Between March 2019 and March 2020 69,430 small businesses opened in Texas and 60,952 small businesses closed. This statistic demonstrates the difficulty of successfully operating a small business. Starting a business is a daunting task and anything which can make success even a little bit easier is always welcome. That is why this article will outline several steps which any business can undertake to ensure the best possible start it can have.
Pick A Business Name
While this may seem like a small and superfluous task, it is actually very important for the success of your business. A good business name will set your business apart from the competition. Your business’s name will also be the foundation of your business’s brand which is extremely important in the current business environment. Good branding can be the difference between success and failure and it all starts with a name.
Incorporate An LLC
One of the best ways to establish any business is to incorporate an LLC. An LLC is a limited liability company. This is a business entity which provides limited liability protection to the business owner. This means that if the business goes into debt or goes bankrupt, creditors cannot expropriate the assets of the business owner. Similarly if the business owner goes bankrupt in a personal capacity creditors cannot expropriate business assets. To get a head start on LLC formation in Texas consult this website for help.
Request An EIN
An EIN is an employee identification number and it functions like a social security number for a business. This is required to open a business bank account which is highly recommended. It is also the first step in the process of developing business credit. An EIN will also be useful for tax purposes as it is necessary when filing tax withholdings for employees as well as filing for other forms of tax.
Ensure You Have The Correct Licenses And Permits
This will not necessarily apply to every small business as Texas does not require any general business licenses. However, depending on the type of business which you are operating the state may require you to acquire a license or a permit to operate. These usually have a small administrative fee attached to them. In the case that you do require a permit or a license it is mandatory to acquire them in order to operate legally.
Make Sure You Meet The Business Employer Requirements
These requirements will vary from business to business and will also depend upon whether your company has employees or not. It is recommended to consult a business lawyer if you are unsure about which state requirements you need to meet as this varies based on your business. You may be required or highly recommended to take out certain forms of business insurance including: general liability insurance, workers compensation insurance and business property insurance. These forms of insurance can protect you from lawsuits as well as an unforeseen event which could compromise your business.
Get A Business Bank Account
This is the best way to separate your personal finances from your business finances. As previously mentioned it is also the first step toward building business credit which is incredibly valuable for your business. You can also use your business bank account to start a business credit card which you can use for your business expenses as well as for developing your business’s credit score.
Included in this article are many valuable pieces of advice for how to best start a small business in Texas. While every business is different there are also certain commonalities which every business shares and this advice can help your business succeed. An LLC, good business credit and compliance with state laws will aid your business tremendously put your business on the path to success.
When you make the commitment to expand and improve your business, you need the best talent available. You will be limiting your future growth if you don’t tap into the skills of remote freelancers available all around the world. Voices notes that veteran entrepreneurs agree that hiring freelancers has many benefits, including the potential to create a talent network specific to your needs. By simplifying the process into four easy steps, as Blu Dragonfly outlines here, you will have an actionable plan for building a happy and productive team of international freelancers for your business.
- Lay Administrative Groundwork
Taking care of some key administrative tasks before introducing new employees or freelancers to your business will save you trouble in the long run. You will want to have your financial affairs in order, which may entail opening a business bank account for processing payments to your future freelancers.
Establishing a sustainable business structure is also important, so you may consider forming a limited liability company that will be subject to certain tax advantages and other flexibility benefits. You can avoid costly lawyers by using an LLC formation service to establish a business structure that complies with your state’s laws.
- Determine the Type of Freelancer You Need
As a business owner, you should differentiate between the help you need locally and the tasks you can source to remote freelancers. Job Hunt points out that some common freelance fields include web development, accounting, and writing. When hiring remote workers for these tasks, be sure to think about the type of individual you would like to keep on your team long-term. You will be more likely to find a fruitful business partner in a freelancer with a skill set that can scale well into future projects. It is equally important to consider how consistent an individual’s work is with your existing brand design and voice.
- Find and Hire Freelancers
Social media and freelance marketplaces are great platforms for advertising work opportunities with your business. If you prefer to scout out potential workers yourself, you can search online job boards for remote workers. For example, you could use Guru or similar sites to hire freelancers from Denmark. When you need to pay your workers, consider using a reliable low-fee money transfer service instead of typical payment platforms and expensive international wire transfers.
- Maintain Communication and Productivity
Completing your team of freelancers is not the end of your involvement in a business project. You have to continue to manage your team and may need to facilitate communication between several individuals across various time zones. Determine your team’s preference on a centralized communication channel, be it email or a third-party messaging app.
When collaborating on documents, you may need to make significant text or formatting edits to PDFs. To make this less of a hassle, try using an online conversion tool that automatically converts a PDF to Word, so you can quickly and easily edit it. Just upload your PDF, convert the file, start working in Word, and then save it as PDF when you’ve finished editing it.
With an outline for building a productive team of freelancers, you can tackle any business project with the best professionals from around the world. Your remote workers will be happier and more effective knowing that their team is being thoughtfully managed. Should you decide to expand your business, you might even use your prior experience to efficiently oversee multiple teams of international freelancers.
Blu Dragonfly creates relevant, meaningful, and personalized brand assets that ring in harmony with each other. Connect with us today to find out more! (214) 714.5344
Article by: Sarah Bull
The State of Texas is powered by 49 Fortune 500 companies, around 3 million small businesses, and thousands of publicly traded companies. The Lone Star State has a diverse, skilled workforce of over 14 million, and the economy of Texas is the 9th largest in comparison to other nations of the world. This is why it should come as no surprise that large tech corporations are moving or expanding their operations into the state. Tech giants such as Oracle, Tesla, Hewlett Packard, Samsung, Dell, and Advanced Micro Devices all have a strong presence in Texas– proving that the state is well on its way to becoming the tech hub of the United States.
Austin Chamber of Commerce CEO Laura Huffman told local news sources that she anticipates Tesla to lead Austin into another strong year, saying, “We estimated … that for every job Tesla brought, you would get between four and six other non-Tesla jobs. We’re seeing that happen.”
Huffman went on to explain that Austin’s evolution into a manufacturing and technology nerve center has persuaded other businesses to consider expansion or relocation into the region. She noted Oracle announcing its headquarters moving to Austin and Samsung deciding late last year to deliver a $17 billion semiconductor plant to Williamson County.
Benefits of Starting a Business in Texas
With so many tech giants taking advantage of the benefits that the texas business ecosystem provides, many small businesses are following the lead of large corporations. By incorporating into the Lone Star State at the onset, entrepreneurs avoid the hassle of having to move their operations later on. The process of starting a new business in the state will vary depending on the business structure; sole proprietorships and partnerships do not require much work with regards to paperwork; however, C and S Corps require a significant amount of formalities.
LLCs, on the other hand, are somewhat of a hybrid structure that combines the flexibility of a sole proprietorship or partnership while still providing members with a significant amount of legal asset protection. Starting a Texas LLC is significantly less complicated and more cost-effective than starting a corporation.
Entrepreneurs will be required to file the Certificate of Formation with the Texas Secretary of State. The filing process will incur a filing fee of $300 that is payable to the Texas state. The application process can be completed online or by mail. The Certificate of Formation is a legal document that will officially create the LLC in Texas.
Prior to application, entrepreneurs will have to decide on a name for the business. This should be carefully selected and should not contradict any of the naming regulations or guidelines that have been set out by the local, state, and federal authorities. Entrepreneurs will also be required to assign a registered agent who will accept all correspondence from the government on behalf of the business. They will also reserve any legal service of process should the business be implicated in a lawsuit.
TRUiC is a great online platform for further research; this website will provide more in-depth information on how to start an LLC in Texas.
Texas is a business hub that is buzzing with innovation and talent. With the strong backing from the state and impressive tax incentives, it is no wonder that more and more businesses have been moving to the Lone Star State. CEO of Tesla, Elon Musk, not only moved his operations to Texas but has since taken up permanent residency in the region as well, solidifying his faith in the benefits that the state provides. Small businesses will also be able to benefit from the impact that these larger companies will have on the economy of the state.
The East Texas Council of Governments (ETCOG) has recently begun funding the incorporation of free-to-use software that will assist businesses, real estate developers, as well as site selectors to find the best local properties for their needs. ETCOG authorities are helping cities fund access to ZoomProspector, which is an online program that will cut down the time and effort it takes entrepreneurs to research new sites for development.
The program works by collecting data on the necessary demographics, all available properties, talent pools, income statistics as well as other vital information that will provide users with a more comprehensive picture of the area’s economic opportunities. Chuck Vanderbuilt, ETCOG’s community, and economic development manager, reportedly “hopes the program will attract locals and outside business developers toward doing business in East Texas.”
“I think it’s useful for someone who is interested in promoting their community,” Vanderbilt said. “Or that small business owner that’s looking to make decisions on starting a business here or making the leap and expanding.”
Texas as a whole has become a hub for business operations and opportunities; the state is currently one of only four states to successfully recover all jobs that had been lost during the covid-19 pandemic, with the unemployment rate in the state dropping from 12.9% to around 5%. This is due to the business-friendly climate that Texas has created, giving entrepreneurs the freedom and resources that they require to grow their companies.
Small Businesses in Texas
Small businesses make up around 99.8% of the total number of businesses in Texas. With the second-largest gross domestic product, valued at $1.77 trillion annually, the Lone Star State does not impose any corporate or individual income taxes as well as no state property taxes. The state provides the perfect playground for entrepreneurs to explore their possibilities.
Many entrepreneurs that are looking towards Texas to start up their small business opt for an LLC business structure. This is because they are provided with the legal protection that structures such as C and S Corps have while still benefiting from the flexibility that sole proprietorships and partnerships provide. LLCs, therefore, allow their members to protect their personal assets– such as their vehicles, properties, and savings– if something should happen to the business. LLCs also provide credibility and options for members to save on taxes.
Entrepreneurs that are looking to start up a new business in Texas are advised to read more about starting an LLC to ensure that the business structure is suitable for their needs.
Why are Large Corporations Moving to Texas
Texas is now home to a number of tech giants and large corporations, many of which have migrated or expanded into Texas because of the state’s ability to promote growth. After Tesla began its expansion into Texas, the company’s CEO, Elon Musk, had taken up residency in the Lone Star State himself.
There are multiple reasons why companies and individuals have been moving to Texas – lower housing costs, better tax rates, and a limited amount of regulations have made it easier for businesses to operate in the state. Texas boasts an abundance of technical talent, and any company moving into the region is able to tap into that well-experienced talent pool.
The State authorities in Texas have a long-standing tradition of providing businesses with a treasure trove of resources to aid in the expansion and development of small businesses and large companies alike. The Lone Star State provides the ideal climate for entrepreneurs to explore their potential and tap into the abundance of skills and tools that the state has to offer.
The Texas labor market has managed to rebound from the covid-19 pandemic. The rapid population growth in the state is driving demand for jobs. With the number of new businesses taking up operations in the area, unemployment levels have seen a steady decline dropping to 5% in December last year. Texas is, in fact, one of just three other states that have managed to recoup the jobs that had been lost since 2019.
With new startups on the rise, the decision regarding the business structure that a new startup will take on is an important decision that every entrepreneur will have to make. The process often requires consultation with an attorney and accountant to ensure that the decision made is the best possible option for the direction that the business wishes to grow in. The decision-making process will involve taking into consideration issues regarding tax, continuity, transferability of ownership interests, liability, management, and formality of operation.
Starting an LLC in the Lone Star State
Limited Liability Companies are a common business structure that has proven popular among new startups in Texas. A Texas limited liability company is relatively easy to create and is made official by filing a certificate of formation. This is done with the Texas Secretary of State. The Secretary of State provides entrepreneurs with a form that meets minimum state law requirements. The online filing of a certificate of formation is also allowed, and this is provided through SOSDirect.
Entrepreneurs that wish to start an LLC in Texas will have to follow these steps:
Choose a name for the LLC
The name of a business is extremely important, as a strong name will leave a lasting impression on consumers and will be the foundation of the brand’s image. In Texas, a business will have to follow these naming guidelines in order to successfully register a business:
- Business owners must use an LLC designator in the name of the business.
- Cannot use words that could confuse the business with another business structure, e.g., “Corp,” “Inc,” “Non-Profit.”
- Terms such as “bank,” “university,” “law center,” or other assuming words can only be used if approval from the proper authorities is obtained.
Assign a registered agent
A registered agent is required for all Texas LLCs and essentially is any individual or entity that has provided consent to receiving tax forms, legal documents, official notices, as well as any other important documents or correspondence from the U.S government on the business’s behalf.
File the LLC Certificate of Formation
To officially form the LLC as a separate legal entity, members will have to file the LLC Certificate of Formation with the Texas Secretary of State. This can be done via mail; however, it is more convenient to complete the form online.
Create a Texas LLC Operating Agreement
In Texas, entrepreneurs do not have to file their operating agreement; however, it is good practice to have one in place. A comprehensive agreement will outline essential aspects such as how the business will operate and the ownership agreement.
Get an EIN
Assigned to businesses by the IRS, an Employee Identification Number helps the government identify a business and essentially will act as the company’s social security number. The IRS will use the number to keep track of the business’s tax reporting.
Forming an LLC in Texas is a great way to capitalize on the state’s business-friendly environment while still receiving superior asset protection should there be a case where the business is unable to pay off debts or is facing a lawsuit. The business structure covers all members of the LLC by keeping their assets separate from the business.
California’s mild climate, educational opportunities, and the job prospects that the state provides have proven attractive to workers for tens of years which helped turn the area into a hub for the tech industry. However, the region’s status as the center-of-the-tech-universe seems to be fading at a rapid rate. Silicon Valley has been the epicenter for the tech industry in the United States; however, there appears to be a paradigm shift due to the high housing costs, unfavorable tax rates, and stricter regulations that have made it difficult to live, work, and do business in the region.
As a result, more businesses are drifting away from the San Francisco Bay area and migrating into Texas. The growth that Texas has experienced is so great that the state now has more jobs than it did prior to the unemployment spike caused by the covid-19 pandemic. The job growth is strongly driven by population gains, which has significantly outpaced the rate that the rest of the country had seen in recent months– based on federal data.
Starting a Business in Texas
Texas LLC formation has proven to be a popular choice among new entrepreneurs as well. Teaming the zero income tax that the state imposes with the pass-through taxation that LLCs are subjected to means that members of an LLC in Texas will turn over a larger profit. An LLC is therefore considered as a pass-through entity, which is also referred to as a flow-through entity. This means that the LLC will pay taxes through an individual income tax code instead of through a corporate tax code.
Registering an LLC comes with a filing fee of $300, which is payable when filing the Certificate of Formation with the Texas Secretary of State. The filing process can be conducted by mail or online, and correctly filing this document will officially form the Texas LLC– making it a legal entity that is registered with the state of Texas. However, before this can be done, entrepreneurs will be required to complete other requirements.
Naming the LLC is an important aspect and is a detail that needs to be included when filing the Certificate of Formation. A good business name should evoke emotion in a consumer and should accurately represent what the brand stands for. It should also be catchy enough to grab the attention of a customer, yet simple enough that they are able to easily remember the name. Keeping this in mind, entrepreneurs will also have to strictly conform to the rules and guidelines that have been laid out by the local, state, and federal authorities. This will ensure that while the name is exciting and memorable, it does not cause confusion or infringe on any copyrights of other businesses.
A registered agent will also need to be assigned as their details will be needed when filing for registration. Details such as the agent’s address and contact details are necessary since a registered agent is the official line of communication that the state will use when contacting the business.
While New York may be called the city of dreams, Texas is definitely the state that has been turning dreams into a reality. The Texas Economic Development webpage states, “Texas offers the best business ecosystem in the nation and has frequently been named the best state to start a business. Our leading business climate and favorable regulatory environment provide the groundwork small businesses and entrepreneurs need to succeed.” With the strong support of the government and the thriving business ecosystem, the Lone Star State is well on its way to becoming the new epicenter for technology in the United States.