? Create a Texas Company legal issues and procedures

Start a business in Texas

(a how to do it yourself guide)

I am not a lawyer, I am not an Accountant, this Article does not provide legal or tax advice.  I assume no responsibility for your use of this information.  While it has information regarding the law and legal aspects of starting a new company in the State of Texas; it is meant to provide an overview and checklist to help the new entrepreneur in learning what is needed to plan and establish a new business. If you need legal, tax or other professional advice then you should seek an experienced professional in that field qualified to provide you help.  Most people starting a new business don’t have deep pockets, as least none with money in them, so many of the steps they will opt to do themselves.  It is my hope that you can use this to find the authoritative information needed to start a new company.

Are you sure you want to start a company? Most of the will involve the nuts and bolts of creating a company. I would advise you to take an honest look at what it is going to take to startup a new company and determine if you are both able and willing to meet those needs.

How much do you know about the line of business you plan to start? Starting a business without a good knowledge of the industry is a fast path to economic disaster. Before starting the company, ask yourself how much you really know about the line of business. If you are not well versed in it, then maybe you should consider another line of business, or at least plan to hire someone who does know, and can do it well. Remember over one third of all new businesses fail in the first two years. Most new businesses initially lose money, which is another way of saying that they produce a negative cash flow, if you don’t put enough cash in the business at the start you are going to be writing checks on your personal account. A new business needs to pay close attention to expenses and as such as a new entrepreneur you will be doing a lot of things yourself.

Business Plan You should have done some planning before starting a new company either formal or informal. At minimum you need to know what assets the company will need to do business and where the financing for those assets will come from. You will need to know how you will generate a revenue stream and some idea of how long it will take to do that. If this company will be your primary job, then how are you going to meet your living expenses until the company generates sufficient profits? You might want to consider creating a more formal business plan before jumping in the new business. The Small Business Administration has a good description on creating a business plan and a step by step process for creating a business plan.

If you are going to seek financing for the new company, a business plan will be needed, but you should go through the process even if no one will see it but you. 

Naming your company, before you can get very far in creating a company, you need to decide on the name. It is possible to change the company’s name, or to add another name as a DBA later, but it would be simpler to decide and create the company name you want to use. I suggest that you come up with several potential names and search to be sure they are unused. Search to verify that the name is available for use, I would search in the following places:

  • Internet:
  • Go to a domain registrar’s website such as godaddy.com and key and search for the availability of a domain name with the name you want to use. If the domain is not available, you will not be able to setup up a website or have an email address using your company name.
  • If the domain is not available, and you still want to use that name, check the whois information to determine who has the domain, what it is being used for etc.
  • County and State records
    • The county clerk has access to a database of names being using in the county as a DBA, you may go to the county clerk’s office or many of the larger counties may have this online. Look for your county clerk’s website. A search will be necessary if you file a DBA with the County Clerk.
    • The Texas Secretary of State maintains a statewide database of companies registered with that office. This information is available online, but you will have to create an account to search the information. A temporary onetime use ID is available for $1.00. You will need to search the database if you are planning to create anything other than a simple DBA with the county.
    • This database will also let you search for trademarks. You should try to avoid using a name that another company is utilizing as a trademark. Aside from the obvious legal entanglements, if you are going to build and market your company you don’t need anything that would confuse you with another company.

Creating the legal structure of a company in Texas is inexpensive and quick. However, getting rid of the legal structure if you want to shut it down can be more difficult. If your business needs a special license or other certification, this is beyond the scope of this article; you need to seek professional advice.

If you have reasonable qualifications regarding the industry you are entering, you are also most likely aware of the laws and regulations regarding that industry. A good overview is available from the State itself. See Texas Secretary of State website (www.sos.start.tx.us) for general advice and information regarding the creation of a new company.

The Secretary of State web site is a good starting place for researching the requirements for starting your business.

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