How to Start a Small Business in Texas

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Small businesses have been popular all over the United States for numerous reasons – and the same applies to Texas. But how to start a small business in Texas? We will try to answer as many of the most important questions as possible in this article.

After all, starting a business is always a bit risky and it is important to have as much information as possible to minimize the risks and have your business succeed.

In addition, some business-assisting services, such as the WordPress booking plugin Amelia, significantly ease the working process and might help to stabilize your growing business.

Internet businesses have been growing in popularity so you might want to check out some cool online business ideas. If, on the other hand, you want a more traditional startup business, you will see that the same rules apply to those businesses as well.

Table of contents

Table of Contents

How to start a business in Texas: Steps You Should Follow

So let’s talk about how to start a small business in Texas and break it all down to the most basic steps every new entrepreneur should follow.

Make a Good Business Plan

If you aren’t sure how to start a small business in Texas, the first step would be to write your business plan. A good business plan will serve you as a guide for achieving business success and to estimate the costs you will face down the road.

Write down the main goal of your new company, the structure of your business, its financing, and the advantages over the competition in your field. Do your research such as market analysis, the funding possibilities, and similar, and put it all on paper.

Pick a Business Location

When you decide to start your own business, one of the first things you will have to choose is the business location. This is not a decision to be made lightly because it can really impact your business in many different ways.

Do your research and choose a location that will help you stay within your budget while also having access to all the supplies you need as well as to your target customers. Once you pick a location, get familiar with all the laws and taxes that apply there.

Choose a Business Structure

You might already know how to start a company, but do you know which business structure to choose?

There are 2 basic options:

DBA (Doing Business As)

Sometimes an individual or a company want to do business under a different name and that is where the DBA structure comes in handy. DBA, known also as “fictitious business name,” “trade name,” or “assumed name” basically helps you use a secondary name if you already own a business.

Corporation

Another option for starting a small business is creating a corporation. A corporation is entity separate and distinct from its owners. It is usually owned by the shareholders who in profits and losses.

The 3 characteristics of a corporation:

Legal existence – a company can own, buy, sell, enter into a contract, be sued by other companies as well as sue them.
Limited liability – the company and its owners are limited in their liability to the creditors and other obligors
Continuity of existence – the company can operate beyond the life spans and capacity of its owners; the ownership can be transferred to another person as a gift of shares or through a sale.

Choose Your Business Name

When planning how to start a small business in Texas, you will have to choose the right business name. It sounds pretty simple but this is a decision that will impact your business in many ways.

Here are some useful tips:

The name has to be unique, and easy to understand, pronounce, and remember
Make sure that there is no other company out there with the same name; do your research before deciding on a name
Do a trademark search with the US Patent and Trademark Office (USPTO) to be sure the name doesn’t have any conflicts
Be sure your company name choice is available by searching Texas’s Department of State: Division of Corporations business name database; search for variations of spelling, misspellings, sound-alikes etc. to be sure your name is unique

How to Establish a Company: the Financial Aspect

Do you want to know how to start a small business in Texas without money? Well, it is not impossible but only with certain types of businesses. In all other cases, you will have to plan your budget ahead and estimate all the costs down the way.

Luckily, there are several different ways to fund a business. You can apply for a bank loan, a microloan, or for credit through personal financing, crowd funding etc. You can also raise money from friends and family.

Obtain your Federal Employer Identification Number (FEIN or “EIN”)

In EIN is an identification number that every company has to have. If you aren’t sure how to start a business in Texas and get your EIN number, you can learn more by visiting the Texas Department of Taxation and Finance website.

To obtain an EIN you can apply online with the IRS or via IRS Form SS-4.

How to do Business in Texas: Company’s Bank Accounts

When running a business, you can’t simply use your personal bank accounts. You need to keep the company’s finances separate from your own. Get your business credit cards and start to build a company credit profile (corporation or LLC required). As you do that, you will be able to qualify for larger loans later on.

You need to choose a bank or online business banking solution, file the paperwork and you will be good to go in no time.

Top Business Banks in Texas:

Get the Necessary Business Licenses and Permits

Different types of business require different licenses and permits so you might want to consult an attorney before you go apply for one. Visit the SBA site for this. They have lots of resources.

Ongoing and/or Annual Requirements

DBA: DBA is valid for 5 years unless you change company name or other basic information

LLC: Unlike most states, Texas does not require LLCs to file annual reports. They must file annual tax franchise reports with the CPA instead

Corporation: The “Statement of Information” or Annual report has to be filed every year. It updates the state on the basic info about your company. Keep in mind that you will pay a $400 late fee if you don’t make the May 1 deadline.

Franchise Taxes: When you start a new business in Texas, you will have to file an annual report with the Texas Comptroller of Public Accounts, due May 15 every year. If you don’t do it in time, you will face a $50 penalty.

Other things to know about starting a small business in Texas

How to start a small business in Texas? First, you have to know that your corporation will be overseen by the Corporations Section of the Office of the Secretary of State (commonly known simply as the Section).

All your necessary paperwork will be submitted to the Section. Also, if you need additional permits and/or licenses, you need to get in touch with the Texas Department of Licensing and Regulation.

The cost to Incorporate in Texas

The cost to incorporate a business in Texas depends on a number of things. For example, if you want to start a for-profit corporation, you will have to pay a $300 filing fee. If, on the other hand, you want to start a non-profit corporation, the fee will be only $25.

Starting an LLC in Texas

How to start an LLC in Texas? You should provide all the necessary information to incorporate.com and submit the Texas LLC application online to the Texas Office of the Secretary of State.

We will continue to talk about LLC in Texas in more detail below

Texas LLC Forms and Filing

In order to start your LLC in Texas, you will have to file a Form 205 Certificate of Formation for a Limited Liability Company, as well as get a federal tax ID number.

Texas LLC Costs

When you think about how to start a new business, you should also take all the costs and expenses into account at the very beginning.

To get an LLC certificate in Texas, you will have to pay a fee of $300. It is a one-time fee that everybody submitting the form has to pay. However, there are some extra services that may cost extra.

Different services come with different fees. You should contact incorporate.com to get a better idea about all the costs for the services you might need to get your business running. For example, there is a good chance you will have to pay for specific licenses and permits. Consult an attorney to know exactly which ones you need.

Now let’s talk a little bit more about specific licenses and permits. Let’s say you have a successful business idea but aren’t sure whether or not you need to obtain any licenses.

I Want to Start My Own Business: Do I Need a License?

In some cases, you can start a business with no licenses and permits. However, in most of the cases, you will have to obtain specific licenses that apply to the type of business you are establishing. Let’s take a look.

Business Permits and Tax Registration

How to start a new business with the necessary licenses and permits? When it comes to Texas, the good news is that it has a cool business-friendly policy. What that means is that many cities don’t require a general business license.

However, it all comes down to the specific city or country where you plan to start new business, as well as to the type of business you had in mind.

To be sure whether or not you need to obtain a business license, you should contact the city clerk or the county office. They will help you with all your questions and give you advice as to how to proceed with the process of establishing a company.

Also, keep in mind that all businesses operating within Texas have to register for different tax-related purposes. You will have to file a Texas Online Tax Registration Application with the Texas Comptroller of Public Accounts.

Registering Regulated Professions and/or Organizations

If you want to start a business in Texas, no matter what type of a company you are establishing, you will have to apply for a Certificate of Authority with the Texas Secretary of State’s Office.

You can easily do that with a 24/7 online service called SOSDirect. After the registration, you will be able to legally run your new business in Texas. The rest of the licensing for specific professions etc. will be handled by the Texas Department of Licensing and Regulation (TDLR).

DBA Name Certificates

As we mentioned before, the DBA is for people/companies who want to run a business by a different name. In order to be able to do so, one must obtain the DBA name certificate. However, keep in mind that the new name can’t be the same or overly similar to the existing entity’s name.

To be sure you have chosen a valid name, contact the Corporations Division of the Texas Secretary of State’s Office or search online using SOSDirect. If you find a name you like, you can reserve it with the SOSDirect even 120 days before you actually start the business.

However, your business structure will determine where you should file the certificate in question. If you have a sole proprietorship, it should be filed with the county clerk’s office. On the other hand, business organizations regulated through the Secretary of State’s Office have to file the certificate at both the county and state levels.

I Want to Start a Small Business in Texas: the Best Locations

Besides knowing how to start a small business in Texas, you should also think about where to do so. Some locations are more business-friendly than the other ones. Let’s talk about why and how to start own business at specific areas.

Castle Hills, Texas

It might be a good idea to start an online business in Castle Hills, Texas. If you already have a good online business idea, choosing the right location is the second logical step. Starting a new business is never entirely easy, but it can be easier in some places than in others.

Castle Hills, for example, had an average population growth of 7.07% from 2010 to 2015. You definitely want a location with the population growth. However, even more important than that is the fact that 34.75% of firms have paid employees and the unemployment rate is at 1.3%.

Roanoke, Texas

If you already know how to start an online business with no money, but you aren’t sure where, check out Roanoke, Texas. This place has many types of businesses (954 to be precise, which means 1 business for every 7 residents). Also, the population grew 22.5% from 2010 to 2015 and the businesses have extremely high revenue, with the average revenue for companies being roughly $5,425,719.

Shenandoah, Texas

So how to set up a business in Shenandoah, Texas? Easily. For starters, it sounds like a really good idea taking into the consideration that 40.68% of the firms there have at least 1 paid employee. Also, revenue in the town there is $953,444.

However, there are only 381 firms in the town, one of them being Mediafire which is one of the biggest websites in the world. That must have something to do with the great numbers we see here.

Addison, Texas

How to start a small business at home in Addison, Texas? Is it a good idea? – Yes, it is. Addison is pretty close to Dallas and it is the home to many businesses. Get ready to hear some pretty impressive numbers now! The average business revenue is $40,072,856 while 40.57% of firms in the town have paid employees.

Westlake, Texas

People in Westlake definitely know how to start a startup or small business and how to take advantage of good internet business opportunities.

If you feel that you might need some professional help to manage your online business, you can always ask Amelia. Amelia can help you to take care of the hassle that is related to managing online booking appointments.

Westlake is a small community, but if you want to start a business, this could be one of the best places to do so. The average business revenue here is $4,678,268 and unemployment is at a very low rate of 1.3%.

Ending thoughts on how to start a small business in Texas

How to start a small business in Texas and why? First of all, Texas is a very business-friendly state with the second largest population in the United States. In fact, some of the largest companies in the United States are based in Texas.

But not only large firms maintain their headquarters here. In fact, there is a huge number of small business in the state and it might be the right place for you to start a business of your own.

So if you already know how to open a company but aren’t sure where you should do it, Texas should definitely be on your list.

If you enjoyed reading this article on how to start a small business in Texas, you should check out this one on how to start a small business.

We also wrote about a few related subjects like how to apply for a business license, small business management software, small business ideas for men, small business ideas for small towns, professional email address and contact management software.