You might wonder if it is really necessary to register your business in Texas and if it would be easier to just start without notifying the government. Honestly, it might be at first, but depending on the type of business and permits you need to obtain, you might be better off just getting all the paperwork done from the very beginning.
All you need to do is follow a series of specific steps, and in return, you can fulfill your legal and tax obligations, which comes with other benefits. These benefits include being able to declare taxes and receive refunds if applicable, improving your banking history, accessing more loan or mortgage opportunities, and even applying for insurance to protect yourself in case of unforeseen events.
To begin this process, let's explain the different types of businesses you can register in Texas, the costs involved, and what you need to have on hand before starting.
According to the official website of the state government, here are the seven basic steps you need to follow to open a business:
The first two steps involve the physical and financial creation of your venture – from choosing the name and analyzing the manufacturing, sales, and distribution processes to opening a physical store or a website for selling your products.
Once you have this, the next step is to seek funding to bring these ideas to life. JUST offers small loans with very low interest to female entrepreneurs in Texas, enough to establish the foundation of your company. Moreover, it also offers support from other women who are starting their own businesses or have already established theirs.
When you have sorted out the financial aspect, it's time to move on to the legal part, officially present your business to the government, and register your brand in Texas.
Now that you know what your business is called, what it will sell, where it will be located, and how it will operate, it's time to choose the legal structure under which it will be registered. Here are the most common types of companies in the United States:
To be recognized by state authorities, you need to choose a name for your company.
We'll explain how LLCs work and what you need to register under this legal structure.
The first step is to choose a name for your venture, which must include the phrase "Limited Liability Company" or at least the abbreviation LLC. Additionally, you must verify that there's no other company with the same name in Texas, which you can achieve using a web checker. Also, the name cannot include words related to government entities like CIA, FBI, Agency, Treasury, Department of State, etc.
Furthermore, you'll need to have a Registered Agent, who, in short, is the person who will be in direct contact with the tax and governmental authorities and will act as a representative. This could be you, a collaborator, or an external person who is a resident of Texas and meets the necessary requirements to manage a business in the state.
To formalize their association, you'll need to submit a written Consent to Designation, either physically or online. This document should include the following details:
Once the agent's formal association has been accepted and registered, you need to send the Certificate of Formation (Form 205) to the Secretary of State of Texas, notifying the existence of your LLC. For this, you only need to submit the form, a government-issued identification, and pay the $300 fee, which is the cost of registering your business in Texas.
In addition to this, you'll need to check which operating licenses apply to your business. Keep in mind that, depending on the products you sell, you may require specific permits from government departments for construction, waste management, environmental responsibility, security, and the use of resources like gas and water, among others.
Also known as an Employer Identification Number (EIN), Federal Employer Identification Number (FEIN), or Federal Tax Identification Number (FTIN), this is a nine-digit number provided by the Internal Revenue Service (IRS) to identify your company and track your tax-related activities. You can request this number directly from the IRS, and there is no cost for it – you just need to fill out Form SS-4. In case you don't have a personal Social Security number, you can continue with the process by leaving the box requesting this information blank.
Once you have the formation registration and your EIN, you can now open a corporate bank account. This account will help you manage your finances better, file taxes, apply for credits, and receive tax refunds, if applicable, after your annual tax declaration.
To open your account, you'll need to go to the bank of your choice with the following documents:
In some cases, they may also request personal identifications, verify your business address, and have other specific requirements, depending on each institution.
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