Difference between revisions of "How to Start a Company in Texas"
| Line 33: | Line 33: | ||
'''Determine the potential tax responsibilities of the new business on the federal, state, and local level.''' | '''Determine the potential tax responsibilities of the new business on the federal, state, and local level.''' | ||
| − | At the federal level, the Internal Revenue Service will be the tax collection agency. You will need to apply for a Employer Identification Number (alternatively called Federal Tax Identification Number) so that the IRS can identify your business. | + | At the federal level, the Internal Revenue Service will be the tax collection agency. You will need to [https://www.irs.gov/businesses/small-businesses-self-employed/how-to-apply-for-an-ein apply] for a Employer Identification Number (alternatively called Federal Tax Identification Number) so that the IRS can identify your business. |
The state of Texas imposes a state sales tax on "all retail sales, leases and rentals of goods, and services that are expressly enumerated as taxable under the Texas Tax Code." Additionally, any taxable business chartered, organized, or doing business is subject to a state franchise tax. That said, most small businesses are exempt from this kind of tax. | The state of Texas imposes a state sales tax on "all retail sales, leases and rentals of goods, and services that are expressly enumerated as taxable under the Texas Tax Code." Additionally, any taxable business chartered, organized, or doing business is subject to a state franchise tax. That said, most small businesses are exempt from this kind of tax. | ||
| Line 40: | Line 40: | ||
Lastly, the Texas Workforce Commission will collect Unemployment Insurance tax from most businesses. | Lastly, the Texas Workforce Commission will collect Unemployment Insurance tax from most businesses. | ||
| − | |||
==='''Step 3: Business Licenses and Permits'''=== | ==='''Step 3: Business Licenses and Permits'''=== | ||
Revision as of 17:32, 19 October 2016
Return to Small Business Development Ecosystem of Houston.
Contents
Basic Process
Step 1: Business Structure and Name
Determine the legal structure of the business and properly file the business name with the state and/or county.
| Business Type | Filing Fee ($) | State Franchise Tax |
| Sole Proprietorship | 0 | Yes |
| For-Profit Corporation | 300 | Yes |
| Professional Corporation | 300 | Yes |
| Professional Association | 0 | Yes |
| General Partnership | 0 | No |
| Limited Partnership | 750 | Yes |
| Limited Liability Partnership | 200 | Yes |
| Limited Liability Company | 300 | Yes |
Step 2: Tax Responsibilities
Determine the potential tax responsibilities of the new business on the federal, state, and local level.
At the federal level, the Internal Revenue Service will be the tax collection agency. You will need to apply for a Employer Identification Number (alternatively called Federal Tax Identification Number) so that the IRS can identify your business.
The state of Texas imposes a state sales tax on "all retail sales, leases and rentals of goods, and services that are expressly enumerated as taxable under the Texas Tax Code." Additionally, any taxable business chartered, organized, or doing business is subject to a state franchise tax. That said, most small businesses are exempt from this kind of tax.
Business Inventory Taxes will be collected at the local level, although many municipalities do not tax items that fall under “Goods in Transit Exemption” or the “Freeport Exemption.”
Lastly, the Texas Workforce Commission will collect Unemployment Insurance tax from most businesses.
Step 3: Business Licenses and Permits
Determine necessary licenses, permits, certifications, registrations, and/or authorizations for a specific business on the federal, state, and local level.
There is no general "business" license in the state of Texas, instead there are different licensing procedures for various professions. The Texas Department of Licensing and Registration has a full list of the specific professions that need additional accreditation. You should also contact the local government of the city you are choosing to operate in to find out if there are any specific licensing needed to conduct business.
Step 4: Business Employer Requirements
Determine federal and state employer requirements. There are various laws relating to employment of personnel.
As a business owner you have many obligations. You must fulfill Americans with Disabilities Act requirements, Equal Employment requirements, applicable Safety requirements, Wage and Labor requirements, New Hire Reporting, reporting of Workers' Compensation Insurance, and placement of labor posters.
(For more information please browse through the Texas Small Business Handbook)
Summary on Forms and Fees
Forming a For-Profit Corporation:
- Search trademark: United States Patent and Trademark Office - Free
- Reserve a name for 120 days:
- Completing Form 501 located at http://www.sos.state.tx.us/corp/forms/501_boc.pdf - $40
- Or reserve a name online at SOSDirect - $50 per class[1]
- Prepare a certificate of formation:
- Download the form at http://www.sos.state.tx.us/corp/forms/201_boc.pdf - $300
- Or file online at SOSDirect ($300) and prepare the following necessary information:
- The name and type of entity being formed;
- The names and addresses of directors and registered agents;
- The number and value of initial authorized shares;
- The business purpose for which the entity is being formed;
- The name and address of the organizer (i.e., the person responsible for incorporating the company);
- The effectiveness of the filing, which means when you want the document and the entity to become effective; and
- The signature of the organizer.
- Create bylaws. While Texas does not set out any concrete requirements for a corporation's bylaws, they should usually contain information about internal rules and procedures, responsibilities of officers, the size of the board, how shareholder meetings will be held.[2]
- Request an Employer Identification Number (EIN). Texas requires that you have an EIN, also known as a federal tax identification number, which is used to identify businesses for tax purposes. Apply online for an EIN at https://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/How-to-Apply-for-an-EIN.
Common Forms and Fees
- Certificate of Fact - $15
- Certificate of formation for a Texas entity (except nonprofit corporation, cooperative association, PA or LP). - $300
- Certificate of formation for a Texas nonprofit corporation (form 202) or cooperative association (no form provided) - $25
- Registration or renewal as a Texas limited liability partnership or LLLP. Forms: 701, 703 - $200 per partner
- Foreign entity application for registration (except nonprofit corporation, LLP, cooperative association, or credit union). - $750
- Name reservation (120 days) or renewal. Form: 501 - $40
- Expedited processing of a document submitted for filing (except trademark documents) - $25
- Expedited processing of a request for a certified copy or certificate of status or fact - $10
- Application for Registration of Trademark. Form: 901 - $50 per class
Payment Methods
Fees may be paid by:
- Check (personal or firm checks accepted) or money order payable to the Secretary of State through a U.S. Bank or financial institution
- Credit card (Credit card payments are subject to an additional statutory convenience fee of 2.7% of amount charged.)
- LegalEaseSM debit card
- Prefunded SOS client account
- Cash (for in-person submissions only)
