In the fourth quarter of 2022, Texas had a 7% growth rate, which was the fastest GDP growth in the country. In fact, it beat the nation’s growth as a whole!
This makes the state fantastic for entrepreneurs to get a start in, as there’s plenty of room to succeed and move up. Plus, the state doesn’t have personal income tax, which is a huge advantage.
Has this been the push you needed to create an LLC in Texas? Then you might be wondering about the process now.
Read on to see how to register a business in Texas so you can get set up in no time.
Research and Pick a Business Idea
Before you can create a business, you need to know what niche you want to fill first. Otherwise, you’ll go into things blindly. Plus, if you do research first, you might find out that the great idea you had may have already been done many times over, which would make it hard to break into the niche.
Consider your own skills and strengths to make things easier. This can also ensure that you stay passionate about your new company.
Write a Business Plan
When you have a general idea of what you want to do, it’s best if you draft a business plan before proceeding. It’s not legally required to start or register a business, but it’ll help you determine whether or not you’ll turn a profit and when that’ll happen.
This document is also beneficial if you’re looking for investors or need financial assistance. When you can back up your ideas, people are more likely to give you money.
Determine What Legal Structure You Want
Small business owners tend to opt for limited liability companies (LLCs), so you’ll probably go the same route too. This business structure limits your personality liability, so your finances are separate from your LLC’s, should there be debts, lawsuits, or liens.
However, if you’re interested in your options, there are also sole proprietorships, partnerships, and corporations. Within these structures are special versions, such as S corporations.
Each legal structure will have its advantages and caveats, and they’ll be different for every person. It’s best if you consult with a lawyer or accountant to determine which structure works best for you.
Choose Your Business Name
To create an LLC or corporation, you’ll need a distinguishable business name. There’s already a database on the Texas Secretary of State (SOS) website, so you can perform a name search on SOSDirect.
In addition to it being unique, your company’s name needs to also have the term LLC in it somewhere. Variations are acceptable, such as L.L.C., LC, L.C., Limited Liability Company, Limited Company, Ltd. Company, or Ltd. Co.
To ensure that the name’s still available when you want it, you can reserve it with the Application for Reservation or Renewal of Reservation of an Entity Name. This will hold your desired business name for up to 120 days.
Register Your Business
There are different steps you need to take to register your business in Texas, depending on the legal structure you chose. Below are the basics.
To register your Texas LLC, file a Certificate of Formation with the state SOS. In addition, you’ll need to name a registered agent, which is someone who can receive legal documents on your behalf. It’s best to use a registered agent service like Business Anywhere since it offers convenience, safety, and privacy.
Consider creating an operating agreement too. The state of Texas doesn’t require LLCs to file these, but they’re helpful since they concretely describe your company’s operations.
If you’re establishing a sole proprietorship, then the good news is you don’t need to file any papers with the state. You’ll only need to apply for a Texas business license and any relevant permits and zoning clearances.
Like with a sole proprietorship, you won’t need to file any paperwork if you’re forming a general partnership. However, it can be beneficial if you create a written partnership agreement. You can refer to this if there are any legal disputes.
On the other hand, if you’re creating a limited liability partnership, you’ll need to file a Registration with the Texas SOS. You won’t need to name a registered agent though; the exception is if you have a non-Texas LLP doing business in the state.
You need to file a Certificate of Formation with the Texas SOS if you’re creating a corporation. A registered agent is needed here too. It’s recommended that you prepare bylaws, even though it’s not legally required.
Are you forming an S corporation? Then you’ll also need to file IRS Form 2553.
Apply for Relevant State Licenses and Permits
Businesses that hire employees must apply for an Employee Identification Number (EIN) with the IRS. It’s still useful to have an EIN to open business bank accounts or acquire funding, so it may be worth your time to get one.
Other licenses and permits you should get include:
- Sales tax
- Health and safety
Specific industries will require special licenses, so research this to make sure you’re operating legally.
Also, check the local zoning regulations, especially if you’re planning on having high foot traffic. This can affect the location you pick. This is still relevant even if you’re operating your business from your home.
This Is How to Register a Business in Texas
By knowing how to register a business in Texas, you’ll make your small business dream and reality with little issue and wasted time. However, it can be a challenge to do on your own, especially if your forte isn’t in granular business details.
Fortunately, the experts here at Business Anywhere have the knowledge and experience to get your LLC registered and all other paperwork filed away efficiently. That way, you can focus on the creative process while we take care of the less interesting things.
To start an LLC in Texas with a professional’s help, sign up with Business Anywhere.