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New business formation law in Texas covers the legal requirements and procedures for starting a new business entity in the state. This includes choosing the right business structure, filing necessary documents, complying with tax requirements, and adhering to state and local regulations. Texas offers several types of legal business entities, such as sole proprietorships, partnerships, limited liability companies (LLCs), and corporations. Understanding these options and the steps involved is essential for anyone looking to start a new business in Texas.
While it is possible to form a business on your own, many people benefit from consulting a lawyer during new business formation. Common situations where legal assistance is valuable include:
A lawyer helps identify potential legal pitfalls early, prevents costly mistakes, and ensures your business is set up correctly from the start.
Texas law requires business owners to follow specific rules and procedures depending on the chosen business structure.
All new businesses must obtain a federal Employer Identification Number (EIN) unless operating as a sole proprietorship with no employees. Texas businesses may also need state or local licenses, sales tax permits, or other regulatory approvals depending on their activities.
Texas does not impose a state income tax on individuals or businesses, but does have a franchise tax applicable to many business entities. Staying informed about state taxes and reporting requirements is critical for ongoing compliance.
The main types are sole proprietorships, partnerships (general or limited), limited liability companies (LLCs), and corporations.
Factors to consider include the number of owners, desired personal liability protection, tax treatment, complexity, and long-term business goals. Consulting a lawyer or accountant can help you make the best choice.
You need to file a Certificate of Formation with the Texas Secretary of State, create a company operating agreement, and obtain an EIN from the IRS.
Business names must be distinguishable from existing entities and, in most cases, registered with the Texas Secretary of State or the county clerk for unincorporated businesses.
Licensing requirements depend on your industry and location. Common requirements include a sales tax permit, city or county business licenses, and industry-specific permits.
Typical requirements include filing annual reports (for corporations and LLCs), paying franchise taxes, maintaining proper records, and renewing licenses or permits as needed.
Most businesses, including LLCs and corporations, need an EIN. Sole proprietors without employees may not be required to have one, but it is often recommended.
A registered agent is a person or entity designated to receive legal and tax documents on behalf of the business. LLCs and corporations in Texas must have a registered agent with a physical address in Texas.
You need a DBA if you operate your business under a name that is different from your own legal name or the registered name of your business entity.
Yes, many business formation filings, such as for LLCs and corporations, can be completed online through the Texas Secretary of State's website.
Several organizations and governmental bodies can assist with new business formation in Texas:
If you are considering forming a new business in Texas, start by defining your business goals and researching the best structure for your needs. Gather information about your industry and location-specific requirements. Consider consulting an attorney experienced in Texas business law to review your plans, answer questions, and prepare your legal documents. An attorney can also help you navigate regulatory requirements, mitigate risk, and set your new business on a strong legal foundation.
To proceed, make a list of questions or concerns, schedule a consultation with a lawyer, and collect any business information or paperwork you may already have. The right legal guidance can make the process straightforward and help ensure your new business complies with all Texas laws.
