The $1.9 trillion Texas economy is the second biggest in the U.S., behind only California. Texas ranks fourth for current economic climate and first for its growth prospects, thanks to strong employment and income growth forecasts for the next five years. In addition, there are over 100 of the 1,000 largest public and private companies in the U.S. based in Texas, including giants like AT&T, ExxonMobil and Dell. Entrepreneurial activity ranks fourth in the nation, per the Kauffman Foundation.
Texas has 1,787,607 small businesses, according to the most current federal data available. Of those 1,787,607 small businesses in Texas, 399,323 have employees. The remaining 1,388,284 are Texas small businesses that have no employees.
Big drivers are low taxes and a cost of living that is low relative to major metro areas such as New York, Boston, Chicago and Silicon Valley. Many small-business owners, who often pay taxes at the individual level, appreciate the fact the state has no personal income tax. The state also has a corporate tax rate of zero. Combined, these factors point to free money that business owners can invest in their ventures.
Austin also has a rich entrepreneurial ecosystem, including hubs such as Austin Technology Incubator, located at University of Texas at Austin; the prestigious Techstars Austin accelerator; and a start-up density that puts it in the top 10 for the country, according to the Kauffman Foundation.
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Choosing a business name is important, you want to make it easier for your customers to remember it, here are some tips:
How to find a good domain name:
Its hard sometimes to find an available domain name that matches or goes with your business. You can search at http://godaddy.com or other domain name companies, try to find a short domain, two words or three maximum, and make sure its easy to spell.
Each state has it’s own requirements for registering a business. Now that you’ve chosen a business structure and picked your business name, here are the requirements to register your business in Texas.
DBA’s in Texas are filed with the County in which the business is located.
Your EIN is your business’ tax ID number. It’s required for Corporations and LLC’s and optional for DBA’s (if you don’t have any employees, then it’s required). However, if you are a DBA and don’t obtain an EIN you will be forced to use your Social Security Number on many documents so it’s typically recommended you obtain the EIN to prevent identity theft.
Open a separate account for your business and apply for business credit cards, that way you can start building your business’ credit rating. To open the account simply call your chosen bank and inquire on the steps to open a business bank account. Typically you’ll need a) your filed paperwork b) your EIN c) a company resolution authorizing your company to open the account (signed by the owners, members, officers or directors, etc.).
Now that you’ve registered your business name you need to obtain a business license for your company – this authorizes your company to do business in your city or county. Typically this also involves registering for state taxes and permits (the city may require them as part of the business licensing process).
The Go Big in Texas website is a great business portal with information covering revenues, services, and business licensing in Texas.
DBA: Your Fictitious Business Name should be valid for 5 years (unless you change company name or other information listed on the FBN) at which point you’ll need to renew it with the county.
LLC: Unlike most states, Texas does not require LLCs to file annual reports. They must file annual tax franchise reports with the CPA instead
Corporation: Every year you’ll need to file the “Statement of Information” or Annual report which updates the state on your business address and other things. There is a $400 late fee for all for-profit corporations who do not make the May 1 deadline.
Franchise Taxes: Texas corporations are required to file an annual report with the Texas Comptroller of Public Accounts, due May 15 every year (or the next business day, if May 15 falls on a holiday). There is a $50 penalty for a late filing of a franchise tax, which is calculated as a percentage of the company’s net income for that year.