Opening up your own business is a little like having your first child—you have almost no idea what you’re doing, you’re about to sink a lot of money into it, and you’ll probably be losing a lot of sleep for a good long while in the near future.
But hey, it’s your baby, right?
And just like with your children, location is vital—and Texas is an ideal place to open up a business. Texas’s top four metropolitan cities—Austin, Houston, Dallas-Ft. Worth, and San Antonio—have all experienced double-digit job growth from 2010 to 2014, which is well above the 8.1 percent national average, and have all been named by Forbes as “cities most likely to boom” within the next decade. Texas was also named 2nd in CNBC’s rankings of America’s Top States for Business in 2015. The state has held a top spot in several different rankings for its pro-small business policies for more than a decade.
Even with the right location, starting a new business is a long process, one often surrounded by a great sense of hope and potential, but also a lot of fear if you’re not certain how to get started. Those first few years are important and meeting all the legal requirements are only part of the process—but a very, very important part.
So, to make sure you don’t stress too much, below are basics for starting your new Texas business. Certainly, there’s a lot more to it in the long run, but these are the initial steps that every business owner must follow to get his/her business off the ground the right way:
- Select the right structure for your Texas business
The stucture of your business is selected for tax purposes and to determine the general size and liability of your business. You could choose to open any one of the following, but need to make sure you have a business plan in place to support it, as sizes vary.
- Sole Proprietorship – this is the simplest form where one individual runs the business and controls all assets.
- Limited Liability Company (LLC) – this is a smaller, unincorporated business structure and is designed to give its “members” some liability protection in the business, meaning that their financial liability is limited to the amount they’ve invested in the business.
- Corporations – this is a larger structure where more than one individual or groups comes together to create a business that has its own separate legal identity from its owners. There are C Corporations and S Corporations and you’d need to research both to determine what’s best for your business.
- Partnerships – in this structure you look to build a business with a specific partner. These can be general partnerships, limited partnerships, and registered limited liability partnerships depending on your needs.
Keep in mind that most of these structures are selected based on how big you want your business to be, how involved others might want to be in helping you grow your business, etc. There are several variables with each structure, so do your research and choose carefully.
- Pick and register a business name
Once you’ve gotten the structuring down, pick your business’s name—and make sure there are no other businesses out there like it, and not just Texas businesses or local startups. You don’t want to get sued by anyone, Texas local or otherwise. Keep in mind, as well, that this is your business’s identity. Make it something you can live with and that your business can thrive on. Think image. Think brand, logo, and growth potential.
- Request an Employer Identification Number (EIN)
From there, you’ll need to set up a tax indentity with the IRS. The process is, unfortunately, a lot of paperwork, but that’s the IRS for you and pretty much everything can be completed online these days.
- Freshen up on tax laws and determine your responsibilities on local, state, and federal levels
Even before you receive you EIN, you’ll want to get started researching your tax laws. Texas states laws are actually much simpler than most other states, but there are still tax laws you’ll need to understand. The Small Business Administration also has a great deal of resources available for understanding state tax laws, as well as setting up your business plan, and other tools.
- Create a business account
By the time you hit this step, the fun is starting. From here, you select the bank you want to work with for your business’s accounts. Many banks offer different incentives for businesses to stick with them. Look around carefully to select the account type and banking location that will best benefit your Texas business or startup.
- Make it official with licensing, permitting, and registration
Depending on your startup or business type, there may be special permits involved. Make sure your Texas business is setup right by ensuring all licensing requirements meet local, state, and federal regulations and that your building permits and registrations with any local regulatory bodies are handled straight away. Fines and other financial penalties could result from failing to meet regulatory standards.
- Research and understand employee requirements
Finally, if you plan to have employees and more than a sole proprietorship, know the laws. This includes tax law, workers compensation law, health insurance laws, etc. The state laws for Texas businesses will have their own standards for employee treatment and management practices. Know your obligations and your employees’ rights up front, so you can avoid any misunderstandings or conflicts later down the road.
Creating a Texas startup or business is actually relatively easy compared to several other states, so don’t let the anticipation or fear of the unknown get to you. If you’re ready to get your own business off the ground, then get started by getting your ideas together and knowing all the facts. From there, listen to the consumers, since they rule the market, and don’t be afraid to get creative and have fun.
About the Author – Ashley Choate is a native of Jacksonville, FL where she lives with her son, dog, and three cats. She graduated Magna Cum Laude from Jacksonville University with a BA in English and holds an MAED in Adult Education and Training. She lives for reading and writing, learning and teaching, and figuring out the day-to-day traumas and joys of mommyhood. .
Top Photo Courtesy of Wikipedia Commons.