What are the steps I need to follow to start a business in Texas?
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To start a business in Texas, an individual or a group of individuals must follow the necessary legal steps before launching their business operations. Here are the steps involved in starting a business in Texas:
- Select and register the business entity:
- Choose and register the business name:
- Obtain the E.I.N or Federal Tax ID number:
- Register the business with the Texas Secretary of State:
- Obtain the necessary licenses and permits:
- Pay the Texas Franchise Tax:
- Obtain insurance:
- Open a bank account:
- Comply with employment and taxes:
Choosing the business entity depends on the individual's requirements, the level of management control he or she wants to maintain, the personal liability, and tax implications. The options include Sole proprietorship, Partnership, Limited Liability Company (LLC), Corporation or S corporation.
After choosing the business name, it is crucial to prevent others from using the same name or a similar name. Check whether the name is available by accessing the Texas Secretary of State website. File a name reservation application or register the business name by completing the 'Assumed Name Certificate' with the county clerk in the county where the business will operate.
Before starting, obtain the E.I.N (Employer Identification Number) or the Federal Tax ID number from the IRS.
The Texas Secretary of State website provides online registration services for a small fee. Completing this step will legally establish the business entity in Texas.
Depending on the nature of the business, business owners must obtain licenses and permits from the state, county, or city. Failure to comply can result in fines and possible suspension of business. Texas allows business owners to review license and permit requirements before registration.
Unless the business is exempt, business owners are required to pay the Texas Franchise Tax. The amount varies depending on the business type/structure and gross revenue.
Business owners may require insurance to protect themselves from potential risks.
Business owners will require a separate bank account from their personal account for all business transactions to avoid confusion.
If the business plan includes employees, it is essential to comply with Texas labor and employment laws.
These are the necessary steps to start a business in Texas. A licensed attorney can ensure compliance and understanding of legal issues and can provide assistance in building a successful business.
