How to Get a Business License in Texas
By F. F. John
, last updated December 22, 2011
Small businesses are the backbone of the United States and if you seek to become a business owner in Texas, the process is straightforward. As is the case for all businesses, you must create a business plan and find the funding you need to turn your dream into reality. You must also register your company and thereby obtain a business license. Then, you will be on your way to being your own boss.
Choose Your Business Structure
Deciding you want to own a business is only one part of a very important process in becoming a business owner. You must also choose how the business will be structured. This decision is extremely important because the structure you choose will not only affect how profits are taxed, but also how liability is apportioned if, for any reason, your business has problems. You can settle on a sole proprietorship, a corporation, a general partnership, a limited liability company (LLC), a limited liability partnership (LLP) or a limited partnership. The most popular structure is the LLC because you and any other members of the LLC cannot be held individually liable for the any debts the business accrues. In addition, it allows all taxes to ‘pass-through’ to members. As such, the entity does not pay taxes, but LLC-members must report all profits and losses to the federal government. In Texas, however, LLCs must pay state franchise taxes.
Pick a Business Name
Every business must have a name to be legally recognized. The business name is registered when you file a certificate of formation with the Secretary Of State’s offices. It is best to choose one that will not be too hard for customers or clients to remember and that is not too close to another company with a similar purpose. Once you submit a certificate of formation, the authorities will check to make sure that your name is not too close to another business. If it is, you will have to try a different business name. Therefore, it is best to have two to three potential names ready, in the event the preferred one is not available. Keep in mind, however, that two Texan entities can have a similar name if the established business gives its consent.
Select a Registered Agent
Texas law requires that all businesses that are incorporated in the state have a local-based registered agent. The registered agent can be an individual or organization that will receive all notifications and other documents for the business. Your selected registered agent can be a service company, which performs this function, for a fee, for many other businesses. It must consent to becoming the registered agent for your business.
Submit The Necessary Forms
As noted above, the certificate of formation must be submitted to begin the registration process. If you opt to create an LLC, you must use Form 205. If you seek to register a non-profit, you must complete Form 202. All forms can be completed and submitted online via the state’s SOSDirect website. All filing fees, which depend on the forms submitted, can also be paid online with a credit card. All credit card payments will result in a convenience fee that amounts to 2.7 percent of the total filing fee and other charges. If you choose to, you can also submit your form via mail or via fax. Once your application is accepted, you will receive your business license.