How to Start an Online Business in Texas

Steps to start and launch an online business from the ground up

Online Business in Texas

They say everything's bigger in Texas, and that includes business. If you're ready to start an online business in Texas, you have a lot to look forward to! In Texas, you can start a business quickly, even though the process still takes some time, hard work, and careful planning. We've developed this guide to help you understand what you need to do and get you started on the path to success.

Texas is very friendly toward small businesses, with low fees and relatively few regulations. It has the third-lowest business costs of any state in the US, and the city of Austin has been ranked as the best in the nation for startups. Dallas has a massive tech industry that reaches worldwide. Even if you aren't in a large metropolitan area, as the state with the second-largest population in the country, Texas fosters a business environment with which few states can hope to compete.

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Table of Contents

Begin with a Business Idea

Every business needs to be founded on a well-defined idea to ensure the greatest chances for success. If you already have a business idea (and chances are that you do), you should still read this part of the guide to help you further refine your idea and build a strategy around it.

The passion you have for your business will reflect on how well it performs, and customers can tell when they're dealing with a business that cares. This is why you should choose an industry you have a genuine interest in, as you can bring your existing knowledge to the business. Maybe your business idea has grown from a hobby you've been nurturing throughout your life, or perhaps you've identified a common problem you know how to solve for your future customers. Either way, being passionate about your business will help keep you focused and enable you to bring your expertise to the forefront of all your business operations.

Market research is your crucial next step, in which you identify your target customers and the extent of the need for your products and services. You need to find out who your competition is, and look for any weaknesses in their offerings where you can step in and build something that does the job better. This is important for developing your unique value proposition (UVP), also called a unique sales proposition (USP). Your UVP is what makes you different from other businesses in your industry and helps your brand stand out among the competition. Anything from specialized knowledge, to your brand ideals, to your store policies and more can be central to your UVP — it just needs to shine through every aspect of your business so your customers can learn to value and trust you.

Begin with a Business Idea

Come Up with a Business Name (and Domain for Your Website)

A great business name needs to be unique, brandable, and easy to remember. It should also reflect what your business does, and if possible, refer to your UVP in some way. The best business names help project value right away, so customers immediately know what you do and what makes you their best choice, but this isn't a hard and fast rule. Still, naming a business can be a significant challenge, especially when so many names are already taken.

You're also going to need a domain name (URL) for your website, and usernames on various social media channels like Facebook and Twitter. It's very helpful for your domain name and social media handles to be the same, and to be the same as your actual business name as well. Some variation is fine, and recommended if it helps your domain name become easier to remember, but don't stray far enough to cause confusion. Having your business name, domain, Facebook, Twitter, Instagram, and other social media accounts all under the same name will help customers find you more easily. It's not absolutely required to be this way, but this is why some businesses choose their domain name and social media usernames at the same time as they choose a business name. Some entrepreneurs even search existing domains and social media to ensure they aren't taken before choosing the name of the business.

Business Name

You'll also need to find out if your business name is already taken in Texas. Business names are handled by the Texas Secretary of State, and you can use their website to search for existing registered Texas businesses.

As you may expect, there are also rules for business names in Texas, and despite the low level of regulation overall, the list of rules is too extensive to reproduce here. In short, you cannot choose a business name that's too similar to another (as this is viewed as a deceptive practice), you can't use certain words, and there are other words or abbreviations you'll need to include. Familiarize yourself with these rules; you can find them on the Texas Secretary of State's website.

Now you need to find out if your desired business name is already taken as a URL. This is easy — just enter it into a domain registrar's search box to see if someone else has already registered it for their website.

Lastly, you should do a trademark search to check whether someone has trademarked your desired name for their own business or products. Rules for trademarks are slightly laxer in the sense that they can use similar names as long as the services or businesses they refer to are completely different. Search for trademarks on the US Patent and Trademark Offices' Trademark Database. As to whether you need to get your own trademark, it's not required, but can serve as an extra level of protection for your business — you can learn about trademarks on the USPTO website and decide whether you need one.

Create a Business Plan

Just as you can't build a house without a foundation (at least, not one that will last for any length of time), you can't start a strong business without a solid plan. A well-written business plan will help you structure your business properly, reach your goals, and grow at the pace you desire. It may seem intimidating, but it's not difficult to learn how to write a business plan, and you can easily find templates online to help you out. In summary, your business plan needs to include the following:

  • 1
    Executive summary: a basic overview of your business and the mission or purpose you intend.
  • 2
    Business description: a more detailed description of your business with an explanation of how you'll operate.
  • 3
    Market analysis and competition: present the proof of a need for your business, analyze demand, and explain how your business differs from your competitors.
  • 4
    Your product or service: a detailed explanation of what you sell.
  • 5
    Marketing and sales plan: explain how you'll market to customers and convince them to convert.
  • 6
    Ownership, management, and personnel: a description of the employee structure your business will use.
  • 7
    Financial plan and projections: this is a detailed explanation of your financial plans including a timeframe for seeing a return on your initial investment.
  • 8
    Investment: describe the return on investment referenced above, for everyone who has put resources into the business, including you and any other founders.
  • 9
    Appendices: supporting documentation for other parts of your business plan.

Choose a Business Structure

Your business structure determines how you'll file taxes and also defines how "separated" you are from the business itself in case of liability. Every business structure has its own requirements, and some are clearly better suited for businesses of different sizes and with different goals. Choose your business structure based on your goals and your vision for growth.

The four main business structures are sole proprietorship, partnership, limited liability company, and corporation. Each is meant to serve differing needs and goals that should be determined at the beginning as part of your business plan. There are also subcategories, like limited partnerships, C corporations, and S corporations. Here are the basics:

  • A sole proprietorship is intended for a one-person business, essentially defining the business as being "the same" as the owner. It's very easy to set one up, but also quite limited in scope — sole proprietorships are meant to remain small and last only as long as their owner's lifespan. Since the business and the individual are the same, there's also no liability protection, which means your personal assets are at stake if the business is sued or falls into debt.

  • A partnership is similar to a sole proprietorship, except split among multiple people. The split includes responsibilities, profits, and liability, and it has similar advantages and disadvantages.
  • A corporation is owned by shareholders, including the business owner, and managed by a board of directors who can be elected by the shareholders based on the business's charter. Corporations are the hardest type of business to set up and come with a lot of responsibilities, regulations, and paperwork, but offer full liability protection. Corporations can also sell stock. Overall, they're best for businesses that are starting out with enough capital and personnel to handle the responsibilities, and intend to grow much more in the future.

  • A limited liability company (LLC) combines many of the advantages of the other business structures, including liability protection and ease of setup. It takes more work than a sole proprietorship, but much less than a corporation. The main disadvantage is that an LLC cannot sell stock, but this isn't an issue for businesses that aren't interested in that aspect. LLCs are the most popular structure for small businesses.

  • Business Structure

    Carefully consider which business structure you want to use before making a final decision. The Texas Secretary of State has more information about business structures and how to choose. If you're still stuck, consider contacting a business attorney or tax adviser. You can also check out our free ebook below, which includes a detailed guide.

    Download the experts guide on how to choose the right shopping cart solution for your business.

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    Register Your Business

    Every business needs to be fully registered to operate in compliance with the law. Registering your business in Texas is a relatively easy process you can do online. You can find the pertinent forms available for download on the Texas Secretary of State website and start e-filing through their SOSDirect service, linked on the same page. Make sure you know which forms you'll need for your desired business structure, and that you're ready to pay the required fees.

    Register Your Business
    Set Up Business Taxes

    Set Up Business Taxes

    All businesses need to collect sales tax on their products, and must file accordingly. While some business owners can file under their own social security number, it's worthwhile to get an Employer Identification Number (EIN) instead so you don't need to use your personal SSN on business documents. You'll also need your EIN to get a business bank account and to apply for business loans. Applying for an EIN is easy and instructions are available on the IRS website.

    Your business may be subject to certain state taxes as well as federal income tax. While Texas is quite business-friendly, some taxes are still imposed but depend on your business structure, whether you have employees, and other factors. You can find complete information on business taxes in Texas on the Texas Comptroller of Public Accounts' website. This includes up-to-date information on all the taxes your business may need to pay, and will help you understand your exemptions. If you're not sure, contacting a tax attorney is your best course of action. The business-focused website Go Big in Texas also has some excellent resources on taxes and the overall process of starting a business.

    Obtain Any Necessary Licenses and Permits

    Obtain Any Necessary Licenses and Permits

    Texas doesn't put as heavy of an emphasis on licensing as some states, but you still need to do your due diligence to ensure you operate inside the law. The licenses you need will depend on whether you operate a brick-and-mortar store that customers can access (as opposed to selling exclusively online), and the industry your business is in.

    While there's no need for a general business license in Texas, you'll need to check the Texas Department of Licensing and Regulation's website to see if your industry requires specific licenses and permits, and which ones you'll need.

    Set Up a Business Bank Account

    Set Up a Business Bank Account

    Many new business owners are reluctant to set up a business bank account, envisioning heavy fees and a tedious selection process. However, you should never use your personal bank account for a business, even if you're a sole proprietor. The IRS frowns on the act of commingling your business and personal funds, and on a practical level, it makes accounting harder as well — and can harm your liability protection.

    A business bank account is also required for most payment processors and other financial services, and you'll also need one if you choose to apply for a business loan or credit card. Fortunately, getting a business bank account is easier than it seems, and certainly not nearly as expensive as you might fear. In fact, Fundera maintains a list of banks offering free business checking accounts, as well as a list of the best business banks in Texas.

    Build Your eCommerce Website

    Once you've followed the rest of this guide to build a strong, legal foundation for your business, you're ready to start building your eCommerce website so you can make your business known! Of course, you want your website to include an easy-to-use shopping cart for customers to buy your products, but there's more to it than that. Before you build an eCommerce website, understand that it's more than just an online store — it's the central online headquarters of your brand, and should help establish your presence as a leader in your field.

    Choose a website builder that's focused on eCommerce from the beginning, not a generic website creator with a few shopping cart and marketing plugins. This will ensure your website is fully optimized for selling online from day one, and give you access to the best tools and features to assist you in running your business and providing an excellent experience to customers. If you want to learn more about building your eCommerce website, we have a free guide you can download below.

    Build Your Online Store

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    Frequently Asked Questions

    What is the least expensive way to start a business?
    If you're looking for a way to get into business without much up-front investment, consider dropshipping. You'll still need to follow the steps in this guide, register for taxes, and get any licenses you may need, but you won't have to invest in inventory or storage space beforehand.
    Are there any business licenses specifically for eCommerce?
    No, there are no business licenses specifically for selling online, but some industries do require you to follow guidelines and regulations for eCommerce. For example, if you want to open an online wine store, you need a shipping agreement with your carrier and you'll need to adhere to their procedures as well as alcohol laws.
    What is the best eCommerce software for an online store in Texas?
    3dcart is the best eCommerce solution for building and growing an online business. Built from the ground up for selling online, it has hundreds of built-in features and integrations to help you keep your workflow streamlined and provide customers with the exemplary shopping experience they're looking for. You'll get everything you need for one low price, rather than having to seek out web hosting and security along with software, and our 24/7/365 US-based support team is ready to help you at any time. You can try 3dcart for 15 days using our free online store trial with no credit card needed.
    How can I accept online payments?
    To accept online payments, your online store needs to be connected to at least one payment provider. 3dcart integrates with more payment types than any other platform in the industry — over 160! — so you'll have plenty of choice to offer your customers. Credit cards, PayPal, digital wallets, bitcoin, and more can all be accepted on your website. Just get an account with the payment providers you want to use, and then you can add them to your online store through a simple menu.