Starting a business in Texas checklist - 9 things you cannot skip

Choosing the location to set up a new business plays an important role and affects investors directly. According to data from the US Bureau of Labor Statistics, non-ideal locations are the leading cause of failure for new businesses. The data also showed that Texas is one of the best business areas with favorable factors in income tax, job growth rate and infrastructure development. Texas had a gross state product (GSP) of $1.9 trillion in 2019, the second-highest in the US after California and personal income per capita at $52,504. Moreover, as the only city in North America to have direct flights to all continents, there are many business opportunities in Houston, Texas. Because of these reasons, Texas is one of the states that attract the most businesses and investors in the US. Below is the starting a business in Texas checklist you have to check out before Texas corporation formation.

1. Choose a Business Idea and Write a Business Plan

Take the time to thoroughly research your business ideas then draft a business plan to determine your chances of making a profit. The business plan is a strategic path map for starting a business in Texas. This plan sets out the goals you want to achieve and will assist you in tracking your progress and making performance adjustments. When you make a plan, you will have a better idea of ​​your startup costs, your competition, and your monetization strategy. At this stage, consider your interests, skills, resources, availability, and why you want to start a business. The best business in Texas sometimes is not the best business for you.

A solid business plan is a good starting point for any company

2. Decide on a Legal Structure

Corporate law is a legal area that deals with the legal aspects of business organizations. The most popular legal structures for Texas corporation formation are:

• Limited liability company (LLC) - is a business structure that combines the taxation through of a partnership or individual business household with the limited liability of a corporation.
• Corporation - is a multidisciplinary company, very large in size and often multinational.

One IBC^® currently supports Texas corporation formation for both LLC and corporation. Each structure will provide some kind of liability protection that can maximize the tax and financial benefits of your business. Therefore, you should consider Texas corporate filing requirements to acquire all the necessary information before starting a business in Texas.

3. Choose a Business Name

For LLCs and corporations, you will need to check if your name is distinguishable from the names of other business entities that are on file. If you have an online business plan, you may want to register your business name as a domain name. There are certain name requirements for an LLC and a company (such as including the word "LLC").

4. Register Your Texas Business Entity

• LLC: To form an LLC in Texas, you must submit a Certificate of Formation to the Texas Secretary of State (SOS). You will also need to appoint an agent or a registered secretarial firm in Texas to accommodate the process. One IBC^® is authorized to be such an entity to help any customer who is starting a business in Texas. Besides, you should also prepare an operating agreement that establishes basic rules of how your LLC will operate.
• Corporations: To set up a corporation in Texas, you must submit an Establishment Certificate to Texas SOS. You will also need an agent or a registered secretarial firm similar to an LLC case. While it's not legally required by the government, you should also prepare regulations that establish your company's internal operating rules.

5. Apply for Texas Licenses and Permits

Without proper licenses, a company might not be able to operate properly. There are many type of Licenses and Permits, including:

• Health and safety
• Environment
• Building and construction
• Specific industries or services.

If you are not certain on which one to apply for when starting a business in Texas, contact One IBC^® licensing service and let our consultant help guide you through this process.

6. Pick a Business Location and check local laws

You will need to choose a location for your business and check local planning regulations. You should not stop at the state level but go further and consider such as what are good business ideas in Dallas, Texas. Before you commit to a location, take the time to consider future expansion, traffic convenience, workforce, proper infrastructure, anything that can benefit your Texas corporation formation.

Dallas is among the top choice to start a company in Texas

7. File and Report Taxes

If your company has employees or is taxed separately from you, you must obtain a federal Employer Identification Number (EIN) from the IRS. One IBC^® can assist you with the EIN application as well as the Individual Taxpayer Identification Number (ITIN). Banks typically require an EIN to open an account in the name of a business, and business partners may require an EIN to process regulatory and license payments.

Identify the new business's potential tax liability with federal, state, and local tax authorities. Federal tax obligations are paid through the Internal Revenue Service (IRS). State tax filings are done through the Texas Certified Public Accountant (CPA). Online Merchant Tax information is also helpful for any online business. For questions about the local property and business taxes, it is recommended to consult One IBC^® accounting, auditing and tax service for proper guidance.

8. Open a Business Bank Account

Currently, there are no compulsory regulations that an enterprise must open a bank account. However, a business account is used in many mandatory tasks such as paying electronic license tax. So while it's not required by law, it's impossible not to have a bank account for your company. In Texas, One IBC^® has several partner banks to help you open a bank account with ease.

More than anyone, entrepreneurs must understand their rights and responsibilities when starting a business in Texas. Through the "starting a business in Texas checklist" above, we hope investors and businesses have a more comprehensive view of what to learn and research before deciding to expand the business to a new market like Texas.