Even with a pandemic, Houston continues to be one of the best cities to start a business. As a result, now is a great time for starting a business in Houston.
If you’re like many other entrepreneurs, you’ve had a lot of time to think about your new business over the last several months; you’ve probably also wondered how to start a business in Houston.
Typically, the first step is to come up with a business plan. This plan should cover office logistics and lay out the financials of your business, including short- and long-term goals. After that’s out of the way, here’s how to start a small business in Houston.
Starting a Business in Houston: Choose the Right Entity Type
When it comes to how your business will be organized, you have several options. Each has different benefits, and it is important to choose the right business entity for your business:
- Sole proprietorship,
- Limited liability company (LLC),
- General or limited partnership, or
- Limited liability partnership.
Each business entity is slightly different, and the one most appropriate for your business will depend on a number of factors. In general, however, most start-ups and small businesses go with an LLC. This is because an LLC, like a corporation, protects its owners from personal liability.
For example, if your company incurs a debt, its creditors may be able to satisfy that debt using company assets.
If you did not have the liability protection of the LLC, the creditors could come after your assets and property as well. For this reason, choosing the proper business structure is one of the most important parts of starting a business in Houston.
Properly Register Your Business
After you’ve decided on what type of business you will have, it is time to register it. Registering your business makes it real in the eyes of the law and allows you to start operating your business. In most cases, you’ll need to register your business with the Texas Secretary of State.
Whether you’re forming an LLC or a corporation, you’ll have to file a Certificate of Formation and appoint a registered agent. The proper forms for this can be found on the Texas Secretary of State’s website. You can file your Certificate of Formation online through Texas’s SOSDirect online business portal.
Obtain the Right Licenses or Permits
Depending on the goods or services your business will offer, you may also need to obtain additional licenses and permits. These can include
- A federal Employer Identification Number (EIN),
- A Texas sales tax permit,
- Health and safety permits,
- Building and construction permits, and
- Professional or occupational licenses.
Note that Houston businesses that sell goods or taxable services must apply for a sales tax permit.
What Is an EIN?
The IRS assigns businesses an EIN for tax reporting. Generally, if you have employees or operate your business as a corporation or partnership, it is a good idea to obtain an EIN when starting a business in Houston.
Doing so is relatively easy, but if you have questions, you shouldn’t hesitate to contact a Houston business attorney.
Consult a Small Business Attorney
As a business owner, there are several important choices you have to make when starting your business—for example, what entity type you should choose or what business licenses you will need.
Consulting a business attorney who is familiar with how to start a business in Houston can save you time and make sure your business starts off properly.
In addition to providing advice on registration, an attorney can help you avoid common pitfalls when starting a new business. These might include:
- Choosing a name that’s already taken;
- Forming a business entity that isn’t a good fit for your business model;
- Failing to file a “doing business as” (DBA) when required; and
- Improperly drafting operating agreements or bylaws.
As your business grows, you’ll likely need the services of an attorney regardless. Having one who was there from the beginning means your attorney will be more deeply familiar with the goals and needs of your business specifically.
Ready to Start Your Business in Houston?
The Curley Law firm specializes in helping Houston businesses with a number of legal matters.
For over ten years, we’ve helped clients resolve contract and employment disputes, both inside and outside the courtroom.
We have the litigation and transactional experience necessary to resolve nearly any issue our business clients have. If you’re ready to start your small business in Houston, we can help. Contact us today online or give us a call at 832-225-3448 to schedule a case evaluation.