They say everything's bigger in Texas, and that includes business. If you're ready to start an online business in Texas, you have a lot to look forward to! In Texas, you can start a business quickly, even though the process still takes some time, hard work, and careful planning. We've developed this guide to help you understand what you need to do and get you started on the path to success.
Texas is very friendly toward small businesses, with low fees and relatively few regulations. It has the third-lowest business costs of any state in the US, and the city of Austin has been ranked as the best in the nation for startups. Dallas has a massive tech industry that reaches worldwide. Even if you aren't in a large metropolitan area, as the state with the second-largest population in the country, Texas fosters a business environment with which few states can hope to compete.
Are you ready? Let's get started!
Every business needs to be founded on a well-defined idea to ensure the greatest chances for success. If you already have a business idea (and chances are that you do), you should still read this part of the guide to help you further refine your idea and build a strategy around it.
The passion you have for your business will reflect on how well it performs, and customers can tell when they're dealing with a business that cares. This is why you should choose an industry you have a genuine interest in, as you can bring your existing knowledge to the business. Maybe your business idea has grown from a hobby you've been nurturing throughout your life, or perhaps you've identified a common problem you know how to solve for your future customers. Either way, being passionate about your business will help keep you focused and enable you to bring your expertise to the forefront of all your business operations.
Market research is your crucial next step, in which you identify your target customers and the extent of the need for your products and services. You need to find out who your competition is, and look for any weaknesses in their offerings where you can step in and build something that does the job better. This is important for developing your unique value proposition (UVP), also called a unique sales proposition (USP). Your UVP is what makes you different from other businesses in your industry and helps your brand stand out among the competition. Anything from specialized knowledge, to your brand ideals, to your store policies and more can be central to your UVP — it just needs to shine through every aspect of your business so your customers can learn to value and trust you.
A great business name needs to be unique, brandable, and easy to remember. It should also reflect what your business does, and if possible, refer to your UVP in some way. The best business names help project value right away, so customers immediately know what you do and what makes you their best choice, but this isn't a hard and fast rule. Still, naming a business can be a significant challenge, especially when so many names are already taken.
You're also going to need a domain name (URL) for your website, and usernames on various social media channels like Facebook and Twitter. It's very helpful for your domain name and social media handles to be the same, and to be the same as your actual business name as well. Some variation is fine, and recommended if it helps your domain name become easier to remember, but don't stray far enough to cause confusion. Having your business name, domain, Facebook, Twitter, Instagram, and other social media accounts all under the same name will help customers find you more easily. It's not absolutely required to be this way, but this is why some businesses choose their domain name and social media usernames at the same time as they choose a business name. Some entrepreneurs even search existing domains and social media to ensure they aren't taken before choosing the name of the business.
You'll also need to find out if your business name is already taken in Texas. Business names are handled by the Texas Secretary of State, and you can use their website to search for existing registered Texas businesses.
As you may expect, there are also rules for business names in Texas, and despite the low level of regulation overall, the list of rules is too extensive to reproduce here. In short, you cannot choose a business name that's too similar to another (as this is viewed as a deceptive practice), you can't use certain words, and there are other words or abbreviations you'll need to include. Familiarize yourself with these rules; you can find them on the Texas Secretary of State's website.
Now you need to find out if your desired business name is already taken as a URL. This is easy — just enter it into a domain registrar's search box to see if someone else has already registered it for their website.
Lastly, you should do a trademark search to check whether someone has trademarked your desired name for their own business or products. Rules for trademarks are slightly laxer in the sense that they can use similar names as long as the services or businesses they refer to are completely different. Search for trademarks on the US Patent and Trademark Offices' Trademark Database. As to whether you need to get your own trademark, it's not required, but can serve as an extra level of protection for your business — you can learn about trademarks on the USPTO website and decide whether you need one.
Just as you can't build a house without a foundation (at least, not one that will last for any length of time), you can't start a strong business without a solid plan. A well-written business plan will help you structure your business properly, reach your goals, and grow at the pace you desire. It may seem intimidating, but it's not difficult to learn how to write a business plan, and you can easily find templates online to help you out. In summary, your business plan needs to include the following:
Your business structure determines how you'll file taxes and also defines how "separated" you are from the business itself in case of liability. Every business structure has its own requirements, and some are clearly better suited for businesses of different sizes and with different goals. Choose your business structure based on your goals and your vision for growth.
The four main business structures are sole proprietorship, partnership, limited liability company, and corporation. Each is meant to serve differing needs and goals that should be determined at the beginning as part of your business plan. There are also subcategories, like limited partnerships, C corporations, and S corporations. Here are the basics:
• A sole proprietorship is intended for a one-person business, essentially defining the business as being "the same" as the owner. It's very easy to set one up, but also quite limited in scope — sole proprietorships are meant to remain small and last only as long as their owner's lifespan. Since the business and the individual are the same, there's also no liability protection, which means your personal assets are at stake if the business is sued or falls into debt.
• A corporation is owned by shareholders, including the business owner, and managed by a board of directors who can be elected by the shareholders based on the business's charter. Corporations are the hardest type of business to set up and come with a lot of responsibilities, regulations, and paperwork, but offer full liability protection. Corporations can also sell stock. Overall, they're best for businesses that are starting out with enough capital and personnel to handle the responsibilities, and intend to grow much more in the future.
• A limited liability company (LLC) combines many of the advantages of the other business structures, including liability protection and ease of setup. It takes more work than a sole proprietorship, but much less than a corporation. The main disadvantage is that an LLC cannot sell stock, but this isn't an issue for businesses that aren't interested in that aspect. LLCs are the most popular structure for small businesses.
Carefully consider which business structure you want to use before making a final decision. The Texas Secretary of State has more information about business structures and how to choose. If you're still stuck, consider contacting a business attorney or tax adviser. You can also check out our free ebook below, which includes a detailed guide.
Every business needs to be fully registered to operate in compliance with the law. Registering your business in Texas is a relatively easy process you can do online. You can find the pertinent forms available for download on the Texas Secretary of State website and start e-filing through their SOSDirect service, linked on the same page. Make sure you know which forms you'll need for your desired business structure, and that you're ready to pay the required fees.
All businesses need to collect sales tax on their products, and must file accordingly. While some business owners can file under their own social security number, it's worthwhile to get an Employer Identification Number (EIN) instead so you don't need to use your personal SSN on business documents. You'll also need your EIN to get a business bank account and to apply for business loans. Applying for an EIN is easy and instructions are available on the IRS website.
Your business may be subject to certain state taxes as well as federal income tax. While Texas is quite business-friendly, some taxes are still imposed but depend on your business structure, whether you have employees, and other factors. You can find complete information on business taxes in Texas on the Texas Comptroller of Public Accounts' website. This includes up-to-date information on all the taxes your business may need to pay, and will help you understand your exemptions. If you're not sure, contacting a tax attorney is your best course of action. The business-focused website Go Big in Texas also has some excellent resources on taxes and the overall process of starting a business.
Texas doesn't put as heavy of an emphasis on licensing as some states, but you still need to do your due diligence to ensure you operate inside the law. The licenses you need will depend on whether you operate a brick-and-mortar store that customers can access (as opposed to selling exclusively online), and the industry your business is in.
While there's no need for a general business license in Texas, you'll need to check the Texas Department of Licensing and Regulation's website to see if your industry requires specific licenses and permits, and which ones you'll need.
Many new business owners are reluctant to set up a business bank account, envisioning heavy fees and a tedious selection process. However, you should never use your personal bank account for a business, even if you're a sole proprietor. The IRS frowns on the act of commingling your business and personal funds, and on a practical level, it makes accounting harder as well — and can harm your liability protection.
A business bank account is also required for most payment processors and other financial services, and you'll also need one if you choose to apply for a business loan or credit card. Fortunately, getting a business bank account is easier than it seems, and certainly not nearly as expensive as you might fear. In fact, Fundera maintains a list of banks offering free business checking accounts, as well as a list of the best business banks in Texas.
Once you've followed the rest of this guide to build a strong, legal foundation for your business, you're ready to start building your eCommerce website so you can make your business known! Of course, you want your website to include an easy-to-use shopping cart for customers to buy your products, but there's more to it than that. Before you build an eCommerce website, understand that it's more than just an online store — it's the central online headquarters of your brand, and should help establish your presence as a leader in your field.
Choose a website builder that's focused on eCommerce from the beginning, not a generic website creator with a few shopping cart and marketing plugins. This will ensure your website is fully optimized for selling online from day one, and give you access to the best tools and features to assist you in running your business and providing an excellent experience to customers. If you want to learn more about building your eCommerce website, we have a free guide you can download below.