COMMONLY ASKED QUESTIONS OF THE BUSINESS HATCHERY

When starting a business in the United States, there are generally three main types of for-profit business entities to consider: LLCs, S Corporations, and C Corporations. For many entrepreneurs, an LLC offers the right balance of liability protection and ease of administration.

The basic requirements for starting an LLC in most states, including Texas, include filing a Certificate of Formation, selecting a business name, and paying the necessary filing fees to the state’s Secretary of State office. However, it is advisable to take several additional steps before officially establishing your LLC:

1. Market Research: Research your target market to confirm there is demand for the products or services your business intends to offer.
2. Business Plan: Develop a comprehensive business plan that outlines critical aspects of your business, including your goals, strategies, and financial projections.
3. Operating Agreement: Draft an Operating Agreement that specifies how your LLC will operate, including management structure and member responsibilities.
4. Industry Research: Familiarize yourself with industry guides and resources relevant to your niche to gain insights and a competitive edge.
5. Compliance: Once your LLC is formed, ensure you understand and comply with any local, state, and federal business licensing requirements.
6. Ongoing Filings: Be aware of any ongoing filing obligations, such as annual reports or state tax filings, and fulfill them in a timely manner.
7. Business Bank Account: Set up a dedicated business bank account to separate personal and business finances, which is important for liability protection and financial organization.
8. Accounting: Consider hiring an accountant or using accounting software to manage your finances, including taxes, payroll, and bookkeeping.

These steps are essential for a successful start to your LLC, regardless of the state in which you plan to operate. However, it’s essential to check with your specific state’s regulatory agencies and seek legal or financial advice to ensure compliance with state-specific requirements and regulations.

Registering a company in the United States involves several steps and considerations. Here’s a general overview of the process:

1. Choose a Business Structure:
   • Determine the legal structure of your business. Common options include a sole proprietorship, partnership, LLC (Limited Liability Company), S Corporation, or C Corporation. The choice impacts your taxes, liability, and regulatory requirements.
2. Select a Business Name:
   • Choose a unique and suitable name for your business. Ensure it complies with naming regulations in your state and is available for registration. Many states have online databases to check name availability.
3. Register with the State:
   • Register your business with the appropriate state agency. In most states, this involves filing formation documents, such as Articles of Organization for an LLC or Articles of Incorporation for a corporation, and paying the required filing fees.
4. Obtain an EIN (Employer Identification Number):
   • Apply for an EIN from the IRS if your business has employees, operates as a corporation or partnership, or for tax reporting purposes. You can typically apply for an EIN online.
5. Business Licenses and Permits:
   • Determine the federal, state, and local licenses and permits required for your specific business type and location. This varies based on your industry and location.
6. Taxes:
   • Understand your federal, state, and local tax obligations. This includes income tax, sales tax, and employment taxes. Consult with a tax professional to ensure compliance.
7. Business Bank Account:
   • Open a separate business bank account to keep your business finances separate from personal finances. This is crucial for liability protection and financial organization.
8. Insurance:
   • Obtain the necessary business insurance, such as liability insurance, property insurance, and workers’ compensation insurance, to protect your business and assets.
9. Recordkeeping and Accounting:
   • Set up an effective accounting system to track income and expenses. Keep accurate records for tax purposes and financial management.
10. Employer Responsibilities:
    • If you plan to hire employees, comply with labor laws, including payroll taxes, employment regulations, and workers’ compensation requirements.
11. Business Website and Branding:
    • Develop a professional website and establish a strong branding identity. An online presence is vital in today’s business environment.
12. Marketing and Promotion:
    • Create a marketing strategy to promote your business. This can include online marketing, social media, advertising, and networking.
13. Compliance and Ongoing Reporting:
    • Stay informed about and comply with federal, state, and local regulations. Be aware of any ongoing filing requirements, such as annual reports or tax filings.
14. Business Support:
    • Consider joining local chambers of commerce, industry associations, and networking groups. Seek guidance from mentors or business advisors.
15. Adapt and Evolve:
    • Be prepared to adapt your business to changing market conditions and customer feedback. Continuous improvement is key to long-term success.

The specific requirements and procedures may vary depending on your state and industry. It’s advisable to consult with legal and financial professionals who specialize in small business matters to ensure compliance and a smooth registration process. Additionally, the Small Business Administration (SBA) and your state’s business development agency can provide valuable resources and guidance for starting a business in the United States.

The cost to form an LLC (Limited Liability Company) in the United States can vary significantly depending on the state in which you are forming the LLC and whether you choose to do it yourself or use the services of an attorney or a professional service provider. Here are some typical costs associated with forming an LLC:

1. State Filing Fee: Every state charges a fee for filing the necessary formation documents. These fees can range from as low as $50 to several hundred dollars or more, depending on the state. Some states have annual fees for maintaining your LLC as well.
2. Name Reservation Fee (if applicable): If you want to reserve your chosen business name before officially forming the LLC, there may be an additional fee.
3. Registered Agent Fee (if applicable): In some states, you are required to have a registered agent with a physical address in that state. You can act as your own registered agent or hire a professional registered agent service, which typically costs between $100 to $300 or more per year.
4. Legal or Professional Fees: If you choose to work with an attorney or a professional service provider to help you with the formation process, their fees can vary widely. Attorneys may charge a few hundred to several thousand dollars, depending on the complexity of your needs. Online formation services are often more affordable, with packages starting at around $50 to $300 or more, depending on the services included.
5. Publication Costs (in some states): A few states, such as New York and Arizona, require newly formed LLCs to publish a notice of their formation in local newspapers. These costs can vary significantly depending on the location and publication requirements.
6. Operating Agreement: While not a government fee, it’s advisable to create an operating agreement for your LLC, which outlines the management and operation of the business. You can create one yourself, use a template, or have an attorney draft it for you, which could involve additional costs.
7. EIN (Employer Identification Number): Obtaining an EIN from the IRS is typically free. However, some services might charge a fee to help you acquire one.

It’s essential to check the specific requirements and fees for forming an LLC in your state, as they can vary. Many state government websites provide detailed information on the fees and procedures involved. Additionally, if you choose to use professional services, make sure to understand the breakdown of costs and services they provide.

Keep in mind that ongoing costs, such as annual reporting fees and registered agent fees, may also apply to maintain your LLC in good standing.

The time it takes to form an LLC (Limited Liability Company) in the United States can vary depending on several factors, including the state in which you are forming the LLC and the method you use to file. Here’s a general overview of the typical timeline:

1. Online Filing: Many states offer online filing options for forming an LLC. If you choose this method and have all your required information ready, you can often complete the process in as little as one day or even a few hours. Some states provide expedited processing for an additional fee, which can further shorten the processing time.
2. Paper Filing: If you prefer to file paper documents or if your state requires paper filings, the processing time may be longer. It can take several weeks or more to process paper filings, depending on the state’s workload and processing times.
3. Name Availability: Before you can file your LLC formation documents, you may need to check if your chosen business name is available in your state. This can usually be done online and may take just a few minutes to confirm.
4. Approval and Processing: Once you submit your LLC formation documents, the state’s processing time can vary. It might take anywhere from a few business days to several weeks, depending on the state’s backlog and workload.
5. Publication Requirements (if applicable): In some states, like New York and Arizona, you may be required to publish a notice of your LLC formation in local newspapers. This process can add several weeks to the overall timeline.
6. Additional Requirements: Depending on your state and the nature of your business, there may be additional requirements or regulatory steps that could lengthen the formation process.

It’s important to check with your specific state’s Secretary of State office or the equivalent agency responsible for business filings to get accurate and up-to-date information on processing times and requirements. Many states provide information on their websites, including estimated processing times for different filing methods.

If you’re working with an attorney or a professional service provider to form your LLC, their assistance can expedite the process and ensure that all required steps are followed correctly.

In summary, the time it takes to form an LLC can range from a few hours to several weeks, depending on various factors. Proper planning and research in advance can help streamline the process and minimize delays. If you pay an additional $50 expedited fee, your LLC can be formed in as few as two days.

Performing a business search typically involves looking up information about a specific business entity to obtain details such as its legal name, status, registration number, and other relevant information. Here’s how you can perform a business search:

1. State Business Registry Website:
   • Most states in the United States maintain online business registries or databases where you can search for information about businesses registered within that state. These databases are often managed by the Secretary of State’s office or a similar state agency.
   • Start by visiting the official website of the Secretary of State or the state agency responsible for business registrations in the state where the business is located or registered.
2. Search by Business Name:
   • On the state’s business registry website, look for a search function. This is typically a search bar where you can enter the name of the business you’re interested in.
   • Enter the full or partial name of the business you want to search for. Be as accurate as possible with the name to narrow down your results.
3. Review Search Results:
   • After submitting your search query, the system will display a list of businesses that match your search criteria. Browse through the results to find the specific business you’re looking for.
4. Access Business Records:
   • Click on the name of the business in the search results to access its business records. The available information may include the legal name of the business, registration date, status (active, dissolved, etc.), registration number, registered agent, and more.
5. Additional Information:
   • Depending on the state and the level of detail provided, you may also find information about the business’s owners, addresses, filing history, and any documents filed with the state.
6. Filter or Refine Your Search:
   • Some state databases allow you to refine your search results by adding additional filters, such as location, business type, or registration number. This can be useful if you have a lot of results or if you’re looking for a specific type of business.
7. Download or Print Records:
   • Many state business registries allow you to download or print business records for your reference.

It’s important to note that the specific information available and the search process may vary from state to state. Additionally, some states may charge a fee for accessing detailed business records.

If you’re searching for a business in a specific state, consider visiting that state’s official website for business registrations or conducting a web search with the state name and “business entity search” to find the relevant website.

Registering a business name in a state typically involves a process known as “doing business as” (DBA) registration or a “trade name” registration. This allows a business to operate under a name different from its legal entity name (e.g., the LLC or corporation name). The exact process and requirements can vary from state to state, but here are the general steps to register a business name:

1. Choose a Business Name:
   • Select a unique and suitable business name that complies with the naming regulations of your state. The name should not infringe on trademarks, be misleading, or include restricted words.
2. Check Name Availability:
   • Most states have online databases where you can check if your chosen business name is available. This is an essential step to ensure that no other business in your state is using the same or a similar name.
3. Complete Necessary Forms:
   • Obtain the required registration form for your state. This form may go by different names, such as “DBA registration,” “trade name registration,” or “fictitious name registration.” You can usually find the form on your state’s Secretary of State website or with the county clerk’s office, depending on the jurisdiction.
4. Provide Required Information:
   • Complete the registration form with the necessary information, including your chosen business name, the legal name and address of your business entity (if applicable), and any other required details.
5. File the Registration Form:
   • Submit the completed registration form to the appropriate government office in your state. This office is typically the Secretary of State’s office for businesses operating at the state level or the county clerk’s office for businesses operating at the county level.
6. Pay the Registration Fee:
   • Pay the required registration fee along with your application. The fee can vary significantly from state to state and may also depend on the type of business entity (e.g., sole proprietorship, partnership, LLC).
7. Publish a Notice (if required):
   • In some states, you may be required to publish a notice of your fictitious business name in a local newspaper. This requirement varies by state and locality.
8. Receive Confirmation:
   • After processing your application and payment, the state or county office will typically send you a confirmation or certificate of your DBA registration. Keep this document for your records.
9. Renew as Needed:
   • Be aware that DBA registrations are often valid for a specific period (usually between one and five years), after which you may need to renew the registration by submitting an updated form and paying any applicable renewal fees.
10. Comply with State Regulations:
    • Make sure to comply with any other state-specific regulations related to operating under a fictitious business name.

It’s important to note that DBA registration is primarily for businesses operating under a name different from their legal entity name. If you’re forming a new legal entity (e.g., an LLC or corporation), the process for registering the entity itself involves a separate set of steps, as outlined in previous responses related to starting a business in the United States.

The term “Articles of Incorporation” is commonly used to refer to the primary document filed with the state to legally create a corporation. However, the specific name and format of this document can vary from state to state. Here are some variations in the names and key information regarding the Articles of Incorporation in different states:

1. California: In California, the document is referred to as “Articles of Incorporation.” It typically requires basic information about the corporation, such as its name, address, the purpose of the corporation, and the number of shares authorized.
2. New York: New York uses the term “Certificate of Incorporation” for the document. It includes information about the corporation’s name, purpose, stock structure, and details about the registered agent.
3. Texas: Texas refers to it as “Certificate of Formation” for-profit corporations and “Certificate of Formation – Nonprofit” for nonprofit corporations. It includes information about the corporation’s name, registered agent, and purpose.
4. Florida: Florida uses “Articles of Incorporation” for corporations. It requires information about the corporation’s name, address, registered agent, and the number of shares authorized.
5. Illinois: In Illinois, the document is called “Articles of Incorporation.” It includes information about the corporation’s name, purpose, initial registered agent, and the number of authorized shares.
6. Delaware: Delaware uses the term “Certificate of Incorporation.” It typically includes basic information about the corporation’s name, purpose, stock structure, and registered agent details. Delaware is a popular state for incorporation due to its business-friendly laws.
7. Nevada: Nevada’s document is also referred to as “Articles of Incorporation.” It includes details about the corporation’s name, registered agent, and authorized shares.
8. Arizona: Arizona’s document is known as “Articles of Incorporation.” It requires information about the corporation’s name, registered agent, and the number of authorized shares.
9. Georgia: Georgia uses “Articles of Incorporation” for corporations. It includes information about the corporation’s name, registered agent, and the number of shares authorized.
10. Washington: In Washington, it is known as “Certificate of Incorporation.” It requires details about the corporation’s name, purpose, initial directors, and registered agent.
11. North Carolina: North Carolina refers to it as “Articles of Incorporation.” It includes information about the corporation’s name, purpose, registered agent, and stock structure.
12. Pennsylvania: Pennsylvania uses “Articles of Incorporation” for corporations. It includes information about the corporation’s name, purpose, and the number of authorized shares.

Please note that this information is as of my last knowledge update in September 2021, and the requirements and terminology may change over time. It’s essential to consult the official website of the Secretary of State or the equivalent state agency in the state where you plan to incorporate for the most up-to-date and state-specific information regarding the Articles of Incorporation or equivalent documents. Additionally, you may consider seeking legal counsel or using professional incorporation services to ensure compliance with state laws and regulations.

Yes, you can start a Series LLC in Texas. This is a particular type of LLC where you create one “overall” business and then have individual, series LLCs within it, each counted as separate legal entities.

Yes, all legal business entities in Texas, including LLCs, must have a Registered Agent at all times. Here at Business Hatchery, we provide a free Texas Registered Agent service for the first year if you file through us.

You change your Texas Registered Agent by filing Texas Form 401 with the Secretary of State. Here at Business Hatchery, we provide a free Texas Registered Agent service for the first year if you file through us. If you’ve been using a different Registered Agent and want to switch to us, we’ll file Form 401 on your behalf.

You can find the Registered Agent for a specific Texas business by searching the Texas Comptroller of Public Accounts website. Once you’ve searched, select “Details,” you’ll see the Registered Agent name.

As an LLC, any business profits you earn will be reported on your personal 1040 filing and reported and taxed as “pass-through” income. You will typically need to pay the following:

• Self-employment or payroll tax on all business profits
• Federal income tax on profits after you meet your tax-free allowance
• Sales tax for selling taxable products and services

Unlike many other states, Texas does not have a state income tax.

Texas charges a 6.25 percent state sales and uses a tax on all retail sales, leases, and rentals of most goods. You must also pay sales tax if you provide a taxable service. You can find a complete list of taxable services here.

You must file a Texas State Sales Tax Application with the Texas comptroller. You can complete this process online.

The base rate for Texas sales tax is 6.25 percent, and there may be additional sales tax depending on your region, county, or city. Once you know your overall sales tax amount, calculate the value of all your taxable products and services. Then, multiply that by your sales tax rate to understand how much you will need to pay.

Once your LLC’s sales tax application is approved, you will receive a letter with instructions on how often you must file a sales tax return and pay sales taxes. Returns and payments may be due monthly, quarterly, or annually.

The types of business licenses you need will vary depending on your type of business, industry, location, and various other factors. We can research the types of business licenses you might need for you.

Some businesses will need to pay a franchise tax in Texas.

Typically, if your business has margins of less than $1,180,000 (for 2020 and 2021) a year, you will not need to pay a franchise tax.

If your margin exceeds this, you will pay a franchise tax of between 0.375 and 0.75 percent.

You can find more franchise tax details on the Texas Comptroller’s website.