How to Set Up Your Business in Texas
You’ve decided to start your own business in Texas. Congratulations!
It doesn’t matter whether you’re pursuing your passion or starting up a side job. Creating your own business in Texas can be a rewarding experience.
Unfortunately, deciding to start a business is not the same as starting one. You need to get your ducks in a row first.
So where do you begin?
Like anywhere else in the country, starting your very own business in Texas is a big deal, but it doesn’t have to be a big job.
Sure, there are a few legal hoops to jump through before you can start doing business. And, while those hoops can seem daunting at first, this guide will help you through them.
Your Business Name
Odds are you already know what you want to call your new business in Texas. But, is that name already in use by another business in Texas? What about another business in the United States?
Before you get started you’re going to have to see if your company name is available for use in Texas. If someone’s already using your business name, you’re going to run into some issues with the formation of your business in Texas.
Before you do anything else, you should check whether your name is available for use with the Texas Secretary of State. Make sure no one in Texas is using that name.
After that you may want to run a trademark search to see if anyone in any of the other 49 states has right to that name. While you may still be able to form your business in Texas you do not want to build your brand subject to a later challenge of the use of the name in the event you decide to register to conduct your business outside of Texas.
If your desired name is free to use you may wish to reserve the name while you complete your certificate of formation, file with the Secretary of State and have a returned Certificate of Formation from the Texas Secretary of State. Keep in mind that the Texas Secretary of State may not accept your desired name if it determines that the name is deceptively like another name already in use. Alternatively, you may be able to get permission from the owner of the name in question and submit the consent to the Texas Secretary of State, following which you should be able to form your company in Texas.
You will also need to appoint an agent for service of process for your business in Texas. The agent may be an entity or an individual that is authorized by the company to accept legal notices directed to the company. This would include service of process related to a law suit that has been filed against the company. There are companies available to act as your agent for service of process if you do not want your normal business in Texas to be interrupted by this type of event. The agent must consent to act in this capacity and that consent is either filed with your application to the state of Texas or kept on file in the company’s permanent records.
Federal, State, and Local Taxes
This is where most budding business owners head for the hills. But, don’t worry. Setting up your taxes is a lot easier than it may seem. But it is always best to consult with your CPA or tax advisors to get the proper advice.
NOTE: Lawyers are not allowed to give tax advice unless they are tax practitioners. I cannot give tax advice but I can probably point you in the right direction.
There are different levels of taxation and various tax authorities that you should consider: federal, state, and local. One of the early events that will occur after your application for a certificate of formation is accepted by the Texas Secretary of State is that you will receive a letter from the Texas Franchise Tax Commission that addresses your responsibilities for filing your annual tax and information statements. In addition to the filing or charter number that you receive from the Texas Secretary of State you will be assigned a state tax identification file number by the Texas Franchise Tax Commission. You will also receive a “web-file” number that you should keep in your permanent records. This number will make easier for you to make your required periodic filings with the State of Texas.
You will likely need an “Employer Identification Number” or “EIN” issued by the United States Internal Revenue Service. You can apply for an EIN on the IRS’s website or you may engage a CPA, attorney or other appropriate party to obtain the EIN.
Starting a Business in Texas
Dealing with the legal aspects of starting your business in Texas can seem confusing and even a little scary. There is the business formation itself and then there are important governance and contracts to work through. But don’t let it deter you.
As important as it is, once you’re all set up you can stop worrying. Then you can get back to work on whatever it is you’re passionate about.
It’s also important to remember that there isn’t any shame in asking for a little help.
Contact LSR Firm Today
Still unsure about the legal workings of starting a business in Texas? With more than 35 years providing business, corporate transactional and general counsel services – including experience as an Executive Vice President, Chief Legal Officer and General Counsel – Attorney Stephen Rizzieri has a broad background and extensive experience from which to assist entrepreneurs and owners to navigate legal issues affecting their ability to grow and efficiently operate their business.
Contact our offices and schedule a consultation today. We’re here to help you navigate the red tape.