The entrepreneurial spirit has always been strong in Texas. While Texas was still under the control of Mexico, dozens of empresarios were given land grants in exchange for bringing settlers into the area. The most successful empresario was Stephen F. Austin, who inherited the grant from his father. There were other empresarios who were able to fulfill their contracts, but there were also many who failed and suffered significant financial loss. During the 1800s, Texas also offered numerous Americans a chance to reinvent themselves. For example, Richard King was a native New Yorker who ran away to the sea and became a successful riverboat captain. While plying his trade along the Texas coast, he began acquiring the land that would become the nucleus of the King Ranch, which covered approximately 825,000 acres at the time of his death. The entrepreneurial spirit was also evident when wildcatters descended on the state to hunt for oil in the early 1900s. Columbus Joiner, H.L. Hunt and Clint Murchison are some of the best-known figures who made their fortunes in the Texas oil fields.
Other entrepreneurs have taken a more traditional approach when founding businesses in Texas. Ross Perot established Electronic Data Systems in 1962. The first Neiman-Marcus was founded in 1907 in Dallas, and this store is still open. Southwest Airlines was established as Air Southwest in 1967 and remains headquartered in Dallas. Whole Foods Market was launched as Saferway in Austin in 1978. Michael Dell started the company that would eventually bear his name from his dorm room at the University of Texas.
The point is that Texas has always been an excellent state for those who want to start a business. No dream is too big for those in the Lone Star State, but there is plenty of room for those with more modest goals. However, if you want your new business to succeed, there are a few things you should consider before you launch a business in Texas.
Your Business Plan
If you were planning to drive across the country, you would want to have some idea of which series of highways would provide the shortest trip or the most scenic views. You would want to define your starting point and destination, determine approximately how long the journey will take, decide what you want from the trip, and plan your stops along the way. A business plan has some similarities.
• Your business plan should include a short phrase that defines what your business will have as its core mission. Is it to innovate, simplify, deliver value, fill a niche or solve a problem? Will you offer services or tangible goods?
• You must define your target market. Who needs your product or service? Where do they live? What are their ages? Will their income be sufficient to purchase your services or goods?
• You will need a marketing plan. Are your potential customers active on the social media sites? Which sites do they use the most? Do they respond better to email or direct mail marketing campaigns? Choose a primary strategy that takes into account your marketing budget.
• You need to establish some milestones so that you can track the performance of your business. Possible milestones might be six months, one year or five years. Be careful, however. Many fledgling business owners vastly overestimate future sales and underestimate expenses.
The legal structure of your business can affect taxes, liability, leadership and several other matters. Most Texas businesses operate under one of the following structures.
• If you have no partners, you are automatically considered to be operating a sole proprietorship. As a sole proprietor, checks to your business list you as the payee, and any checks that you issue will also bear your name. You do not need to file any documents to form a sole proprietorship. However, you can be held personally accountable for any debts, fines or judgments incurred by your business.
• You can register a fictious business name, also known as “doing business as” or DBA. You can receive and submit payments under your DBA. However, like a sole proprietorship, you can still be held personally responsible for any liabilities related to your business.
• If placing your personal credit history and property at risk worries you, you might consider registering as a limited liability company. Your LLC will be considered as a separate legal entity, so your personal assets are typically protected. It is more economical than incorporating, requires less work to manage, and normally has lower tax rates than a corporation.
• Corporations provide the best protection against potential liabilities, but they are also the most expensive and difficult to create, administer and dissolve. Unless you plan to sell shares in your business to raise funds, you might want to postpone incorporating your business. If your business does well, you can always change its structure later.
You will need to name your new business. Try to pick a name that is unique, easily pronounced and eternal. Perform an online search as a preliminary test. If you do not find any results, visit the business name database hosted by the state’s Division of Corporations.
Licenses and Permits
A Federal Employer Identification Number is mandatory for an LLC or corporation. If you operate as a sole proprietor or DBA, it is only mandatory if you have employees. However, you might want to secure a Federal Employer Identification Number FEIN (Federal Tax ID) to avoid having to use your personal Social Security Number on various documents.
If your goods or services are subject to sales tax, you will need to complete a tax registration application. The Texas Comptroller of Public Accounts has a website where you can complete the application and file your sales tax returns.
There could be permits and/or licenses required by your local government. Some cities, for example, require business licenses, zoning permits or signage permits. Depending on the nature of your business, you may also need to obtain a health permit.
Even if you operate a sole proprietorship, it is not a good idea to use one account for your personal and business income and expenses. This makes it extremely difficult to determine how your business is actually doing, but it also makes it virtually impossible to build a credit profile for your company. To open a business account, you usually need your FEIN and a copy of the paperwork you filed to register your DBA, LLC or corporation.
Marketing Your Business
No matter how great your products or services are, you must make potential customers aware of your business. There are numerous strategies that can be used, but you should not try to employ all of them simultaneously. Choose one or two that fit your budget and have the best chance of reaching your target customers. Put all of your effort into these strategies for a few months. You can then evaluate how well they are working; if the results are disappointing, make adjustments or select a different strategy.
Many entrepreneurs are operating on a small budget, so they feel that they cannot afford professional assistance. However, you should keep an open mind about hiring an accountant or lawyer. You may find that professional assistance can actually save you money on taxes or help you ensure the enforceability of contracts.
When planning to launch a new business, be sure to take advantage of all that the internet has to offer. Texas offers several official websites that go into great detail about what you will need to do, and the Internal Revenue Service is also a great source of information. Furthermore, there are countless sites that are geared toward entrepreneurs, free software programs that you can download, and forums where you can interact with other entrepreneurs. Above all, believe in yourself and your idea.
Business clients can purchase a virtual address for business by leveraging multiple premium physical addresses offered by PhysicalAddress.com to attract international clientele, set up a Corporation or LLC, market their company and virtualize their postal mail.