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Step-to-Step Guide to Starting a Business in Texas

Year after year, Texas is listed as one of the best states in which to start a business. With so many people being put in a position to rethink their career path, it’s no wonder that so many Texans are dipping their toes into the world of small business ownership.

In fact, Texas is also one of the leading real estate markets, making it an ideal starting point for people moving from other states.

If you’re considering opening a business in Texas, use this step-by-step guide to get you started.

1. Clarify and Validate Your Idea

Every business starts with an idea. It’s this idea that sparks the entire enterprise into existence. However, even the best ideas don’t always translate to a business opportunity. Whether demand for your proposed offering is too low or you’re too far ahead of the technology, there are considerable variables that could derail your efforts.

Before you take the leap, validate your idea to determine if it has merit. Do some market research to get a better idea of that demand, startup costs, profit margins, etc. Determine who your ideal customer would be and ask that group of people what they think about your idea. If you determine that the idea is viable, continue on with your business plans. If not, move on to the next idea.

Clarifying the opportunity will help prevent you from spending time and money, starting a business that’s doomed from the start.

2. Create a Business Plan

Once you’ve validated your idea, put together a business plan. There are several free business and marketing plan templates online that you can use to structure this document. A business plan outlines everything from the financing you’ll require, how you’ll attract new customers and your overhead costs.

There are numerous benefits to crafting a business plan. First and foremost, it prompts you to consider things you hadn’t before. You might discover that you should take the time to shop around for insurance rates and compare electricity rates in Texas rather than guessing your overhead costs. This document will also serve as your guidebook to return to when you feel lost or overwhelmed.

Banks and investors may demand a solid business plan before they agree to offer to finance. Take time with this document to ensure it’s accurate and thorough.

3. Determine Your Business Structure

As a part of the business planning and registration process, you’ll need to determine your business structure. The overarching options include:

  • Sole proprietorship
  • LLC
  • Partnership
  • Corporations

For most small business owners, an LLC is the way to go. If you have a business partner or aspirations of growing into an international enterprise, a partnership or one of the corporation subsets is likely a better choice. Each structure has different taxation requirements and liabilities to consider. Take the time to compare the nuances of each structure before registering.

4. Choose a Business Name

Now you’re at the fun part: choosing a business name. Start by brainstorming a name that’s relevant to your business and timeless. You want something that will still work if your business is thriving 20 years from now using technology that doesn’t yet exist.

Conduct an internet search to see if the name you’ve chosen is already in use. If you don’t find anything relevant, move on to a more thorough trademark search.

Finally, search the Texas Department of State: Division of Corporations to ensure no other business has a variant of your name. If there’s something too similar, your name will be rejected. If all seems well, you can register your business name with the Secretary of State. It also makes sense to secure an online domain name at this time.

5. Register Your Business

Now it’s time to make it official. First, hire a Registered Agent. This is a mandatory expense when starting a business. The RA is responsible for acting as the middleman and gatekeeper, ensuring you’re getting the documentation you need to keep your business compliant.

Once you have an RA in place, file the Articles of Organization with the Texas Division of Corporations. This applies to LLC businesses, as well as partnerships and corporations. If you opt for a sole proprietorship, you can skip this and file a DBA (Doing Business As) in your county.

6. Open a Business Bank Account

Keeping a separate business account is a must when starting a business in Texas. It creates a degree of separation that protects your personal assets, no matter what business structure you choose. If the IRS comes knocking to do an audit, you want your business and personal finances separated as much as possible.

7. Secure Any Required Financing

Now that you have all the administrative components of your business in place, you can seek out any financing you require to get up and running. You can secure this financing through banks, investors, and grant programs. Note: your financing goals and sources should be listed in your business plan.

8. Sort Out Your Tax Obligations

Take some time to determine what the tax obligations are for your business structure. Again, this will vary depending on your business. Don’t hesitate to reach out to an accountant to ensure you’re in compliance and understand what’s expected.

9. Look into Licensing and Permits

Depending on the type of business you operate, you may require special licensing and permits. These come from federal, state, and county levels. The Texas government recommends using the Business Permits Office Handbook to help you determine your needs.

10. Look into Insurance

Regardless of whether you’re starting a bustling corporation or an independent consulting business, you’re going to want insurance. Take some time to determine what you need to be completely covered. At the very least, you should have general liability insurance and professional liability insurance in place. If you have employees, company vehicles, etc., you’ll want even more coverage.

11. Launch with Confidence

Once you have everything ready to go, put your business launch plan to the test. While there are many things you can do to network and pre-launch your business from a marketing perspective, it’s best to have everything in place before you make it official.

Ajeet Sharma, the founder of Financegab and a well-known name in the field of financial blogging. Blogging since 2017, he has the expertise and excellent knowledge about personal finance. Financegab is all about personal finance which aims to create awareness among people about personal finance and help them to make smart, well-informed financial decisions.


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