One of the first thoughts that may cross your mind when thinking about starting a business is how much it will cost. Taxes, registration fees, and the legal makeup of the firm will all affect how much it will cost to launch in Texas. In this post, we’ll look into the costs of forming a sole proprietorship in Texas and address some relevant issues.
First off, no particular formation documents are needed in Texas to register a sole proprietorship. However, if you want to conduct business using a name other than your own, it is advised that you apply for a DBA (doing business as). Depending on the county, the cost to file for a DBA in Texas may differ, however it typically costs $15 to $50.
Additionally, you will require an Employer Identification Number (EIN) from the Internal Revenue Service (IRS) if you plan on hiring staff. You can access this free service from the IRS online, by mail, fax, or phone. You’ll need to enter your business name, address, Social Security number, or individual taxpayer identification number in order to obtain an EIN in Texas.
On the other hand, the price will be higher if you choose to set up an LLC rather than a sole proprietorship. An LLC must be formally incorporated in Texas for a fee of $300 plus an extra $40 for a certificate of formation. Additionally, there are yearly franchise taxes that must be paid, which are computed using the LLC’s net profits.
Finally, you must register with the County Clerk’s office if you intend to run your business in Dallas County under a false name (DBA). The initial owner must pay $24 for registration, and each successive owner must pay $1. The registration must be renewed before it expires because it is only good for ten years.
In conclusion, a sole proprietorship can be a suitable alternative for small business owners because it is reasonably inexpensive to set up in Texas compared to other business structures. To get started, you must register an assumed name if you are operating in Dallas County, receive an EIN if you are hiring personnel, and file for a DBA if you are doing business under a different name. Additionally, it’s critical to keep in mind that running a business could incur extra expenses like taxes and licenses.
In Texas, a sole proprietorship’s fictitious name is referred to as a “DBA” or “doing business as” name.