Legal Requirements for Starting a Business in Texas
Starting a business in Texas entails putting some things in consideration after you have gotten the business idea you set to start in Texas. Just like every nation of the world, there are certain requirements for business registration, requirements and vital information you need to consider before starting.
So, in today’s guide, I will quickly show you the basic requirements to register your business in Texas and how to go about your business registration.
Legal requirements for starting a business in Texas
Following are some of the documents you need to register your business in Texas:
- Completed application for registering a sole proprietorship
- A government-issued photo identification.
- Business registration fee (you can Check from the County’s clerk)
Note: Requirements for a BN application can be submitted by a representative on behalf of a business, provided that the representative presents proper identification and an authorized letter signed by the business’s owner.
How To Register A Business In Texas
Establish the form your company will take:
You should select a business structure, also called a business entity, that meets your liability needs, operational requirements, and employee benefit objectives. Your choice of business structure will also impact where and how much it will cost to register your company.
Here are some of the most common types of companies in Texas:
Business structure based on a single owner:
This setup is ideal if you plan on operating your business single-handedly and owning all of the assets outright without any concern for personal liability. A sole proprietorship in Texas is exempt from paying the state franchise tax.
When two or more people decide to go into business together, they form a partnership. Participating parties share joint and several liability for the company’s debts and obligations but are exempt from paying franchise taxes to the state.
The cost to form a general partnership in Texas is $200 per general partner.
Association with limited liability:
Also called a limited liability company, this business structure combines the best features of several others, making it a popular option for entrepreneurs.
In Texas, a limited liability company must pay $300 to file its certificate of formation with the state secretary. In Texas, limited liability companies must pay the state franchise tax.
For-profit S- and C-corporations:
in Texas, you must file paperwork with the state’s secretary of state to register this form of business. Payment of $300 is required to file a certificate of formation.
A state franchise tax may also apply to a corporation. Corporations provide enhanced liability protection because they are legally recognized as distinct from their owners.
Registration for sole proprietorships and partnerships is handled by county clerk’s offices. The secretary of state is the official place of registration for limited liability companies and corporations.
Pick a name for your company
To do business under your own name is legal if you are a sole proprietor. Otherwise, you should do some digging to find out if the name you have in mind for your company is taken.
To make sure no other company in Texas has a name that sounds similar to yours, you can do a quick Google search and then check the Texas Department of State: Division of Corporations database.
Acquire an Employer Identification Number (employer identification number)
Applying for an EIN is a free but necessary step for businesses. Establishing business credit, filing for employee tax withholdings, and opening a business checking account all require a valid EIN, which the IRS uses to keep tabs on your company’s financial dealings.
Please be aware that a sole proprietor does not require an EIN and can instead use their social security number. However, if you’re a small business owner, having an EIN can help you in a number of ways, including securing a loan and avoiding identity theft.
Submission of Applications for Required Permits and Licenses
Although starting a business in Texas does not necessitate a statewide license, local jurisdictions may have specific licensing requirements depending on the industry.
The Lone Star State has a lot to offer entrepreneurs just getting their feet wet. Texas has a wide variety of business licenses and permits, and the Texas Business Licenses & Permits Guide details them all in an easy-to-use, industry-specific format.
The Texas Secretary of State provides more details on a wide range of topics, including licenses, patents, trademarks, securities, and more.
Various types of business filings have their own unique, often nominal fees.
Give thought to supplementary needs
The registration process is just the beginning; there are other legal considerations to make, such as business insurance and unemployment tax. The Governor’s Small Business Handbook includes supplementary material on unemployment insurance taxes.
Do you have to register a small business in Texas?
There is need to register all business in Texas, but registration is of different types. When starting a business as a sole proprietor or partnership, it is necessary to register the business name with the county clerk’s office.
The website of your state’s SOS has resources to help you select the appropriate legal structure for your business if you decide to incorporate.
Starting a business in Texas requires you to file and submit some necessary documents to be able to obtain the permits and licenses you need to operate fully without any hindrance from the government. In this guide, I have provided you with information you need to know about business registration in Texas.