How to Start a Business in Texas
Starting your own business can be an exciting and rewarding experience. The trouble is that most people are unaware of how to get started. The first thing that you need to do is to choose which of the seven different business types best applies to your business. For startups, the business types that typically apply are sole proprietorship, general partnership, limited liability company, limited liability partnership, and limited partnership. Other registration types include corporation and association.
The most basic business type is a sole proprietorship which is the type of business you should register if you want to do business as an individual. If you have a partner or partners, then a general partnership is the most basic option. With both a sole proprietorship and a general partnership, you will need to file an assumed name certificate at your county clerk's office if your business name does not include the surnames of each of its owners.
You may wish to register a business type that allows you limited liability. Limited liability is important if you do not wish to be personally responsible for business losses. It establishes your company as a legal entity. If your business becomes subject to litigation, you will not personally be responsible for any damages that your business is required to pay. Your business will be required to pay them. If your business becomes bankrupt, you will not necessarily find yourself in the same situation. A limited liability company or LLC is perhaps the simplest way to attain limited liability. This type of registration allows significant taxation benefits but has a few disadvantages and very strict record keeping requirements. If you are in a partnership and you wish to limit your liability you may wish to register a limited partnership. A limited liability partnership is another option that further limits liability in regards to business debts that are incurred by partners.
Once you have decided the business type that best suits your model, you will need to get an Employer Identification Number or EIN. This is sometimes known as a federal tax identification number. To get an EIN, you need to fill in a form provided by the IRS. The EIN is generally required by businesses and nonprofit organizations alike.
If you are planning to sell taxable items or taxable services in Texas, you are required to have a sales tax permit. Regardless of the type of entity that you have registered, a sales tax permit is a requirement. If your business is a limited liability company or corporation, you will also be subject to franchise tax. It is important to be aware of your taxation requirements before you start to do business. With taxes taken care of, your business should be ready to go.
Business registration can be a complicated process to begin with. A good business attorney will be able to advise you on everything about starting a business in Texas from which business type is best for your situation to your rights and responsibilities as an employer.
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