Frequently Asked Questions
Do You Have what it takes to start a business?
1. Do I have what it takes to own/manage a small business?
You will be your own most important employee, so an objective appraisal of your strengths and weaknesses is essential. Some questions to ask yourself are: * Am I a self starter? * How well do I get along with a variety of Personalities? * How good am I at making decisions? * Do I have the physical and emotional stamina to run a business? * How well do I plan and organize? * Are my attitudes and drive strong enough to maintain motivation? * How will the business affect my family?
2. What business should I choose?
Usually, the best business for you is the one in which you are most skilled and interested. As you review your options, you may wish to consult local experts and businesspersons about the growth potential of various businesses in your area. Matching your background with the local market will increase your chance of success.
3. What is a business plan and why do I need one?
A business plan precisely defines your business, identifies your goals and serves as your firm's resume. Its basic components include a current and pro forma balance sheet, an income statement and a cash flow analysis. It helps you allocate resources properly, handle unforeseen complications, and make the right decisions. Because it provides specific and organized information about your company and how you will repay borrowed money, a good business plan is a crucial part of any loan package. Additionally, it can tell your sales personnel, suppliers and others about your operations and goals.
4. Are there government funded programs available to help me start my business?
There are state and federal funded programs available to assist a business owner in starting their business. State of Texas Resources - Federal Resources
5. Where can I find information on my industry?
A great place to begin research on your industry is through your industry trade association(s). A free online list of trade associations is available from the American Society of Association Executives.
6. What types of permits and licenses are generally needed for starting a business?
In addition to local permits and licenses which may be required, some businesses require specific licenses by the State of Texas. A complete list of Business Licenses and Permits required for each type of business is available at the Texas Department of Licensing and Regulations.
7. Do I need a Federal Employer Identification Number (EIN) or tax number?
If so, how can I obtain one?
An Employer Identification Number (EIN) is a nine-digit number that the IRS assigns and uses to identify taxpayers that are required to file various business tax returns. EINs are used by employers, sole proprietors, corporations, partnerships, nonprofit associations, and trusts, estates of decedents, government agencies, certain individuals, and other business entities.
In some cases, sole proprietors with no employees and no sales tax can simply use their own social security number for tax purposes, but most businesses will need an EIN. You can apply by phone, fax, or mail. A downloadable form (SS-4) is available on the IRS website .
8. Who is required to hold a Texas sales and use tax permit, and how do I get one?
You must obtain a Texas sales and use tax permit if you are engaged in business in Texas and you:
- sell tangible personal property in Texas;
- lease tangible personal property in Texas; or
- sell taxable services in Texas.
The requirement to obtain a Texas sales and use tax permit applies to individuals as well as corporations, firms, partnerships, and all other legal entities.
Information on obtaining a permit, on-line registration, or contacting your local field office is available from the Texas Comptroller of Public Accounts.
9. What is a fictitious name? Why do I have to register a fictitious name?
A fictitious name is a name used for business purposes that differs from the true name of the owner of the business. It is very important to do a thorough search when considering a business name. If a corporation and an unincorporated company have very similar names, neither automatically has the right to the name. If both parties have properly filed the Assumed Name Certificate, the courts will most likely have to decide this matter. Taking the time necessary to conduct the name research up front will help avoid legal costs after the business is opened and operating.
10. What is a business entity?
There are several legal structures available for businesses operating in Texas including sole proprietorship, general partnership, limited partnership, corporation, limited liability company or limited liability partnership. A professional tax consultant, accountant, and/or attorney should always be consulted before determining your legal structure.
11. How do I file a business entity registration of "DBA"?
Once the legal structure of the business has been determined, and if a separate business name will be used, the business name must be registered with the county clerks office and/or the Secretary of State.
If the business will operate as a sole proprietorship or a general partnership, an Assumed Name Certificate or d.b.a. (doing business as) for each name (or deviation of that name) the business will use must be on file with the county clerk in each county where a business premise will be maintained.
All businesses operating in Texas as limited partnerships, registered limited liability partnerships, limited liability companies, corporations, professional corporations, nonprofit corporations, and professional associations must register with the Secretary of State. For more information, contact the Secretary of State
12. Which form of business organization should I choose?
The answer depends on the balance you seek between complexity of the firm, liability limits, tax implications, the need to raise capital, the need for the business to continue after a death, the number of owners, and so on. If your business is a fairly risk-free "mom and pop" operation then a sole proprietorship or general partnership may be appropriate. For most businesses who plan to grow or engage in activities with risk, limited liability is an important issue. For these companies, an LLC, an LLP, or a Corporation are probably good choices.
A professional tax consultant, accountant, and/or attorney should always be consulted before determining legal structure and business name. General information and business name searches are available at (512)463-5555.