How to start your own business
Starting a new business can seem like an insurmountable task. Where does one even begin to turn their hobby into their livelihood? What forms do you need to fill out? What licenses and permits are required to start selling your products? It all feels like a lot, but the process is much simpler than it sounds.
Today I am going to step you through the process of how to start your own business. Taking it one step at a time, you will see that starting your own small business is not nearly as daunting as it looks. I will include important links and answer some of the most frequently asked questions as we go along.
The information provided in this post is for informational purposes only and does not constitute legal advice. Preferences stated below are based solely upon personal and professional experiences in the creative industry, your mileage may vary. DFW Craft Shows participates in affiliate programs and some of the links below may benefit DFW Craft Shows at no additional cost to you.
Quick Reference Guide
- What type of business do I need?
- Sole Proprietorships
- Limited Liability Companies (LLC)
- What is a DBA?
- How to get a DBA
- Do I need a Sales & Use Tax Permit?
- Should I have a business banking account?
- How do I track my sales?
- What’s special about cottage bakeries?
- How important is a logo?
- Do I need a social media page?
- How can I find local events?
- Where can I connect with other small business owners?
What type of business do I need?
Most businesses fall into one of four general categories. The category you select will determine startup costs, how your business is taxed, what protections are offered, and so on. The 4 main types of business structures you can select are:
- Sole Proprietorships
- Non Profit
- Limited Liability Corporation (LLC)
The two most popular business types for small businesses are Sole Proprietorships and LLCs. So what’s the difference between the two?
Sole Proprietorships are ideal for businesses with a single owner who are looking for a quick and easy startup. As a Sole Proprietorship, you can only have one owner and you will personally assume all liability for your business. A separate tax filing is not required.
Limited Liability Companies (LLCs)
Limited Liability Companies or LLCs allow unlimited business owners and you are not personally responsible for business liabilities. LLCs do have special forms and startup costs associated with their creation.
More Info about Business Structures
For a more detailed explanation of the 4 different types of business structures and how to start your own business using one of these entities, check out the Small Business Administration.
Most small businesses start out as a Sole Proprietorship with a DBA, though some do choose to go straight to LLCs. Please Note: It is both possible to start as a Sole Proprietorship and later decide to form a Limited Liability Corporation and vice versa, though dissolving a LLC is inherently more complicated.
What is a DBA?
When deciding how to start your own business, it is important to consider how much you want the business attached to your personal information vs doing business under a separate name. DBA stands for “Doing Business As” and refers to a Sole Proprietorship that is “doing business as” another name. For example, Carrie Smith might have a DBA as Carrie’s Crafts. If you are doing business solely under your own name, ie Carrie Smith, then a DBA is not needed.
DBA’s have to be researched and filed with your local Secretary of State. DBAs are also known as Assumed Names, Name Filings, or Name Registrations.
How to get a DBA
In Texas, the process of registering your assumed name or DBA is two-fold. The first step is searching the database to ensure that no one else has a DBA for the name you are interested in. There are a few ways you can request a name availability check:
The second part of the process is filling out Form 503 to register your assumed name. You may register your DBA for up to 10 years, at which point you would need to renew your assumed name certificate within 30 days before its expiration. Please note there is a $25 filing fee for an assumed name certificate.
Once the Secretary of State has approved your assumed name certificate, you will receive a file-stamped copy of the document. Scan this so you will always have a digital copy on hand, and file the paper version away somewhere safe. If you are planning on opening any accounts under your DBA, such as a business banking account, you will need this certificate.
Name Filing FAQs
Do I need a Sales & Use Tax Permit?
This is one of the most common questions I receive. If your business plans to sell products or services, you will need a Sales & Use Tax Permit. I know taxes feel inherently complicated and stressful, but the process of applying for a Sales & Use Tax Permit is relatively simple. I’ll walk you through it.
How to apply for a Sales & Use Tax Permit
You will apply for your Sales & Use Tax Permit on the Texas Comptroller’s website–and good news–they recently revamped the entire system so it much more user friendly.
Simply click “Apply for Permit via eSystems” and fill out the appropriate questions. Allow 2 – 3 weeks to receive your Sales & Use Tax Permit. Again, make sure you scan your permit so you have a digital version on hand. I love using the Adobe Scan App on my phone for stuff like this.
If you do live events, craft shows, pop up shops etc, you will want to save your Sales & Use Tax Permit somewhere with your Must Have Vendor Bag or general Business Supplies. You do not want to be caught selling products without your Sales & Use Tax Permit on hand.
Determine your tax rate
The Texas Comptroller also has a Sales Tax Rate Calculator that you can use to determine how much sales tax you should be charging/paying.
Sales Tax Exemption
Use your sales & use tax permit to save money on sales tax when purchasing raw supplies for use in products that will be sold to your consumers. You may also use your sales & use tax permit to purchase supplies in bulk at various wholesalers. You will need to track these purchases and report them when you file your taxes later.
How often do I have to file my sales tax report?
The Texas Comptroller will determine how often you need to file your taxes based on your average annual tax liabilities. All businesses are required to file their sales tax either monthly, quarterly, or annually. You can file your sales tax online by using esystems Webfile.
Sales & Use Tax FAQ
Should I have a Business Bank Account?
When starting your own small business, I always recommend opening a business bank account. If you are a Sole Proprietorship, you do have the choice of using your personal bank account. Personally, I find bookkeeping to be a lot messier when everything is intertwined. It is a lot easier to manage money in and money out when you can isolate and generate reports for your business only.
If you have an assumed name or DBA, you can use that paperwork to open your business bank account under your new business name. This will also allow you to open other financial business accounts, like Paypal, Stripe, Square, etc.
How do I track my sales?
Now that you know how to start your own business, you might be wondering the best way to track your sales. You can ask a room full of people what the best approach is, and you will receive a different answer from each. For example, some might advise that they have never needed anything but a spreadsheet, where others may keep everything inside one processing system, like Square or Paypal. Starting out, any of these options may be valid, but your life will be so much easier once you embrace real accounting software.
One of the most popular systems is Quickbooks. When it comes to usability, I prefer a web-based accounting software called Xero for its user-friendly interface.
What’s the deal with Cottage Bakeries?
As you might have guessed, running a food based business is a bit different than running an arts & crafts based business. You will need to complete Food Handler Training and educate yourself on the cottage bakery laws in your state. If you are in Texas, the Texas Cottage Food Laws has a wealth of information to help you along.
How important is a logo?
Branding is extremely important to set yourself apart from the millions of other makers at markets and online. A strong logo helps to establish your small business as both trustworthy and professional, but it also helps your products, booth, and packaging stand out from the crowd.
Finding a reliable and affordable graphic designer can be tough for small businesses who are just starting out and have limited budgets. That’s why DFW Craft Shows offers complete branding and design services geared specifically toward helping small businesses establish or revamp their brands. You can check out more information on our Design Menu.
How do I find local events?
No short answers here. There are lots of ways to find fairs, festivals, and arts & crafts shows near you–which is exactly why we have an entire guide dedicated to the subject. If you are from the North Texas area, you’ve already stumbled upon THE source for arts and craft show information in Dallas Fort Worth: DFW Craft Shows. Hop on over to our Events page to discover all the events we currently have listed and curated just for vendors like you.
Where can I connect with other small business owners?
Are you ready to get started with your small business? Make sure you swing by our Vendor Resources section, Craft Show Tips & Tricks, and thriving online communities for support along your journey. We’ve even got a post dedicated to Vendor Networking & Craft Show Etiquette to help you put your best foot forward right out of the gate.