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How to Start a Business in League City Texas
If you want to know how to start a business in League City Texas, this detailed guide will be an excellent resource for you to refer to today. There are twelve steps that you’ll go through to become a business owner in the state. Following them ensures that you don’t overlook an important part of the researching, planning, and implementation processes required to own a business in Texas.
12 Step Checklist to Starting a Business in League City Texas
- Research and Plan your Business
- Choose a Business Structure
- Create a Business Name
- Register your Business
- Obtain an EIN
- Complete Texas State Registrations
- Apply for League City 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 very first step in the journey of how to start a business in League City Texas begins with research. Knowing the current marketplace and the opportunities it presents by studying the competition is imperative. It helps you target your ideal demographic by becoming very clear who your preferred customers are currently. To appeal to these people, you must know more about their lifestyle and behaviors to market your products and services to them effectively.
After you’ve become very clear who you want to sell to, it’s easier for you to formulate a business plan. The written document serves as a roadmap to your success. It should be straightforward and relatively short so that it doesn’t take a long time to read through it and implement its ideas. A few pages summarizing your business mission and goals is ideal.
Resource: How to Write a Successful Business Plan
When starting a business in League City, it's very important to decide on the legal structure your business will use. It can make or break you financially. Before making your final decision, it’s imperative that you know which types of business structures exist, so you know which one fits your plan best. The most common options entrepreneurs have to choose from include Limited Liability Company (LLC), Corporation, Sole Proprietorship, and Partnership.
- Limited Liability Company (LLC) – This business structure separates the people who own it from the business which protects their personal assets from financial or legal issues related to the business. LLCs have become one of the most popular business structures among small business owners since its combines the liability protection of a corporation wit the pass-through tax benefits of a sole proprietor or partnership.
- Corporation – This business structure is a separate legal entity from the shareholders who own it.
- Sole Proprietorship – This option is the easiest way to start a business in Texas. The business structure is beneficial for single owners. Typically, this option doesn’t require you to register your business but depending on your business, you might need to get permits or licenses.
- Partnership – This business structure is similar to a sole proprietorships except that it is for 2 or more owners.
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.
Among the most challenging steps in the process is coming up with a unique name to give your business. After all, you don’t want your customers to be confused about the operation you run. It’s also vital not to name your business the exact same name as another company. There can be legal repercussions in doing so, and it creates confusion as people try to differentiate one business from another because of their names.
The name that you choose should be three things. First, it needs to sum up what your business is all about. Second, it should be memorable and easy to pronounce. Finally, it should be accessible online when customers search for it. Checking companies that sell web domains and social media platforms for businesses with similar names is something you can do to ensure that you’re not duplicating web addresses and social media handles.
Resource: How to Come Up with a Business Name
At this stage, you are ready to register a business in League City. 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.
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
An Employer Identification Number or EIN is like a social security number and unique to your business. It’s required for tax purposes and necessary to open a business bank account. If you have a Corporation, Partnership, or Multi-member LLC, you must have an EIN registered. LLCs without an EIN and separate business bank account are at higher risk of losing their limited liability protection.
Resource: What is an EIN and How to Apply for One
Not only will you need to comply with federal tax regulations, but you’ll also need to be aware of Texas state regulations too. The type of business you start determines the kind and amount of tax you’ll need to collect on a local and state level. If your business sells physical goods, you’ll need to charge local sales tax on every sale. For the employees that you hire, you’ll pay the Texas Workforce Commission employment tax. Businesses with a tax nexus must pay the Texas Comptroller of Public Accounts all collected sales tax.
Texas State Registration Resources:
A League City Texas business license may be required depending on what you plan to do with your business. For example, any building project requires a building permit. The law may require you to acquire signage permits and professional licensure on the city, county, state, or federal level. The best way to know your particular business needs is to refer to the Texas Economic Development and Tourism Business Permit Office for further advice.
- Federal Business Licenses and Permits
- State of Texas Business Licenses and Permits
- League City Texas Business Licenses and Permits
Now that you’re fully registered as a business and have an EIN, you’ll want to set up a bank account in your business name. For accounting purposes, you must complete this step after you’ve registered with the state of Texas and have a unique identification number for your company. It keeps your personal and professional affairs separate financially. Although you have access to the money kept in the account, the liability falls on your business, not you, personally, when you set up your business bank account this way.
Resource: How to Open a Business Bank Account
Having a way to process credit and debit cards is imperative. An estimated 60 percent of all transactions over $10 in total get charged this way. Learning which credit card processors are available takes research. Keeping transactional fees as low as possible helps your bottom line from the beginning of you opening your business. It’s something you’ll want to put a lot of thought into because it can eat into your profits if you get charged a big percentage of the sales that you make each day.
Resource: How to Accept Credit Card Payments
Keeping accurate records of the various expenditures your business generates each year is imperative. It allows you to see how well you’re performing against projected sales reports and budgets. It helps you keep tabs on the flow of cash that your business has and allows you to make adjustments wherever needed to stay within your budgetary constraints. Many done-for-you software companies offer accurate accounting methods that could help you with this area of your business. You can also hire an accountant after you’ve decided if you’re going to account for your expenditures on a cash basis or using accrual basis accounting methodologies.
Resrouce: Small Business Accounting 101 Guide
Protecting your business against loss is the next step in the process. Researching various companies to see which offer the best business insurance available is something that other entrepreneurs highly recommend. It would limit your liability if a customer or employee were to get injured. A good policy also protects you from natural disasters, theft, and other incidents that could significantly impact your business financially.
There are multiple types of business insurance to have before you make your company public. They are General Liability Insurance, Product Liability Insurance, Professional Liability Insurance, Commercial Property Insurance, Home-Based Business Insurance, and Business Owner’s Policy. Working with your insurance agent is the best way of knowing which of the six insurances you need for your business. It allows you to get the most coverage possible by bundling policies and saving money in the process.
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.
Conduct interviews and background checks on all qualified candidates that you want to hire. While you’re fulfilling your staffing needs, find a payment processor that charges minimal fees. You’ll need a reliable way to pay your employees and keep records of the income paid out for tax purposes. Once you have a reliable timekeeping system in place and enough employees to run your business safely, you’ll be ready to open your doors to the public. It goes for brick-and-mortar businesses and online businesses.