1. Prepare a business plan
When you create a business plan, you draw up a blueprint for how your company will run. Creating a business plan helps you get organized to start your business, and you can use it later to apply for a loan or bring on investors. Once your business is established, you’ll keep on track with your professional goals and make plans for the future by referring back to your plan.
Creating a business plan takes a number of steps—including researching competitors. For a detailed look, check out our guide on how to write a business plan. And don’t forget to include a cover page that can catch people’s attention.
2. Choose your entity type
Texas business entity types are the same as those recognized by the IRS:
Plus, there’s another entity type you can choose in Texas: A limited liability partnership (LLP). Generally, this structure is only meant for lawyers, accountants, and similar professionals. It gives your partnership some liability protection within the state of Texas.
In addition to LLPs, LLCs and corporations also give you liability protection. While sole proprietorships don’t offer liability protection, they’re the easiest to set up. You don’t need to file any forms with the state.
To learn more about the benefits and drawbacks of each business structure, check out our guide to business entity types.
3. Name your company
The business structure you choose partly determines whether you need to register a name for it.
Sole proprietorships and general partnerships operating under owners’ names
If you’re forming a sole proprietorship or a general partnership in Texas, and you’re doing business under your own name or the surnames of partners (respectively), you don’t need to register your business name with the Secretary of State (SOS).
Sole props and partnerships operating under different names than their owners’
If your sole prop or partnership is going to operate under a name different from the owners’, you’ll need to register it with the county clerk’s office in the county where your business is based. For example, if your business is in Austin, you’ll register it with the Travis county clerk’s office. The forms and processes for this vary county to county.
LLCs, LLPs, and corporations
If you’re starting an LLC, LLP, or corporation, you’ll need to register an assumed business name with the SOS. But first, you have to file a Reservation or Renewal of Reservation of an Entity Name form.
How to file a Name Reservation Request in Texas
When you file a Reservation or Renewal of Reservation of an Entity Name in Texas, you reserve your name for 120 days. If you haven’t registered your business by then, you can renew for another 120 days by submitting the same form. To apply for a name reservation costs $40.
How to register an assumed business name in Texas
An assumed name in Texas is the same as a Doing Business As (DBA) name. You do this by filing an Assumed Name Certificate with the SOS. Your assumed name is valid up to 10 years, and it costs a $25 filing fee to register it.
Search for business names in Texas
You need to choose a unique name for your business. You can search for currently registered business names on the SOSDirect website. Each search costs $1.00.
Your goal should be to turn up zero results—in that case, nobody else has chosen your name.
Trademark your business name in Texas
Registering an assumed name and a Reservation or Renewal of Reservation of an Entity Name in Texas doesn’t legally protect your name or logo. There’s a chance it could still be copied, or very closely imitated, by someone else. To trademark your business name, file a Trade or Service Mark Application with the SOS.
4. Register your business in Texas
Here’s a breakdown, by entity type, of how to officially register your business in the State of Texas. In all cases, you’ll be submitting official documents to the SOS.
5. Open a business bank account
One essential part of setting up your business finances is opening a business bank account. It keeps your business transactions and your personal banking transactions separate—which means it’s easier to manage your bookkeeping and stay on top of deductible expenses.
To set up with a bank you can access anywhere—not just Texas—check out our list of best business checking accounts.
6. Choose your location
The location you choose for your business will have to depend on local zoning codes. To search zoning and ordinance information by location, check out the Municode Library for Texas.
8. Buy business insurance
The State of Texas does not require you to have any type of business insurance. However, we highly recommend you insure parts of your business anyway—it could help you avoid disaster in the future. Learn more about how to buy business insurance.
9. Learn about the Texas Franchise Tax
All business entities, save sole proprietorships, are eligible for the Texas franchise tax. There are a number of ways to calculate this tax—some may save your business more money than others, depending on your revenue. You can learn how the tax is calculated, and the due dates for payment, on the Comptroller’s website.
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