They say everything is bigger and better in Texas, and that includes opportunities. In fact, there are 2.6 million small businesses in Texas, and the state’s rate of growth far exceeds the national average.
With the constant influx of people, it’s no wonder that so many individuals are opting to go into business for themselves rather than living someone else’s dream. Here’s what you need to know about starting a business in Texas.
Create a Business Plan
First and foremost, you need to draft a business plan to outline what kind of work you’ll be doing, who your customers will be, how much money you’ll require to get started, and how you’ll go about promoting your business. There are plenty of business plan templates online that you can use to put this document together.
Having a business plan will help you get funding for your business in the form of bank loans and grants. Look through the Texas Comptroller of Public Accounts and Texas eGrants to see if there is anything you are eligible for. Before applying, you’ll need to work through a few more steps in creating your business.
Determining Your Business Structure
There are various business structures to choose from, depending on the nature of your business. Limited Liability Companies (LLC) are a popular option for small business owners.
To become an LLC, you must register all the relevant paperwork with the Secretary of State to form your LLC. You must have a professional Registered Agent in place before you file the paperwork. You also need to have a unique business name in place before going through this process, so start brainstorming now!
Incorporating your business is another way to operate in Texas. For most small business owners, this approach doesn’t make the most sense. Incorporations are for when you will have various shareholders and will make you subject to a lot more regulations as a business owner.
Getting an EIN
A Federal Employer Insurance Number (EIN) acts as a social security number for your organization. If you do not have one– which you are required to in most cases– you will be forced to use your personal social security number on business documents and applications, making it public knowledge.
You can apply for an EIN online or work with an agency to have them get it for you. You will require an EIN to apply for the grants mentioned previously, as well as to open bank accounts for your business and apply for loans.
Licensing and Permits
Depending on your line of work, you may be required to acquire additional licensing and business permits to offer your goods and services. These requirements can vary by county and can cover anything from putting up a sign in a residential area to applying for permission to release pollution into the environment during manufacturing.
Operating a business without the proper licensing and permits in place can result in substantial fines further down the road and the closing of your business. For example, if you open a bar and don’t adhere to the rules as set by the liquor license you have in place, you can be shut down for the duration of a busy weekend, losing you thousands in profit on top of your fine.
Plan Ahead for Taxes
Many new businesses make the mistake of failing to prepare for tax season from day one. Make sure you have enough money set aside to pay the taxes you owe on the income you generate. Set aside 20% of your earnings to be safe. When in doubt, work with a tax specialist or accountant to start on the right foot.
With careful planning and an entrepreneurial spirit, you can be a part of the incredible growth taking place in Texas. Follow the steps listed here, and your dreams of business ownership will come true.
