Starting a business involves more than filing paperwork, and the order you do things in matters. Choose a name before checking trademarks, or sign a lease before your company exists, and you may spend months undoing it.Here is the sequence we walk our clients through, with the legal decisions that come up at each step.

Step 1: Test the idea and write a simple plan

Before spending money on formation and branding, make sure the business can work. A plan doesn't need to be a 40-page document. It should answer who your customers are, what you'll charge, what it will cost to get started, and how long you can operate before turning a profit.From a legal standpoint, this is also the time to ask whether your industry is regulated. Health care, food service, alcohol, child care, financial services, and construction, among others, often require licenses or approvals that affect your timeline and startup costs.

Step 2: Choose a business structure

Your structure affects your personal liability, your taxes, and how easily you can bring in partners or investors. The most common options are:

• Sole proprietorship or general partnership. Simple to start, but the owners are personally responsible for the business's debts.
• Limited liability company (LLC). Flexible and popular with small businesses. It offers liability protection and several tax options.
• Corporation. Often preferred by businesses planning to raise outside investment or issue stock to employees.

Licensed professionals such as lawyers, physicians, and accountants may face extra rules about which entity types they can use. Tax treatment is a separate choice from legal structure. An LLC, for example, can elect to be taxed as an S corporation, so involve your accountant in this decision too.

Step 3: Choose a name, and make sure you can use it

A name being available at the Secretary of State only means no other entity in that state is registered under it. It doesn't mean you can use it as a brand. Another business may already hold trademark rights to the same or a confusingly similar name.Before committing, run a trademark clearance search, check domain names and social media handles, and consider registering the trademark if the brand will be valuable. If you plan to operate under a name different from your entity's legal name, you'll generally need to file an assumed name ("DBA") certificate.

Step 4: Form the entity

In Texas, LLCs and corporations are created by filing a certificate of formation with the Secretary of State. You'll need to name a registered agent, a person or company with a Texas address who agrees to receive legal papers on the business's behalf.Form the entity before you sign a lease, open accounts, or take on customers. Contracts signed in your own name before the company exists can leave you personally responsible for them.

Step 5: Put the owners' agreement in writing

The state filing creates the company. The operating agreement (for an LLC) or bylaws and shareholder agreement (for a corporation) set the rules for how it runs. This is true even for a single-owner business, where the agreement helps show the company is separate from you.With more than one owner, the agreement should cover ownership percentages, who contributes what, how decisions are made, how deadlocks get resolved, and what happens when an owner leaves, becomes disabled, or dies. It's also the right moment to have each founder assign to the company any intellectual property they created for the business.

Step 6: Get an EIN and open a separate bank account

An Employer Identification Number (EIN) from the IRS is your business's federal tax ID. Most banks require one to open a business account, and you'll need it to hire employees. The IRS issues EINs free of charge.Once you have it, open a business bank account and run every business dollar through it. Keeping personal and business funds separate is one of the simplest ways to protect the liability shield your entity provides, and it makes bookkeeping and tax time far easier.

Step 7: Register for taxes and get your licenses and permits

Requirements depend on what you sell and where you operate. Common ones include:

• Sales and use tax permit from the Texas Comptroller, if you sell taxable goods or services
• Texas franchise tax registration and reporting, which applies to most LLCs and corporations
• Professional or occupational licenses for regulated fields
• City and county permits, such as certificates of occupancy, health permits, signage permits, and zoning approval for your location

Check zoning before you sign a lease. A space that isn't zoned for your use can stall your opening indefinitely.

Step 8: Get your contracts and insurance in place

Before you open, have the core documents ready:

• Commercial lease, reviewed for personal guarantees, pass-through costs, and assignment limits
• Customer agreements or terms of service that set out payment terms, scope of work, and limits on your liability
• Contractor and vendor agreements, including IP assignment and confidentiality terms
• Website privacy policy and terms of use, if you collect customer information online

Insurance is your second layer of protection. Depending on your business, consider general liability, professional liability, property, cyber, and commercial auto coverage. An entity protects your personal assets; insurance protects the business's.

Step 9: Prepare to hire, and stay compliant

Before bringing on your first team member, decide whether they'll be an employee or an independent contractor. That decision turns on how the work is actually done, not on the title you choose. Employees also bring payroll tax withholding, new-hire reporting, and Texas unemployment tax registration. Texas lets most private employers decide whether to carry workers' compensation coverage, but opting out has real legal consequences, so make that choice deliberately.Starting the business is a one-time event; staying in good standing is ongoing. Keep a calendar for franchise tax reports, license renewals, permit renewals, and registered agent updates. Missing state filings can result in your entity losing its good standing or being forfeited.

Build it right from the start

Every business is different, and the right order and details depend on your industry, your partners, and your plans for growth. Langer Law Group helps new business owners work through each of these steps so they can focus on running the business. 

This article is for general informational purposes only and is not legal advice. Reading it does not create an attorney-client relationship. Laws, fees, and filing requirements change over time, so consult an attorney about your specific situation.