About a dozen firms on the Fortune 100’s “Best Companies to Work With” list are based in Texas. With that kind of statistic, it sounds like the type of place you may want to set up if you are starting a business.
If you are considering starting a business in Texas, the first thing you need to do is to decide on a legal structure. Small business legal arrangements include sole proprietorship, partnership, limited liability company (LLC), and corporation. Restricted partnerships and S companies are examples of special versions of each of these systems. Consider which business entity structure provides the liability security you desire as well as the best tax, financing, and financial benefits for you and your company.
The next step is to register your business entity with the state. The documentation you need to file for registration depends on the type of legal entity you decide on. For instance, you don’t need to file any organizational documents if you are filing a sole proprietorship or a partnership.
After following the registration process for your type of business, the next thing you need to do is apply for Texas licenses and permits. You must register for a sales tax permit for the Comptroller of Public Accounts if you intend to sell products in Texas (CPA). In general, every company doing business in Texas can file with the CPA. You have the option of registering online or on paper. You must get a federal Employer Identification Number (EIN) from the IRS whether your company has employees or is taxable separately from you. And if you aren’t legally bound to get an EIN, there are other business incentives to do so.
With regards to regulatory licenses and permits, they are sometimes required for in industries dealing with health and safety, the environment, building and construction and other specific industries and services. The Secretary of State Guides and Resources webpage has information on state licenses and permits. In Texas, several business licenses and permits are provided by the city or county. Check the websites of the towns or counties where you want to do business for updates on these state licenses and permits. Be sure to also acquire any professional and occupational licenses.
It’s also important to double-check that the location is zoned for your type of business. Check your municipal codes and call your town’s zoning or planning department to identify zoning laws for your town or area.
You should open a separate account for your company and keep your business and personal expenses separate. Obtaining business credit cards also allows you to begin building a company credit profile (corporation or LLC required) that would enable you to apply for larger loans and lines of credit in the future.
In order to ensure your business runs smoothly, you will also need to set up an accounting system, hire employees, obtain business insurance and set up your marketing strategies.
Before starting a company, it is advisable to seek the advice of a licensed tax consultant, accountant, and/or attorney versed in corporate law to ensure that you are meeting all the legal requirements in the state.