McKinney, Texas is a great place to start a small business. Rated as America’s “Best Place To Live” by Money Magazine, McKinney is the U.S.’s third-fastest growing city with a population of about 179,804.
Unique by Nature is the city’s motto and it truly is just that. Its exceptional business environment makes it a great place for an entrepreneur to start a business. The city has a diverse mix of industries, which include medical technology, aviation, manufacturing, data management, defense, emerging technology, distribution and sustainability. They support an upscale lifestyle.
Starting A Small Business in McKinney
McKinney offers many opportunities for building a thriving business. Entrepreneurs can focus on businesses that provide goods and services for local companies like Raytheon, Encore Wire Corporation, Torchmark Corporation, the Medical Center of McKinney and Baylor Scott & White Medical Center at McKinney.
Plus, the city has a highly educated population, so finding skilled workers is never a problem. A budding entrepreneur can simply study the top local industries to identify opportunities. With so many vibrant industries and growing companies, it’s easy for a startup with a good business plan to make a profit.
Steps To Starting A Business
Starting a business in Texas requires a few simple steps. Once you have identified what you think is a good business idea, there are some legal steps you have to take.
You have to register your business with the Secretary of State’s office. In order to do that your have to decide on the structure your business will use. The most common types of business structures are:
- Limited Liability Company (LLC)
- S Corporation
- C Corporation
- Sole Proprietorship
A Sole Proprietorship is the easiest one to set up. You simply need to decide on the name of your business and register it. However, LLCs tend to be the most popular because as a corporation they protect your personal assets, offer flexibility with federal taxes, but don’t require the legal upkeep of a corporation.
An S Corporation can have as many as 100 shareholders, corporate officers and a board of directors. However, it isn’t assessed any corporate tax. Shareholders’ profits and losses are reflected on their personal tax returns. A C Corporation can have unlimited shareholders, but the business as well as the shareholders must pay taxes on any profit made.
License And Tax Obligations
Texas based businesses require several different types of licenses and permits to operate in the state legally. They must also comply with federal, state and local tax laws. The Small Business Association and the IRS can provide helpful information on the applicable requirements.
The Texas SOS website and the SBA can provide all the pertinent information on state licenses, permits and registration. Information about the local municipal business requirements at available from the McKinney Chamber of Commerce. Should the process seem too complicated, the entrepreneur can turn to a business license service for help.
Apply For An EIN
If an entrepreneur will be hiring employees to work in the business in Texas, they must file for an Employer Identification Number or Federal Employer Identification Number. The IRS issues this nine-digit tax identification number to track the tax returns of every company doing business in the United States. This number is needed to open a business bank account. If you have a Sole Proprietorship or single-member LLC that does not have any employees, the social security number of the business owner can be used instead of an EIN.
Develop Your Business Plan
One of the most important steps entrepreneurs should take when starting a business is to write a business plan. The business plan is a roadmap for building a successful company. It lays out in detail the short-term and long-term goals of the business and the steps the owner and staff of the new business will take to attain them.
The business plan clearly outlines the available business opportunity, the amount of potential for profit anticipated, the resources needed, how those resources will be used and the timeline for achieving the goals of the business. Banks and investors require a detailed, coherent business plan before they will even consider providing any financial support, so don’t skip this step!
Finding the money you need to get your new business venture up and running is vital. For an entrepreneur planning to start a small business, the process of finding the money they need can be stressful and time-consuming process. It requires a solid, workable idea, an effective business plan, clear documentation of the entrepreneur’s personal finances and a 15% to 25% investment of the total amount needed by the business before most banks or other financial institutions will even consider providing a loan to finance the project.
The new business owner must also prove they have access to the buildings, vehicles, tools, equipment and inventory the business needs to succeed and the skills and trained and qualified staff to make the business profitable.
Sources Of Small Business Financing
There are several sources of financing entrepreneurs can turn to when starting a new business venture. But they often require the business owner to have a good credit score and a solid personal financial record. With those things in place, the entrepreneur can attempt to get financing for their business venture through:
- Conventional Bank Loans
- Credit Unions
- The Small Business Association Loan Guarantee
- Peer-to-Peer Lending
- Venture Capitalist
- Family And Friends
All of these require a solid business plan, some type of collateral and an entrepreneur with the skills and experience necessary to make the business fulfill its potential.
Once the new business owner has secured the funding they need to get the business started, they must have the proper forms and systems in place to hire and manage their employees. This includes the New Hire Reporting, I-9 Employment Eligibility Verification, W-4 wage payment and Federal and State Income Tax Withholding forms.
The new employer must also be prepared to withhold payments for Federal Insurance Contributions Act (FICA) payments for Social Security and Medicare, Federal and State Unemployment Insurance, and Worker’s Compensation Insurance. The employer must also understand and follow Federal and Texas labor laws. The Texas Workforce Commission can help with the legal requirements.
Building and marketing your brand is a very important task for a new business. You should create a logo and website that captures the essence, reflects your company’s core mission, differentiates you from the competition and helps your company stand out visually. Your marketing plan has to be bold, sleek and leave a lasting impression.
You should identify your target market and the platforms on which they are most active, so it’s important to create an effective marketing strategy to reach them and get them engaged. When you start a small business in McKinney, Texas effective marketing can significantly increase your profit. All of the above might seem overwhelming, but the good news is that there are plenty of small business resources in McKinney to help you get started, from the SBA to networking events that help you find a mentor who can guide you through the process. And at Safe Harbor Commercial Capital, we’re here to help when you need small business funding.