As the calendar turns to January, a new business venture represents more than just a fresh start—it's a serious commitment demanding a principled, structured approach. For aspiring entrepreneurs here in Texas, kicking off the new year by officially launching your business requires several crucial steps. Our experience shows that setting a robust legal and financial foundation now is the greatest predictor of future success.
Here are the key steps we advise clients to take right out of the gate:
1. Define Your Entity Structure (And Why It Matters)
The very first decision is arguably the most critical: choosing the correct legal entity. In Texas, popular choices include the Sole Proprietorship, Partnership, LLC (Limited Liability Company), and various Corporate structures (S-Corp, C-Corp).
- Liability Protection: An LLC or Corporation is often preferred because it separates your personal assets from the business's debts and obligations—a crucial layer of protection a Sole Proprietorship does not offer.
- Tax Implications: Each entity is taxed differently. An LLC, for instance, offers flexible tax treatment, while a C-Corp faces "double taxation."
This decision impacts your liability, fundraising capabilities, and tax obligations for the life of the business. It should not be taken lightly.
2. Register Your Business and Secure Your Name
Once the structure is chosen, you must formally register your business with the State of Texas.
- Filing Documents: For an LLC, you will file a Certificate of Formation with the Texas Secretary of State.
- Assumed Name (DBA): If your business will operate under a name different from its legal entity name (a "Doing Business As"), you must file an Assumed Name Certificate in the county where your principal office is located.
- EIN: You will need an Employer Identification Number (EIN) from the IRS, even if you don't plan to hire employees immediately. This is essential for opening a business bank account.
3. Establish Separate Finances
A client-focused approach prioritizes clarity and compliance. The moment your legal entity is formed, you must maintain strict separation between personal and business finances.
- Open a Dedicated Bank Account: Use your newly acquired EIN and formation documents to open a checking and savings account solely for business use.
- Adopt an Accounting System: Implement a basic accounting system (even simple software) to meticulously track income and expenses. This is vital for maintaining the "corporate veil" and simplifying year-end tax preparation.
4. Understand Texas Permit and Licensing Requirements
While Texas is generally pro-business, your specific industry and location may require specific permits or licenses.
- State-Level: Certain professions (e.g., medical, financial services) require state-level occupational licenses.
- Local-Level: Cities and counties often require specific permits for signage, fire safety, or zoning, particularly if you have a physical location. Failing to secure these can result in costly fines and operational delays.
Talk to a Business Formation Attorney in Arlington
Starting a new business in January is an exciting pursuit, but it demands meticulous attention to legal and structural details. Do not treat formation as a simple checklist; treat it as the foundational contract for your business's future integrity and compliance.
At Norred Law, PLLC, we stand ready to guide you through the formation process, ensuring your Texas business starts on the strongest possible footing. We can provide experienced counsel on entity selection, formation filings, and compliance.
Reach out to us today at (817) 500-9433 to schedule a focused consultation.