Starting a new business in Texas is exciting but it also has its share of risks and disappointments. The State of Texas has made business registration less daunting for businesses so that they can focus on the priorities instead of being tied up in red tape. For example, application for TX Tax ID is available online. The EIN will be delivered directly to your inbox after a few days.
There are lots of good things about Texas but the best is the support the state extends to businesses. The support provided to the business community is very apparent with the low business licensing fees, lack of red tape when transacting with the local government and abundance of cheap real estate where you can locate the business. Very few states can boast of a similar lack of regulation that Texas businesses enjoy.
The process of starting a business in Texas is relatively straightforward. You have to choose the legal structure that you want your business to be, what type of business you will be starting, whether you will be hiring employees and your comfort with liability. There are some legal structures with free registrations while others are subject to low fees and the state’s franchise tax.
The simplest and common business structure is sole proprietorship wherein an individual owns all assets for the business activity. However, the individual is also solely responsible for all the liabilities of the company. A partnership is composed of two or more individuals. While the business entity is separate from the partners, their assets can be subject to creditor’s demand to satisfy debts and liabilities. Corporations are composed of shareholders. If the corporation is for profit purposes, it must be registered with Texas secretary of state.
Sole proprietorships, partnerships and corporations with employees are required to obtain TX Tax ID to track business dealings. The Tax ID is the business equivalent of the Social Security number that is issued to individuals. The Tax ID is very important when the business opens a checking account with a bank and when tax withheld from employees has to be paid to IRS.