Texas Coworking Entrepreneur Resource - How to Start a Business in Texas A 10 Step Guide to Transforming Your Business Idea into Reality
Many people dream of owning and running a business of their own, but it can be a challenging and confusing process. At Venture X Dallas Coworking by the Galleria, we know firsthand that getting started can be one of the most intimidating parts of the process. To clear up confusion and help you take the first steps to starting your very own business, we’ve put together a guide to walk you through starting a small business.
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1. Conduct Market Research
The first step in creating a business is to figure out how to make your business idea viable on the current markets. Market research is the process of finding out about the needs and preferences of consumers. Essentially, market research is what will allow you to find customers and understand the other businesses on the market that you will be competing against.
It is important to conduct market research at the start of your business journey because understanding the consumer base you are targeting will inform the steps you take moving forward and help you to reduce risk along the way.
Market research can be conducted using already existing sources, by going to consumers directly with interviews and surveys, or a mixture of the two. According to the Small Business Administration, you should find the answers to these questions to begin your market research:
Demand. Is there a desire for your product or service?
Market size. How many people would be interested in your offering?
Economic indicators. What is the income range and employment rate?
Location. Where do your customers live and where can your business reach?
Market saturation. How many similar options are already available to consumers?
Pricing. What do potential customers pay for these alternatives?
2. Create a Business Plan
It is also important to create a business plan in the early stages of setting up your business. A business plan is the foundation of any business, as it guides you through each stage of starting and managing your business.
While there is no right or wrong method of creating a business plan, lenders and investors are most likely to ask for a traditional business plan, which goes into detail about every aspect of the business and is often dozens of pages long. Business plans take a significant amount of time and effort, but having a well-written business plan will pay off in the long run.
A traditional business plan usually has the following sections:
Organization and management.
Service or product line.
Marketing and sales strategies.
3. Gather Business Funding
Starting any kind of business involves some kind of cost, even if you plan to work from home and be your business’ only employee. These costs can include paying for a website domain, registering your business, and purchasing adequate equipment to conduct your business with.
Once you have determined how much funding your business will need to begin with, there are a variety of sources that you can obtain capital from, including:
Venture capital from investors.
Small Business Administration-approved loans.
Most businesses use a combination of two or more of these types of funding.
4. Choose a Location For Your Business
An important step in budgeting and funding your business is to determine where you will conduct your business from. Knowing your target market will help you figure out the best geographical location to run your business from, based on where your consumers are located. Other factors to consider include:
Region-specific business expenses.
Local zoning ordinances.
State and local taxes.
State, local, and federal government incentives.
Aside from choosing a geographical location for your small business, you will also need to figure out where your employees will be working from. While locating a specific office can wait until closer to when you are ready to start working, your choice of office can have a significant impact on your budget and overhead costs.
Consider whether a coworking space, also known as a shared office space or a flexible office space would meet your business’ needs. Some of the benefits of using a VentureX coworking space for new businesses include:
Flexible contracts that allow you to expand into more space as your business grows.
Multiple office types depending on your needs.
Access to other VentureX locations included in the cost of one membership.
Around-the-clock keycard access to your office.
A prestigious business address and mailing address to boost your business’ professional reputation.
Reduced overhead costs because the coworking space takes care of expenses such furniture, cleaning, and front of house staff.
Unique networking opportunities.
Onsite amenities covered in the cost of membership.
5. Choose a Business Structure
Another important decision to make is what business structure fits your business model best. Each type of business structure varies in how it is taxed, how it is treated legally, and how its assets and liabilities are separated from your personal assets and liabilities.
The business structures in the United States are:
Partnership, either liability partnership or limited liability partnership.
Limited liability company (LLC).
Corporation, which can further be divided into C-corporation, S-corporation, B-corporation, closed corporation, and nonprofit corporation.
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6. Protect Your Business Name
Your market research will help you come up with a creative business name that targets the correct niche and reflects your business values and mission. Once you have come up with a name for your business, you will have to protect it.
While most businesses try to use the same name for each registration, you are usually not required to. There are four ways that you will need to register your business name:
Entity name. An entity name protects you at the state level. Laws vary from state to state and depend on your business structure, but most states will not allow you to register under a name that another business has already registered under. Additionally, some states may require that your entity name reflects the kind of business you are conducting.
Trademark. Trademarking your business name and the name of your products protects you on a national level. When your products and business names are trademarked, other businesses cannot use the same names. Protect your intellectual property.
DBA (doing business as). Your DBA name is the name that you conduct business under. Usually, multiple businesses in the same state can register under the same DBA, so you will be less restricted when choosing one.
Domain name. Your domain name is your website address. No one else can use your domain name as long as you own it.
7. Register Your Business
Unless you choose to conduct business as a sole proprietorship (which does not come with liability protections or tax exemptions), you will have to register your business with multiple government agencies.
Federally, you will need a federal tax ID. If you have chosen to operate as a non-profit, you will have to register your business as a tax-exempt entity with the IRS.
You may need to register with multiple state agencies, depending on the location of your business and employees. You are generally considered to be operating in a state if:
Any of your employees work in that state.
A significant portion of your revenue comes from that state.
You frequently meet clients in-person in that state.
Your business has a physical presence (such as an office or storefront) in that state.
In the state of Texas, you can register your business through the Secretary of State’s website.
8. Obtain Tax ID Numbers
Employer Identification Numbers (EIDs), or tax ID numbers, operate similarly to social security numbers, but for businesses instead of individual people. They allow you to pay taxes, withhold employee taxes, and receive tax returns.
You will need a federal EIN if your business:
Uses a tax-deferred pension plan
Withholds employee taxes
Operates as a corporation of partnership
Files tax returns for employment, excise, or alcohol, tobacco, and firearms
Although the state of Texas does not usually have a state tax for businesses or individuals, you are still required to register for a state EID in most cases. Fortunately, the processes of obtaining federal and state tax ID numbers are similar and easy to follow.
9. Apply for Licenses and Permits
In Texas, general business licenses are not required. However, certain industries are regulated by the state government; if your business operates in one of these industries, you will likely need a license or permit. Industries requiring licenses and permits in Texas can be found here.
At the federal level, you will also need a license or permit to run a business in an industry regulated by a federal agency, such as:
Firearms, explosives, and ammunition
Fish and wildlife
Mining and drilling
Radio and television broadcasting
Transportation and logistics
10. Open a Business Bank Account
Before spending or receiving any money under the name of your business, you should open business bank accounts. You can do this as soon as you have your federal EIN.
Business checking and savings accounts offer perks that personal bank accounts do not, such as:
Protection. Keeping your business funds separate from your personal funds offers limited liability protection.
Professionalism. Customers will be able to make checks out to your business instead of to you personally, which helps build a professional business image and reputation. Business accounts also allow you to assign financial management responsibilities to employees instead of having to handle them yourself.
Preparedness. Most banks offer you the option to open a line of credit as needed, which can save you in an emergency.
Purchasing power. Credit card purchases under the name of your business will help you establish your business’ credit history.
Take Advantage of the Benefits of Coworking for Small Businesses
If you are a small business owner, freelancer, entrepreneur, or startup, see if coworking is right for you by scheduling a free tour at Venture X Dallas by the Galleria today.