If you want to be successful as an entrepreneur and business owner, you have to chart a course towards profitability. In Plano Texas, you have found a business environment that will provide you with a great opportunity for success due to the large influx of new people and businesses moving into the state.
As you start your Plano Texas business endeavor, you will need to get everything off to a good start. To do that, you need to know how to start a business in Plano Texas. Following, you will find a road map that should help you put together a solid plan to guide you along the way.
12 Step Checklist to Starting a Business in Plano 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 Plano 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
Before you do anything, you need a general idea of what you will face as you start developing your business. First and foremost, you need to research the legalities surrounding the running of a business in your community.
Once you have a sense of direction, you can put together a business plan. Your business plan should focus on the steps you will need to take to get the business from a concept to viable business organization.
Resource: How to Write a Successful Business Plan
One of the very first things you will need to address is what kind of a business structure you wish to organize your business under. Your basic options are:
- Limited Liability Corporation (LLC) – Small businesses that operate LLCs have personal asset protection if the company has any issues, either financial or legal. Preferred pass-through means that the owner pays taxes on their individual income but not what the business earns or loses. There’s more flexibility with an LLC for small business owners than some other business entities, making it a preferred choice.
- Corporation – A corporation is a formal business structure that creates a legal person separate and distinct from shareholders. The shareholders each hold one or more shares of stock representing their ownership interest. The corporation has a set of characteristics that include limited liability, management centralization, ongoing duration and ease of ownership transferability interests. Profits are taxed at the corporate rate before distribution to shareholders.
- Sole Proprietorship – Sole proprietorships are the simplest business form in which you conduct business without a formal organization. You do not need to register the business, however, you are limited to operating under a business name that includes your personal name. You can operate under a name that does not include your personal name by filing a DBA, commonly referred to as an “Assumed Name” in Teas. Sole proprietors have the downside of having unlimited personal liability.
- General Partnership – A partnership is formed by two or more people to conduct business for profit. It is not a separate legal entity, meaning the owners have unlimited liability should the business experience an issue. A general partnership has pass-through tax status, meaning taxable income is passed to the partners for taxing on personal tax returns.
Each option comes with its advantages and disadvantages related to business function, financing of the business, legalities, and taxes. It is incumbent on you to figure out which type of business structure will offer you the most benefits in terms of taxation, profitability, and protection against litigation.
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.
You will want your business name to be unique and easily recognizable. The name should speak to the products or services you will be providing. When you have a few business names in mind, you will want to check with the Texas Secretary of State (SOS) to determine name availability. When you find the right name and it’s available, you will need to register the name with the SOS.
Resource: How to Name your Business Guide
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
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
Once you have a viable and legal business entity, you can apply to the IRS for your Employer Identification Number (EIN). This is a unique number that the IRS will use to track your company for tax filing purposes. The number might also be used in reference to employment issues. Information regarding how to secure your company’s EIN is available on the IRS.gov website.
Resource: What is an EIN and How to Apply for One
Once you have completed your federal registration, it’s time to complete your state-level registrations. You’ll need to register with the state of Texas to ensure your business will be in a position to comply with the state’s tax regulations. Your company’s tax obligations in Texas will include the filing and payment of state employment taxes. If you are selling products, you will need to collect, report, and pay state sales taxes.
Texas State Registration Resources:
This is the point where things get a little complicated. Your business will occupy a position within a certain industry. At the city, county, and state levels, you might need certain licensing and permits to carry on your business of choice. Licensing pertains mostly to service-oriented businesses while permits are often needed to sell certain products (alcohol, tobacco).
It is critical that you apply for the right Plano Texas business license and permits before you open for business. Failure to secure the proper licenses or permits can lead to significant fines and penalties, which is not a good way to start a business.
- Federal Business Licenses and Permits
- State of Texas Business Licenses and Permits
- Plano Texas Business Licenses and Permits
Keeping track of business and personal expenses is a necessity, so you must have a separate bank account for your business. Accounting and bookkeeping are less complex when you keep business and personal assets separate. If your business is an LLC or a corporation, you could lose the liability status. If someone ever files a lawsuit against you, personal and business assets could be a target if they aren’t kept in separate accounts.
As you well know, Americans don’t like carrying cash. It is incumbent on you to give your customers the option to pay for goods and services with their debit/credit cards. It’s a matter of convenience for your customers that will likely cost you a small fee.
If you have a brick-and-mortar store, you can use a simple card reader during the checkout process. It’s affordable, easy to use, and a simple process. You can also choose a point of sale transaction (POS) system that is an integrated computerized network. A POS provides inventory management, credit card processing, and transactions.
Online retail and eCommerce stores can set up accepting credit cards through the website builder such as BigCommerce, Shopify, and WordPress.
Resource: How to Accept Credit Card Payments
From the moment you pay your first business registration fee, you will need to start tracking all of your business transactions. In the early days, you can probably do it by hand. However, you will want a good and reliable accounting software product in place as your business activities increase.
When you select an accounting software package, you will need to consider the scope and needs of your business. If you anticipate growing your business as fast as possible, you will want to select accounting software that will meet your current and future needs.
Resrouce: Small Business Accounting 101 Guide
To protect you and your business, you will want to secure a range of business insurance products. At the least, you will want to purchase liability insurance to protect you from claims that a customer or employee might level at you or the company. Types of small business insurance include:
- Business owner’s policy
- Commercial property
- General liability
- Home-based business
- Product liability
- Professional liability
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.
At this point, your business is almost ready to open its doors. Now, you need to secure your company’s most valuable assets, employees. As you go through the selection process, you need to focus on getting the best talent possible. To do that, try to put together an employment package that will draw the best possible employees. Remember, employees, are the ones within your organization who can make or break your business right out of the gate.
Also, you need to be ready to process that very first payroll with tax tracking and payment capabilities. The ability to handle this responsibility could be integrated into your accounting software package. If not, you might want to consider outsourcing your company’s payroll processing with an accounting firm or payroll processing company.