Starting and running a business may be your dream. But turning your business idea into reality involves certain steps and paperwork. If you have no idea where to start, these tips can help.
Business plan
Although it is not a legal requirement, the first step in starting a business should be drafting a business plan. A business plan is a written document that serves as a roadmap for your business.
A business plan has several sections, starting with an executive summary, which states the purpose of your business and how it will be successful. Other parts of a business plan include detailed information on your product or service, market analysis, organizational structure and financing information.
There is no specific way to write a business plan, although there are templates online that can get you started.
Licenses and permits
Next, obtain any licenses or permits you need to run your business. A general business license is not required in Texas. However, you must still determine if any other licenses, certifications, permits or registrations are required for your specific business. Examine these requirements at the state, federal and local levels.
If you plan to operate your business as a trade name or any other name other than the legal name of the business, you must register a DBA (“doing business as”) for your business. This requirement applies no matter what type of business structure you have.
Partnerships and corporation documents
From there, your necessary documents depend on your type of business structure. If you are forming a partnership, a written partnership agreement details each partner’s ownership share and responsibilities.
If you incorporate your business, your business exists as its own separate entity. This comes with several advantages but it also means there are certain documents you must file.
For example, if you form a C corporation, documents you must file include articles of incorporation and bylaws. You must also hold at least one annual board meeting and file the minutes from that meeting.
Federal tax ID number
Additionally, if you operate your business as anything other than a sole proprietorship, you must apply for and obtain a federal tax ID number or employer identification number through the Internal Revenue Service. When you are a sole proprietor, you can use your own social security number on legal documents.
Starting a business in Texas should be an exciting time. Many people believe that starting a business involves nothing more than having an idea and opening a storefront, but it is much more than that.
As you research the legal requirements and documentation involved, it is natural to feel confused or overwhelmed. Starting a business can feel burdensome at first, which is why it is best to know and understand the requirements up front. Having your documents prepared and ready to go will set you up for success as you begin your life as a Texas business owner.