Starting a business can be exciting, but it can also feel overwhelming, especially with all the legal and financial requirements that come with it. Workforce Solutions is here to provide clear guidance and ensure your business gets off to a strong start.
Texas is known for being a business-friendly state, offering a range of resources and incentives to help entrepreneurs thrive, but before you can start operating, you’ll need to take care of some important legal and administrative steps. Your Career, Your Choice, powered by Workforce Solutions, is a series that guides you through building your desired career.
Willy Verbrugghe, chair of Score Houston, highlights the three fundamental things every new business owner in Texas needs:
1. Pick a Unique Name
“You need a unique name for your business, so there’s no problem with the legal side at any point,” says Verbrugghe. Check with the Texas Secretary of State to make sure your chosen name isn’t already in use and that it complies with state naming rules.
2. Get an EIN
Next, Verbrugghe recommends getting an Employer Identification Number (EIN) from the Internal Revenue Service (IRS). This number acts like a Social Security number for your business, allowing you to open a business bank account, hire employees, and pay taxes.
You can get an EIN immediately online.
3. Choose a Legal Structure
Finally, your business requires a legal structure. Determine legal structure DBA, LLC, LP, S-CORP. The right structure affects your taxes, liability, and how you operate your business.
Get to know more about each structure, and choose which one fits your business the best:
- DBA (Doing Business As): A legal registration for a business that operates under a name different from the legal name.
- LLC (Limited Liability Company): This structure provides owners/members with liability protection and flexible tax options. Combines the simplicity of a partnership with the protection of a corporation.
- LP (Limited Partnership): Has at least one general partner (manages and is fully liable) and one limited partner (invests with limited liability). This structure is commonly used in investment or real estate ventures.
- S-CORP (S Corporation): Offers liability protection and pass-through taxation to avoid double taxation. For this structure, the business must meet IRS requirements and shareholder limits.
Once you’ve completed these three steps, you’ll be well on your way to launching your business in Texas. To know more about what is the next stage of your business plan, we invite you to watch Episode 13: “Be Your Own Boss”. Hear from real entrepreneurs who have succeeded in the market and gain practical tips to help your business thrive.
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