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How to Start a Business in Carrollton Texas
Learning how to start a business in Carrollton Texas is easier than you think. It all comes down to knowing the right steps to take at the right time. In this article, we’ll guide you through all of the moves you need to make to register a business in Carrollton Texas. The sooner you get established, the sooner you can turn a profit.
12 Steps Checklist to Starting a Business in Carrollton Texas:
- Research and Plan your Business
- Choose a Business Structure
- Create a Business Name
- Register your Business in Carrollton, TX
- Obtain an EIN
- Complete Texas State Registrations
- Apply for Carrollton Business Licenses and Permits
- Open a Business Bank Account
- Set up Credit Card Processing
- Establish an Accounting System
- Get Business Insurance
- Hire Employees and Set Up a Payroll
The first step to knowing how to start a business in Carrollton Texas is knowing just what kind of business you want to create. It's a good idea to put some time and effort into creating a plan for your business. A bit of market research and competitive analysis will let you know if your plan is feasible or needs some readjustments.
The business plan that you create should be brief, detailed, and straight to the point. You want to lay out what the goals for your business are as well as the various pros and cons of starting it. What are you offering to the public and how can do you it differently than your rivals? How can you do it even better than your competitors?
Resource: How to Write a Successful Business Plan
Your next step will be to choose the basic structure of your business. You can choose from among the following models:
- LLC (Limited Liability Company) - An LLC is a business that is legally separate from the individuals that own it. If the business has financial or legal issues, these will not affect the owners personally. An LLC is classified as a pass-thru tax entity, similar to sole proprietorships and partnerships.
- Corporation - A corporation is owned by shareholders with the proviso that the business itself is a legal entity separate from them. Each shareholder holds a certain amount of stock that will determine their share of profits from the company. This is the arrangement that will give you the strongest level of liability protection.
- Sole Proprietorship - A sole proprietorship is the easiest structure to adopt if you intend to remain the sole owner and employee of your business. The main drawback is that you will not be a separate legal entity from your business. This leads to unlimited liability, which could be a major drawback if you are ever in trouble legally or financially.
- Partnership - A partnership is an informal business consisting of two or more owners. It's classified as a pass-through tax entity, meaning that the business's profits are passed to its owners, who are required to pay taxes via their personal tax returns.
If you're seeking more help deciding between which business structure would be best for your business, read our helpful guide on how to choose the right business structure for you.
Naming your business is more crucial than you may realize. You want to have a name that defines your business and its goals. This needs to be a unique name that no one else is using. It needs to be one that can help to create your public brand. Try to choose one that is easy to spell, easy to pronounce, and easy to remember.
The name that you choose for your business will strongly influence the first impression that you make on a potential customer. For this reason, it needs to be a strong one. Pick an evergreen name that is immune to trends.
Resource: How to Come Up with a Business Name
Once you've determined your business name and structure your ready to register a business in Carrollton. You need to register your business according to the business structure. The process will vary depending upon the business structure you choose. Below you'll find a brief description of the registration process for each business structure along with a link to a more in-depth guide on its registration process.
Register a Texas LLC
An LLC needs to file formation paperwork with the Texas Secretary of State known as Form 205, Certificate of Formation - Limited Liability Company. The Texas Secretary of State charges a filing fee of $300 to submit Form 205, which can be done online or by mail. You'll need to conduct a name availability search before filing the Certificate of Formation to ensure the business name you chose is available.
Resource: How to Start an LLC in Texas
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Register a Texas Corporation
The formation process for a Texas Corporation is similar to that of an LLC. You'll need to file Form 201, Certificate of Formation - For-Profit Corporation with the Texas Secretary of State and pay the $300 state filing fee.
Resource: How to Form a Texas Corporation
Register as Sole Proprietorship
A sole proprietorship in Texas doesn’t require any filing with the state if you choose to use your own name. However, if you want to use a business name that doesn't include your personal name, you need to register with the county clerk to get a "doing business as name" or DBA. Since parts of Carrollton are in Dallas, Denton, and Collin counties, you'll need to ensure you reach out to the correct county clerk depending upon your business's location.
Register a Partnership
Partnerships are quite easy because it doesn’t require any formal filings unless you don’t plan to use the partners’ surnames in the name of the business which requires you to file an Assumed Name Certificate.
Resource: How to Start a Partnership in Texas
Next, you need to get an Employer ID Number (EIN - EINs are sometimes referred to as a FEIN or Tax ID). The IRS will need it to properly identify your business when it comes time to file your taxes. This is mandatory if you are forming your business as a corporation, partnership, or LLC with multiple members. An EIN can be obtained for free by visiting the IRS Online EIN Assistant.
Resource: What is an EIN and How to Apply for One
Your obligations for paying your taxes will vary according to the type of business that you form. You will most likely need to file sales tax and employer taxes. If your tax nexus is located in Texas, you need to collect and send this amount to the Texas Comptroller of Public Accounts.
Texas State Registration Resources:
Now it's time to gain your Carrollton Texas business license. You won't need a general business license in Texas. However, you may require a number of licenses that are specific to your business. These may be necessary at the federal, state, or local level or any combination thereof.
Examples of licenses you may need for your business can include building permits, permits for signage, and any number of other professional certifications. To get the complete list of licenses your business may require, you can contact the Texas Economic Development and Tourism’s Business Permit Office.
- Federal Business Licenses and Permits
- State of Texas Business Licenses and Permits
- Carrollton Texas Business Licenses and Permits
You will need to fully separate your business from your personal bank account. This is a must in order to guarantee full and timely payment of your business taxes. You'll need a business bank account to organize your bookkeeping and accounting. It will also be your best method of protection should your business be involved in a lawsuit.
Resource: How to Open a Business Bank Account
You'll need to set up an account to process credit card payments from your customers. This may include a point of sale at your physical business or a merchant account for your online business.
Resource: How to Accept Credit Card Payments
Your next step should be to establish an accounting system in order to keep track of your outgoing expenses and incoming payments. The difference between these figures should represent your level of profit. An accounting system will allow you to create realistic budgets, pay your taxes correctly, and plan for new growth and expansion.
Resrouce: Small Business Accounting 101 Guide
You will need to obtain an adequate policy of insurance for your business. Doing so will allow you to minimize your financial risks. Your insurance will allow you access to coverage should you be visited by an unforeseen accident, lawsuit, or natural disaster.
Resource: Read our Small Business Insurance Guide, we go over the six types of business insurance so that you can make sure you’re covered.
Your final step should be to hire your staff and set up payroll to cover their wages. This will give you the documentation you need to make sure your employees are paid fairly and in a timely manner. It will also cover you in case you are brought to court by an employee who claims they were not paid their full due.