Step 1 : Business Structure
There are 3 basic options: a DBA, a Corporation or an LLC.
Step 2: Business Name
Picking a business name is easier said than done – many legal and business problems can arise from picking the wrong name (you can always change it later but the less times you have to do that, the better).
Step 3: Register
Each state has its own requirements for registering a business. Now that you’ve chosen a business structure and picked your business name, here are the requirements to register your business in Texas.
How to form an LLC in Texas
How to Incorporate in Texas
Considerations when Incorporating or forming an LLC in Texas
The Texas Division of Corporations could take anywhere from 2-3 business days for e-filing to 3 to 5 days for mail filings to process the paperwork. This may increase during peak periods.
A registered agent (or Business Planning Attorney) is required for every Texas Corporation and LLC. The chosen registered agent must have a physical street address in Texas. A Business Planning Lawyer who will provide their address and forward any important documents to you. This is convenient if you have to move, since you won’t have to file forms or pay fees, (just update your address with your agent).
How to File a DBA in Texas
DBA’s in Texas are filed with the County in which the business is located.
Step 4: Federal Employer Identification Number (FEIN or “EIN”)
Your EIN is like your Social Security Number for your company. It’s required for Corporations and LLC’s and optional for DBA’s (if you don’t have any employees, then it’s required). However, if you are a DBA and don’t obtain an EIN you will be forced to use your Social Security Number on many documents so it’s typically recommended you obtain the EIN to prevent identity theft.
You can read more about corporate tax laws in Texas on the Texas Department of Taxation and Finance website.
Step 5: Open Company Accounts
To keep business and personal expenses separate, you should open a separate account for your business. In addition, getting business credit cards is how you begin to build a company credit profile (corporation or LLC required) and can later qualify for larger loans and lines of credit. To open the account simply call your chosen bank and inquire on the steps to open a business bank account. Typically you’ll need a) your filed paperwork b) your EIN c) a company resolution authorizing your company to open the account (signed by the owners, members, officers or directors, etc.).
Step 6: Business Licenses and Permits
Now that you’ve registered your business name you need to obtain a business license for your company – this authorizes your company to do business in your city or county. Typically this also involves registering for state taxes and permits (the city may require them as part of the business licensing process).
The Go Big in Texas website is a great business portal with information covering revenues, services, and business licensing in Texas.
Step 7: Ongoing Requirements
DBA: Your Fictitious Business Name should be valid for 5 years (unless you change the company name or other information listed on the FBN) at which point you’ll need to renew it with the county.
LLC: Unlike most states, Texas does not require LLCs to file annual reports. They must file annual tax franchise reports with the CPA instead
Corporation: Every year you’ll need to file the “Statement of Information” or Annual report which updates the state on your business address and other things. There is a $400 late fee for all for-profit corporations who do not make the May 1 deadline.
Franchise Taxes: Texas corporations are required to file an annual report with the Texas Comptroller of Public Accounts, due May 15 every year (or the next business day, if May 15 falls on a holiday). There is a $50 penalty for a late filing of a franchise tax, which is calculated as a percentage of the company’s net income for that year.’
At Shann M Chaudhry Esq, Attorney at Law PLLC we have more than 11 years of Business Planning experience and would be happy to help you through this process. You can call the firm at (210)646-9400 or email us at email@example.com to book a free pre-consultation with one of our attorneys to discuss your needs.
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