The decision to start a small business in Texas is a major step in the owner’s life. Many people find it easy to start a business in Texas because of the business-friendly tax structure and strong economy. All entrepreneurs should ensure they take the right steps as they start their business.
One of the first decisions they’ll have to make is the type of business structure they want to use. Sole proprietorships, partnerships, and limited liability companies are the most common. Thinking about the protection the structure offers the owner and company, the tax structure and the operational requirements may help owners to decide on the most appropriate structure.
Register the business
Most businesses in Texas must register with the state. Sole proprietorships and partnerships operating under a name different from the owner’s legal name must file an Assumed Name Certificate (DBA) with the county clerk. LLCs and corporations must file formation documents with the Texas Secretary of State. Additionally, an Employer Identification Number (EIN) from the IRS may be required for tax and employment purposes.
Understand tax and licensing requirements
Texas doesn’t have a state income tax, which is a significant advantage for business owners. However, businesses may be subject to the Texas franchise tax, sales tax or other industry-specific taxes. Obtaining the necessary permits and licenses is also critical to operating legally.
Starting a business in Texas isn’t complicated, but it’s critical that the entrepreneur protects themselves throughout the process. Working with someone who’s familiar with the legal aspects of starting a business may reduce the stress associated with the process.