The entrepreneurial spirit is in full swing, and many people are thinking about taking the jump to open their own business. According to the Texas Economic Development website, Texas is one of the best states in which to start a small business. With its favorable regulations toward Texas businesses, the Lone Star State offers a leg up to those who want to take their business idea to the next level.

Understandably, many people experience hesitation and uncertainty when opening a new business. How much money does it take to get a business idea off the ground? What is a business structure? What is the best way to keep track of expenses?

Most small business owners have asked themselves these types of questions. One more important question might be, "Am I ready to turn my business idea into a reality?"

Here, we'll cover the steps you can take to start your own small business in Texas.

How Much Does It Cost to Start a Texas Business?

Everything is bigger in Texas. From Big Tex in Fair Park to the larger-than-life myth of the cowboy, the bigger, it seems, the better. Not quite for your small business.

In terms of cost, the type of business largely determines how much capital you need. For businesses with more overhead costs, such as a company vehicle, salaried employees, and rent, the initial investment and cost of maintenance can run high. Many small business owners start out with only the essentials. They may wait to hire employees or choose a home-based business to avoid the added expense of renting or buying a commercial space.

When it comes down to the cost of starting your own business, it really depends on the type of business and the needs associated with running and keeping it afloat. Think about your business needs and budget to estimate the amount of capital you need to start your small business. Once you have a realistic number in mind, you can take steps to legally form your new business.

How to Start Your Small Business in Texas

Like most new ventures, there are specific steps you can take to get from point A to point B. Sure, some people enjoy spontaneity in things, but when it comes to forming a business entity, it's best to stick to an organized set of steps so that you don't overlook anything.

We'll cover all the bases, from choosing a business idea you're passionate about to marketing your new business effectively.

Choose a Business Idea

When thinking about going into business for yourself, you want to go with something you can do for the long term. One way you can do this is to choose an industry or niche that excites you — something you are passionate about. Passion can relieve feelings of burden and burnout. Passion can also inspire growth and the desire to continue learning. Staying up to date offers a competitive edge that small business owners need to stay ahead.

Whether you're a creative or technical whiz, choose an industry that sparks your interest and curiosity. From there, it's time to plan.

Develop a Business Plan

Behind any good idea is a plan. A plan can help you organize and prioritize your business needs. This can be an elaborate formal report or a bare-bones outline. The Small Business Administration (SBA) describes these as a traditional or lean startup.

A traditional business plan is comprehensive, uses standard structure, and typically contains the following sections:

  • Executive summary
  • Company description
  • Market analysis
  • Organization and management
  • Service or product line
  • Marketing and sales
  • Funding request
  • Financial projections
  • Supporting documents

A lean startup business plan is a good option for simpler businesses or for those who want to open their business quickly. The SBA recommends including the following components when writing a lean startup plan:

  • Partnerships with vendors, subcontractors, etc.
  • Actions that can help you gain visibility
  • Resources that build value for customers
  • Value statement about what you offer
  • Customer relationships and interaction
  • Customer segments
  • Channels to reach target market
  • Cost strategy
  • Revenue streams

There is no right or wrong way to develop your business plan. Do what works and makes sense for you. Taking the time to hash out the details of your business can help you stay on track with your business goals.

Choose and Register Your Business Name

Choosing a name for your business might be the most exciting part of the process. When you have settled on a name, make sure it's not already in use. You can check this on the SOSDirect website. If your business name is available, you can register it with the secretary of state. This prevents a different entity from using your chosen business name.

Registering a business name isn't required for all types of businesses. For example, a sole proprietor working under the owner's legal name rather than an assumed name isn't required to register.

Choose a Business Structure

Choosing a business structure is an important decision, as it'll affect federal taxes, state taxes, and personal income tax, and it may limit liability protection and determine how you operate your business in the state.

There are six business structures and whichever you choose needs to be filed with the Texas Secretary of State in Austin. Don't worry, you won't have to drive across the Lone Star State to file. You can complete everything you need online for a small filing fee.

The following are the types of legal structures you can choose from. You can find a full description of each type on the Texas Secretary of State website.

  • Sole proprietorship
  • Limited liability company (LLC)
  • General partnership
  • Limited partnership
  • Limited liability partnership
  • Corporation (C or S corporation)

A sole proprietorship is the simplest and most commonly used among small business owners. In this type of business structure, there is one owner who operates the business. They can run their business under their own name or an assumed name. This is also known as a "doing business as" (DBA) name. All required paperwork is filed with the county clerk's office in the same county the business is run.

Another type of legal entity is a nonprofit corporation. Some nonprofits are tax-exempt. To qualify for business tax exemption, the organization must meet specified requirements and apply for the exemption through the Internal Revenue Service (IRS) and Texas Comptroller of Public Accounts. You can find resources for nonprofit businesses on the Texas SOS website.

If you're unsure what legal structure is best for your business, consult with an attorney or tax specialist.

Open a Business Bank Account

Whether on your own, in a partnership, or running a corporation, you want to open a bank account specifically for your business. If working under a business name, have your EIN on hand to provide the bank representative when setting up the account.

Business banking accounts are beneficial for several reasons. According to the U.S. Small Business Administration (SBA), business bank accounts are more advantageous than personal accounts. Some added perks include a line of credit in the event of an emergency, increased purchasing power with a business credit card account, ease of accepting payments from customers, and streamlining your accounting system.

Market Your New Business

Marketing and promoting your business is essential to running your day-to-day operations. After all, if no one knows about you, how can your business survive? There are several ways you can promote your business on your own.

Do you plan to take your business online? Developing a website dedicated to your business is a great advertising tool. When choosing a domain name, stay as close as you can to your business name or industry. Unfortunately, the first choice isn't always available.

Connect your business website to your social media accounts. Here, you can engage and attract potential customers and build a network of possibilities.

It can take some time, but devoting a little time to marketing your business each day can bring rewards.

Apply for Licenses and Permits

Depending on the type of business, you may need federal or state licenses and permits to operate. The SBA shows a complete listing of business activities regulated, such as selling alcoholic beverages or broadcasting. If your business falls under a category, check with the listed federal agency for requirements and fees.

For state licensing, visit the Texas Department of Licensing and Regulation (TDLR). Here, you can find the various license types and apply or renew your license. Several industries, such as massage therapists and property tax professionals, require ongoing education for licensing. The TDLR offers continuing education for these industries.

Let Skynova Be There for Your Small Business

It might be small beans at first, but the hope is that your small business can generate enough profit to stay ahead. With an efficient accounting system, you can monitor your business cash flow and sales tax, create reports, and stay in touch with how your business is doing in just a few clicks. Skynova's accounting software can help simplify your accounting, giving you more freedom to run your business.

Create invoices, manage expenses and payments, and keep accurate records for your small business with Skynova.

Notice to the Reader

The content within this article is meant to be used as general guidelines and may not apply to your specific situation. Always consult with a lawyer or tax consultant to ensure that you're meeting standards and guidelines in Texas.