of starting a Texas business?
Texas has a business entity formation fee. The cost to form an LLC or corporation starts at $300 You’ll need to pay $25 if you file a DBA. Other startup costs include inventory, renting physical space, or hosting your website. Every business has different startup costs.
Is it difficult to start a Texas business?
It is easy to file your Texas business formation papers. It takes only a few minutes to complete the simple process. It can be difficult to start a business in any country. You must find funding, write the right business plan, and find customers.
What are the requirements for Texas to open a business?
Texas requires that certain types of businesses form papers. Other requirements could include permits or licenses from the state or local government depending on the type of business that you are operating. Texas is known for being a business-friendly place.
Texas has everything. The total population and the number of small businesses that serve it are both larger. Texas is home to more than 3,000,000 small businesses, 99.8% of which employ nearly 5 million Texans. Texas is one of the most popular states for starting a business. This article will show you how to start a small business here in Texas. We also discuss the first tasks that you should complete.
These are the seven steps to get your Texas business started.
1. Find the right business idea
Before starting one, you must have an idea you can make into a profitable business. Find a niche market that needs your product or service and find a way to fill it.
2. Start with a Business Plan
The most fun part of starting a business is creating the business idea. It’s important to have a business plan in place to ensure your business succeeds.
This plan will allow you to map your business opportunities, your target market, and how you intend to generate sales. You’ll also be able to create a financial plan to help you protect your business’s profitability within the first year. This will help you determine how much money you will need and whether or not you require funding. Learn more about how to write a business plan.
3. Register Your Business
To become legal entities, certain types of business entities will need to file paperwork with Texas. It is easy to file the formation papers once you have decided which type of business entity you wish to use. The Texas Secretary of State’s portal allows you to file your formation papers and receive a confirmation. You will soon receive the paperwork in the mail.
Select the right business entity
You have many options for choosing the right entity for your business. Each type of entity has its own rules and benefits, both in terms of taxation and operation. You can choose from:
- Limited Liability Company: Small businesses in Texas can register as LLCs. This entity provides liability protection and allows you to manage your taxes flexibly. Find out more about how to create an LLC in Texas. You must file a certificate of incorporation with the state to create it.
- C Corporation: Because it can divide the company’s stock into multiple shares, a C corporation should be the preferred business entity for public companies. If the owners have raised significant capital, they are unlikely to choose this option for smaller businesses. You must file a certificate of incorporation to create it.
- S Corporation: Most people refer to a corporation as the C-corp mentioned above. However, there is another type that offers tax benefits to its owners. This is subchapter “S,” a tax classification that avoids double taxes. Find out more about S corporations. S-corps are simply tax designations and can be registered with the state similarly to C-corps.
- Sole Proprietorship A sole proprietorship refers to a business owned and managed by one person. The individual is responsible for all finances and liability. To form this business, there are no state forms.
- General Partnership You can form a general partner if you are partnering with at least one person to start a business. To form an entity, you don’t need to file paperwork with the state. You and the state are jointly responsible for the debts of your partnership.
- Limited Partnership If you are a general partner or limited partner in a business, you can file a certificate of formation with the state. While the limited partners can only be held liable to the value of their investment in the company, the general partners are personally responsible for any company debts.
If you plan to do business under another name than your own or the name of the company formed through filing paperwork with the state, you may need to file a Doing Business As (or DBA) with Texas. This informs the state who is running the business and who is responsible.
Choose the right business name
Before registering your company with the state, ensure that any other business isn’t using the name. To find out if your name may be available, you can do an online search at a cost up to $1 per search. You will need to pay this fee, so you don’t slow down your application and can have confidence that your chosen domain name can be legally purchased or used in marketing materials.
Apply for a Business EIN
The federal government will use your employer identification number (EIN), to identify your company. IRS.gov allows you to apply online for an EIN. It is easy, quick and free. This information is needed to file taxes for certain businesses and to hire employees.
Find the steps to how you can get an EIN.
Select a registered agent
A registered agent is an entity or person responsible for obtaining important legal documents on your behalf. A registered agent is required for any business that files documents with the state.
The registered agent can be notified if someone files a suit against your company. Your registered agent should be reliable and check the mail. You can either serve as the registered agent or hire a registered agent to take care of this responsibility.
Get a Business License
After registering your Texas business entity, it is important to check which federal, state, and local business licenses are required before starting operating. There are many licenses that you will need for different professions and industries. These licenses can be difficult to obtain, so apply as soon as possible. Find out more about Texas business licensing.
Apply for a Texas sales tax permit if your business intends to sell taxable products and services.
4. Register for a Business Bank Account
You can open a bank account to separate your personal and business finances. You could lose the protection you have created for your business entity by combining personal and business funds. If you are audited, this can also cause problems.
5. Get Business Insurance
Insurance for businesses provides financial protection in case of an accident or natural disaster. Insurance can also be purchased to protect your company from financial losses. There are many types of business insurance, including general liability, business income, and commercial property insurance. It’s risky enough to run a business without worrying about potential liability.
6. Take into account the applicable business software
You’ll need to streamline your business operations as you start your business or grow your company.
These are the top software tools for small businesses:
- Accounting software: This will help you keep track of your finances. This can be very helpful regarding tax time, especially if your finances are being audited. For more information, visit the best accounting program for small businesses.
- Point of sale (POS) software: To process transactions online or face to face, you will need a point of sale (POS) system. To process transactions in person, you will need additional hardware.
- Payroll software If your employees are employed, you will have to pay them. It can be difficult to understand all the filing and tax requirements. You could also face a fine if you make mistakes with payroll taxes. The best payroll services will take care of everything.
- Customer relationship management, This tool allows you to keep track of potential customers as well as where they are at each stage of the sales cycle. This tool can prove invaluable in the early stages of a business’s growth. Sales are vitally important. Find out more about the best CRM system for small businesses.
Even if your company is not looking to use any of these software systems right now, it’s a good idea to know what options are available to you to find the support you need later.
7. Get Financing
Having enough money to cover your expenses when you operate a business is essential. To account for the slow growth many businesses experience before becoming profitable, most businesses need six to one year’s worth of expenses in the bank.
These are some of the possible types of financing that you could access:
- Small business loans: Your bank or credit union can provide a small loan for your business. While most business loans require two years of income, some can provide capital for new ventures. Find out more about the best start-up loans.
- Capital raise: Investors can help you raise capital. They will buy a part of your company in return for capital.
- Small business grants You may apply for small business grants based on your industry. Capital donated to businesses like yours can be accessed.
- Savings You may also borrow your savings to start your business. This is how many successful entrepreneurs choose to go, which has proven to be a good investment.
You have now secured the funds and are ready to open your doors. The first step in forming your Texas business entity is registering it with the state.
There are many things to do, from marketing your product or offering services to collecting payments and paying employees.
It can be rewarding to start a Texas business. But you must plan well and ensure that all administrative tasks are completed correctly.