start business in texas
There are no guarantees or ways to eliminate all the risks; however, the chances of success can be improved with enough insight, planning, and preparation.3 min read
2. Best Place for Startups
3. How to Start a Business in Texas
4. Types of Business Structure
5. Filing for a DBA
Start a business in Texas? If you do, know that there are no guarantees or ways to eliminate all the risks; however, the chances of success can be improved with enough insight, planning, and preparation. Small businesses in Texas continue to prosper due to factors such as the predictable regulatory environment, reasonable cost of living, low tax burden, highly-skilled workforce, and excellent geographic location.
Best Place to Start a Business
Aside from Delaware, the best place to start a business in the U.S. is in Texas since it has a number of fast-growing metropolitan areas. Texas supports small businesses in many ways, particularly with its lack of red tape, an abundance of relatively cheap land, and low business licensing fees. Nicknamed the “Lone Star State” as a reminder of the struggle for its independence from Mexico, Texas has a population of roughly 25 million people, making it the nation's second-most populous state. The largest city in Texas, Houston, has a population of approximately 2.24 million people.
Best Place for Startups
Texas also is home to 2.4 million small businesses, with a dozen companies featured on Fortune's list of 100 Best Companies to Work For. The major companies in Texas include Tenet Healthcare, Alliance Data Systems, GameStop, American Airlines Group, Texas Instruments, AT&T, and ExxonMobil. Recently, Austin was named as the best place for startups in the U.S. and named by CNBC Metro as No. 1 in its list of best places to start a business.
How to Start a Business in Texas
Before commencing a business in Texas, you must have a well-thought-out strategy in order to secure funding, manage cash flow, and track the progress of the business as it grows. As part of your strategy, here are some things you should develop:
- Pitch: A brief, one-page summary that covers the key points in your business plan.
- USP (Unique Selling Proposition): Your business' core mission captured in a short phrase. For instance, Startup Savant's USP is “Entrepreneurship Simplified.”
- Target market: The people you offer products and services to. You must define your business' target demographic and look for the most effective method of communicating with it.
- Marketing plan: A comprehensive, logical and detailed plan of how you will market your business.
- Milestones: The future goals you set for your business. Consider what your business will look like in the next six months, 12 months, or even five years. Setting up milestones is a wonderful way to keep track of how your business is performing.
Types of Business Structure
Before commencing business operations, you should decide on the kind of business structure that is right for you.
- Limited Liability Company (LLC): Since this offers the legal protection a corporation has without the double taxation or legal upkeep, an LLCs is the most popular type of business structure. It also offers more flexibility where federal taxes are concerned.
- General partnership: General partnerships are similar to sole proprietorships but are designated for two or more people. Although this form of business entity is separate from its owners, creditors can still satisfy liabilities and debts with the owners' personal assets. General partnerships cannot be subjected to state franchise tax.
- S corporation: More formal than LLCs, an S-corp must have corporate officers and a board of directors. It can have up to 100 shareholders and is not subject to corporate tax — all profit and loss go into the personal tax returns of the shareholders.
- C corporation: The structure of a C-corp is similar to that of an S-corp, but no limit is placed on the number of shareholders it can have; however, it is subject to double taxation.
- Sole proprietorship: Known as the path of least resistance for budding entrepreneurs, a sole proprietorship comes with some level of risk. If you operate alone (i.e., without partners) and don't have any registered business structure, you're categorized as a sole proprietorship. There is no need to file any formation documents, although there are benefits to a DBA filing.
Filing for a DBA
A DBA (which stands for “Doing Business As” or “Fictitious Business Name”), is not a formal business structure, rather it is a different name that individuals or business partners use as a public business name. It should be noted that general partnerships and sole proprietorship are registered in counties, while corporations file with the state's Secretary of State.
If you need help with starting a business in Texas, you can post your job on the UpCounsel marketplace. UpCounsel accepts only the top 5 percent of lawyers on its site. Lawyers on UpCounsel's marketplace come from schools such as Yale Law or Harvard Law and usually average 14 years of legal experience, including work on behalf of companies like Menlo Ventures, Google and Airbnb.