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Step 1
Business Legal Structure and Name
The initial step in the starting of your business is to
correctly record the name of your business and to decide the
legal arrangement of your business. The legal arrangement is
the most critical since it will have significant impact on
your taxes and liability, both financially and legally.
Business Name
Upon determining the legal organization and a name for the
business, and if the name of the business will be other than
the owner’s name, a business name must be filed with the
Cameron County clerk’s office and or the Secretary of State
depending on its legal structure.
Local Registration
All businesses doing business as a Sole Proprietorship or
Partnership will need to file an “Assumed Name Certificate”
with the Cameron County courthouse.
For further information visit or call: Cameron County: (956)
544-0815
www.cameroncountyclerk.org.
State Registration
All business entities doing business in the State of Texas
as Limited Partnerships, Registered Limited Liability
Partnerships, Limited Liability Companies, Corporations,
Professional Corporations, Non Profit Corporations, and
Professional Associations must submit documentation with the
Secretary of State.
For further information visit the Secretary of State’s Web
site:
http://www.sos.state.tx.us/
Finally, with corporations, all businesses will need to file
Articles of Incorporation with the Secretary of State.
Step 2:
Navigating Through the Tax Maze
The specific taxes that are applicable to organizations vary
based on the legal structure selected, the location of the
business, the number of employees hired, and other varying
factors. Although the following is a summary of the
different types of taxes that most businesses are required
to pay, it should not be construed as a comprehensive list.
A tax accountant should be contacted to verify the taxes
that are applicable to your organization.
Federal Taxes
When forming your business, one of the first steps in to
apply for a Federal Taxpayer Identification Number. If you
are in a trade or business, your taxpayer ID number is
generally your Employer Identification Number (EIN) that
must be shown on all of your business tax returns as well as
on any tax-related documents and statements.
When filing income tax returns as an individual proprietor,
partner in a partnership, or member of an LLC, you must
place your Social Security Number (and EIN) on your personal
income tax return (Form 1040), form 1040 for sole
proprietorships, partners, and LLCs; and form 1120 for
corporations.
If you have changed the legal form of the organization (i.e.
incorporated your individual proprietor business, formed a
partnership, or vice versa) you must get a new Employer
Identification Number. The same is true if there is a change
in owner-ship of the business (such as the purchase or
inheritance of an existing business): you cannot use the EIN
of the former owner, even if she may be your spouse. A new
number is required if you terminate an old partnership and
begin a new one.
For further information visit or call:
Internal Revenue Service
2701 S. 77 Sunshine Strip
Harlingen, TX 78550
(956) 365-5185
http://www.irs.gov/businesses/small/index.html
Once this form is processed, you will receive your ID
number, Federal deposit tax slip, and relevant information
about the taxes you will need to pay.
As an employer, you are responsible for withholding and
paying certain taxes connected with the salaries, wages,
tips and other compensation paid to your employees. The most
common taxes are the Federal Income Tax, Federal Insurance
Contribution Tax Act (FICA), and the Federal Unemployment
Tax Act (FUTA). It is important to mention that you, as the
employer, are liable for regular payments to the government
(federal, state and lo-cal) of the various taxes that are
withheld from your employees’ compensation. You are subject
to severe penalties for non-payment.
A business tax kit is available at the IRS office; this kit
includes forms and brochures that will help you comply with
federal tax laws and regulations. The kit also contains a
Tax Guide for Small Business, which ex-plains step-by-step
the taxes for which you may be liable, sample filled-in
forms, and other helpful information. Contact the IRS office
to request the Business Tax Kit and other publications at
1-800-829-3676 or 1-800-829-4059.
State Taxes
The agency in charge of administration and collection of
state and local sales tax from businesses operating in
Texas, and any franchise taxes owed by Texas corporations
is the Comptroller of Public Accounts. For further
information, contact:
Comptroller of Public Accounts
955 W. Price Road, Suite B
Brownsville, TX 78520-8703
(956) 542-8426
http://www.window.state.tx.us/taxinfo/sales/
Some employers must contribute to the state unemployment
insurance fund. The agency in charge or collecting all
unemployment taxes for workers employed in Texas is the
Texas Workforce Commission. For further information about
these taxes, obtaining a state employer’s identification
number, and tax credits contact:
Texas Workforce Commission Tax Dept.
101 E. 15th St.
Austin, TX 78776
http://www.twc.state.tx.us/
New Employer Accounts/Status of Accounts: 1-800-832-9394
Quarterly Reports and Rates: (512) 463-2407
Unemployment Insurance Customer Service: (512) 463-2542
Labor Market Information: (512) 491-4922
Work Opportunity Tax Credit (WOTC): 1-800-695-6879
Corporations and limited liability companies organized or
doing business in Texas are subject to the Texas franchise
tax. For additional information call 1-800-252-1381 or visit
the Texas State Comptroller’s Web page at
http://www.window.state.tx.us/taxinfo/franchise/index.html
When the business owner sells taxable items (tangible
personal property or tax-able services), she/he must collect
state sales or use tax plus the appropriate local sales or
use taxes. Sales taxes can reach a maximum 8.25 percent. The
state levies an amount of 6.25 percent of the sale’s price
on qualifying items. The state also collects sales taxes for
the cities and other municipal taxing authorities, which can
reach an additional 2.0 percent combined, then rebates money
to the local authorities. Depending on the anticipated
sales volume for the business, the owner will file sales tax
reports quarterly, monthly or yearly. The State’s
Comptroller’s Office will send preprinted report forms to
the taxpayer before the due date.
http://www.window.state.tx.us/taxinfo/sales/new_business.html
Local Taxes
Owners of real property and tangible personal property
located in Texas on the date of assessment, and that is used
in generating income, are subject to tax. The tax rate is
set by the local (county) taxing unit. Real property
includes land and improvements on the land. Tangible
personal property includes boats, trailers, inventory, and
depreciable tangible personal property, with certain
exemptions for inventory. For further information, contact
the local county appraisal district where the business is
located.
NOTE: There are a variety of miscellaneous state and
federal taxes, such as the gasoline tax, which must be filed
in specific situations. The above tax rates and other tax
matters covered are subject to change. It is recommended
that you see the IRS office, the Texas Comptroller of Public
Account office, or your accountant for updated information.
Step 3:
Business Licenses and Permits by Business Type
The Texas Department of Economic Development has an updated
list of licenses, permits, certifications, and registrations
for a specific business on the federal, state, and local
levels. Visit their Web site at
www.texasonline.com/category.jsp?language=eng&categoryId=9
or contact them at 1-800-888-0511.
Step 4:
Business Employer Requirements
Employers have to comply with labor, safety, and tax
obligations at the federal and state level. Some of the most
important regulations affecting employers are:
Texas Workforce Commission
101 East 15th St.
Austin, TX 78778
(512) 837-9559 or 1-800-832-9243
Online at http://www.texasworkforce.org/
The Texas Workers’ Compensation Commission publishes a new
law guide, a quarterly newsletter, and an information
brochure for employers to help them become more familiar
with the basic requirements for workers’ compensation in
Texas.
Federal Requirements
Equal Employment Requirements
Federal and state laws prohibit employment discrimination.
The United States Equal Employment Opportunity Commission (EEOC)
and the Texas Commission on Human Rights (TCHR) are charged
with enforcing fair employment laws which prohibit
discrimination on the basis of race, color, sex, religion,
disability, age, or national origin.
Current statutes cover all employment transactions. All
employers with 15 or more employees engaged in an industry
affecting commerce, employment agencies, and labor unions
are prohibited from denying equal employment opportunities.
Regardless of the number of individuals employed, a county,
municipality, and any state agency or instrumentality
including public institutes of education, are also
prohibited from denying equal employment opportunities.
The TCHR will assist local governments in establishing human
rights commissions and provide technical assistance and
training to employers to facilitate compliance with laws
prohibiting employment discrimination.
The TCHR has jurisdiction for investigating employment
complaints in Texas. The EEOC pro-motes voluntary programs
that allow employers and organizations to implement equal
employment opportunity programs within their businesses.
For inquires regarding federal equal employment
requirements, contact:
U.S. Equal Employment
Opportunity Commission
San Antonio District Office
5410 Fredericksburg Road, Suite 200
Mockingbird Plaza, Plaza II
San Antonio, TX 78229
(210) 229-4810 or (210) 229-4858
Americans with Disabilities Act Requirements
The Americans with Disabilities Act (ADA) provides
protection for people with disabilities in the areas of
employment, public services and transportation, public
accommodation, and telecommunications.
For more federal information on how the Americans with
Disabilities Act will affect a business and for technical
assistance with provisions applying to employment, contact:
U.S. Equal Employment Opportunity Commission
1801 L Street NW
Washington, D.C. 20507
1-800-669-4000 or 1-800-669-6820 (TDD)
www.eeoc.gov
Safety Requirements
Occupational Safety and
Health Administration (OSHA)
U.S. Department of Labor,
Regional Office
525 Griffin St. Room 602
Dallas, TX 75202
(214) 767-4731
Wage and Labor Requirements
The Texas Workforce Commission is charged with investigating
and notifying appropriate county and/or district attorneys
regarding all labor law violations. The Labor Law Department
is charged with the enforcement of state and federal labor
laws as well as the prosecution of offenders of these laws.
State statutes include the Pay Day and Child Labor laws.
U.S. Department of Labor Regional Wage and Hour Offices
Corpus Christi (512) 888-3520
San Antonio (210) 229-4515
Drug-Free Workplace
Advice is available to Texas employers with 15 or more
employees who maintain workers’ compensation coverage.
Employers must comply with certain drug-free workplace
requirements, and are also subject to federal regulations.
These federal regulations include the Drug-Free Work-place
Act of 1988, and U.S. Department of Transportation
regulations requiring drug and alcohol testing.
Texas Drug-Free Workplace Initiative
2525 Wallingwood, Bldg. 5
Austin, TX 78746
(512) 328-1144 or 1-800-343-3822
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