When looking at starting a business there are many things to take into consideration. A big factor that comes into play is where one decides to start their business. Texas is currently the rising star, being one of the best states to start a business in the United States.
In the process of starting a business, all the decisions that come into play hold great importance. One of the bigger ones is deciding which strategies are best for the respective business at hand. For most small businesses looking to gain more credibility, have added tax benefits, and hold certain status, electing S corp status could be the ideal strategy to implement. The Really Useful Information Company (TRUiC) provides a comprehensive outline on filing for S corporation Texas status and how to go about it.
After forming a limited liability company (LLC), you are able to start an S corporation (S corp) in the Lone Star State. The process is somewhat easy and straightforward, requiring individuals to follow the steps according to the Internal Revenue Service (IRS).
With the LLC or corporation formed and named, a Registered Agent is chosen and the Articles of Organization are filed. This along with an Operating Agreement being created leaves just the election of the status itself with the required paperwork.
Upon completion of the process, having met the requirements and adhered to the respective restrictions, a small business can elect S corp status within the state of Texas. An employee identification number (EIN) will be assigned and the required IRS Form 2553 must be filed. It should be noted that this tax designation of the IRS is considered a status of the business and not a business structure itself.
The main motivating factor behind a small business opting to elect S Corp status would be driven by tax purposes. In addition to Texas S corp status allowing for the minimizing of the tax burden of a business, it goes further to also give businesses added credibility and benefits for shareholders too. Business owners are able to take advantage of this as they are considered to be employees of the business and in turn, can take an employee salary from the business.
However, there are also restrictions that are applicable to the shareholders of the business, who need to be private individuals and not businesses. Aside from this, shareholders must be U.S. citizens or nationals, with an equal distribution of stock between all members. The business may have no more than 100 shareholders in total.
With Texas holding the second largest economy in the United States, it is no surprise that the state is becoming one of the best locations to start a business. Regulations in the state of Texas make for a climate that is very much pro-business and in turn, encourages the starting of businesses as it makes the process easier and more feasible.
On an individual level it holds true to be an ideal state to do business in general, but even more so on a larger scale to start a business too. It is an added advantage that small businesses starting up along with the business owners do not have to pay income tax. This is highly appealing for individuals getting started as their money can be used differently day-to-day, both personally and in the corporate realm of things within their business.
Furthermore, the environment in which businesses start-up and operate in Texas is supportive of organizational development which in turn lends itself to new opportunities as entrepreneurs get started. This more supportive and diverse environment results in more and more businesses being created, which in turn becomes a self-sustaining cycle fueled further by supply and demand.
With more small businesses opening up and adding to the growth and sustenance of the economy, the state of Texas and the nation as a whole will see further growth and development. Along with all the benefits businesses are able to take advantage of in Texas, its pro-business climate plays a major role in being the driving force behind the economic success of the state.