A sole proprietorship is a common and straightforward business structure in Texas. You will be the single proprietor of your company and have total control over how it is run. This article will walk you through the process of forming a sole proprietorship in Texas.
Select a business name in the first step. Your company name needs to be original and not in use by another company in Texas. The business name database maintained by the Texas Secretary of State can be used to determine whether a name is available. For an additional $40, you can reserve a name for a period of up to 120 days.
Step 2: Declare Your Company
Texas does not need sole proprietorships to register with the state. However, you must file a DBA (doing business as) with the county clerk’s office where your business is located if you intend to operate under a name that differs from your own legal name. You’ll be able to utilize your company name lawfully after doing this.
Step 3: Obtain All Required Licenses and Permits You might need to seek particular permits and licenses depending on the nature of your business and its location. For a list of licenses and permissions needed for particular sectors, visit Texas.gov.
Obtain an EIN in Step 4 The IRS issues a special nine-digit number known as an EIN (employer identification number) to identify your business. Even while it’s not necessary for sole entrepreneurs without staff, getting an EIN can help you open a business bank account and keep your personal and professional finances separate.
Step 5: Submit Taxes You will be liable for paying federal income tax, self-employment tax, and state taxes if you operate as a single proprietor in Texas. Schedule C (Form 1040) and Schedule SE (Form 1040) are the tax forms you can use to file your federal taxes. You can submit a Texas Franchise Tax Public Information Report to the Texas Comptroller for state taxes.
In conclusion, establishing a sole proprietorship in Texas is a simple procedure that may be carried out with little difficulty. Although not necessary, getting an EIN and DBA might be beneficial for your company. Additionally, be aware of the taxes you’ll be responsible for paying in Texas as a sole owner.