Texas is home to multiple companies on the Fortune 100 “Best Companies to Work For” list, as well as nearly 2.5 million small businesses. In 2019, the Dallas tech industry saw a boom in small businesses, while Austin was recently named the best start-up city in the nation. If you’re considering opening a brick-and-mortar business in Texas, here’s how to get started.
Decide on Your Business Structure
Before opening a brick-and-mortar location, you’ll need to choose your business structure. There are three basic business structures for brick-and-mortar businesses, namely DBAs, corporations, and limited liability companies (LLCs).
A DBA, or “doing business as,” does not require creating a separate entity for your business. Instead, a DBA is simply a different name that entrepreneurs use as their business name. In Texas, DBAs are filed in the county in which the business is located.
Establishing a corporation requires creating a separate business entity to provide liability protection to the business owner. Corporations involve shareholders, directors, and officers, and are considered more complex than DBAs. If you’re interested in building a large company or raising money for your start-up, a corporation is a preferred choice. Corporations must file a “Statement of Information” report annually in Texas.
Like a corporation, an LLC is a separate business entity. LLCs differ from corporations in their taxation and management structure, as LLCs do not require directors or officers. Over recent years, LLCs have become increasingly popular compared to DBAs and corporations, as they provide liability protection to owners with less complexity than a traditional corporation. LLCs in Texas do not file annual reports but must file annual tax franchise reports.
Choose a Business Name
Choosing the perfect business name can be difficult, especially because a wide range of legal problems can arise from picking the wrong name. Start by making sure your business name is unique and easy to pronounce and spell. Next, conduct a Google search for your business name. Ensure your business name is not taken, and search for potential conflicts within your state or jurisdiction. If you plan to operate on a national level, choosing a unique business name is imperative.
Additionally, check whether your business name is available using the Texas Department of State: Division of Corporation’s business name database and conduct a trademark search through the US Patent and Trademark Office. Check possible misspellings, variations, and plural versions of your business name, as Texas may reject business names that are too similar. Once you’ve chosen the perfect business name, you can register your business under your structure of choice.
Open Company Accounts
After registering your business, you’ll need to open separate bank and credit card accounts for your business. Opening separate accounts will help separate your business expenses, including rent and start-up costs, from your personal expenses and can help you qualify for business tax incentives.
To open a business bank account, contact your bank and ask what steps are required to open a business bank account. Most banks require a business owner to file paperwork and present their federal employer identification number (EIN), as well as a company resolution authorizing the account.
If your business is a corporation or LLC, opening business credit cards can build company credit, which will later help your business qualify for larger loans. In many cases, qualifying for loans or a line of credit can be difficult for new businesses. Texas hard money lenders like Bay Mountain Capital are ideal for business owners looking for funds for a brick-and-mortar location.
Opening a brick-and-mortar business in Texas requires thorough planning and preparation. All in all, following these tips can help ensure the success and growth of your new business.
