Startup FAQs

What types of permits and licenses are needed for a startup and can I operate out of my home?

In addition to local permits and licenses which may be required, some businesses require specific licenses by the State of Texas. For information on businesses and occupations that require state permits, search the Occupational Licenses and Permits page of Texas.gov.

Most cities within Collin County allow home-based businesses, subject to certain restrictions. For more information contact the Planning and Zoning Departments in your city at the number(s) listed below.

  • Allen - (214) 509-4163
  • Arlington - (817) 459-6502
  • Dallas - (214) 948-4351
  • Fort Worth - (817) 392-8000
  • Frisco - (972) 292-5301
  • Garland - (972) 205-2445
  • Irving - (972) 721-2424
  • McKinney - (972) 547-7400
  • Plano - (972) 941-7151
  • Richardson - (972) 744-4180
  • Rockwall - (972) 771-7709
  • Wylie - (972) 442-8158 or (972) 442-8150

What is a business entity, how do I choose one, and where do I file?

The answer depends on the balance you seek between complexity of the firm, liability limits, tax implications, the need to raise capital, the need for the business to continue after a death, the number of owners, and so on. If your business is a fairly risk-free "mom and pop" operation then a sole proprietorship or general partnership may be appropriate. For most businesses who plan to grow or engage in activities with risk,limiting their liability will be important. For these companies, an LLC, an LLP, or a Corporation are probably good choices.

Once the legal structure of the business has been determined, and if a separate business name will be used, the business name must be registered with the county clerk's office and/or the Secretary of State. If the business will operate as a sole proprietorship or a general partnership, an Assumed Name Certificate or d.b.a. (doing business as) must be on file with the county clerk in each county where a business premise will be maintained. In Collin County contact:

Collin County Clerk's Office
Collin County Administration Building
2300 Bloomdale Rd., Suite 2104
McKinney, TX 75071
Phone: 972-548-4185 (McKinney) 972-424-1460 ext. 4185 (Metro)
Hours: 8:00 a.m. - 4:30 p.m., Monday - Friday

All businesses operating in Texas as limited partnerships, registered limited liability partnerships, limited liability companies, corporations, professional corporations, nonprofit corporations, and professional associations must register with the Secretary of State. General information and business name searches are available at the Secretary of State website or by phone at (512) 463-5555.

Do I need a Federal Employer Identification Number (EIN) or tax id number? If so, how can I obtain one?

An Employer Identification Number (EIN) is a nine-digit number that the IRS assigns and uses to identify taxpayers that are required to file various business tax returns. EINs are used by employers, sole proprietors, corporations, partnerships, nonprofit associations, and trusts, estates of decedents, government agencies, certain individuals, and other business entities. In some cases, sole proprietors with no employees and no sales tax can simply use their own social security number for tax purposes, but most businesses will need an EIN. You can apply by phone, fax, or mail. A downloadable form (SS-4) is available on the IRS website.

Who is required to hold a Texas sales and use tax permit, and how can I obtain one?

State Sales and Use Tax is imposed on all retail sales, leases and rentals of most goods, as well as taxable services. Texas cities, counties, transit authorities and special purpose districts have the option of imposing an additional local sales tax for a combined total of state and local taxes of 8.25% The requirement to obtain a Texas sales and use tax permit applies to individuals as well as corporations, firms, partnerships, and all other legal entities who are engaged in business in Texas and engage in retail sales, leases and rentals of most goods, as well as taxable services. Information on obtaining a permit, on-line registration, or contacting your local field office is available from the Texas Comptroller of Public Accounts.


Business Plan FAQs

What is a business plan and why do I need one?

A business plan is a road map for the direction of your company and specifically defines your business and clearly states your goals. In addition, a good business plan is a crucial part of any loan package because it provides specific and organized information about your company and how you will repay borrowed money. Basic Business Plan components include:

  • Executive Summary
  • Business Concept
  • Products and Services
  • Market Analysis
  • Marketing Plan
  • Operations
  • Ownership, Management and Organizational Plan
  • Financial Data
  • Critical Risks
  • Appendices/exhibits

Visit our Downloads page to access everything you need to write your business plan effectively.


Funding FAQs

How much money do I need to get started?

When considering how much money you need to get started, you need to think about two different amounts of money: start-up costs and working capital. Start-up costs will consist of those things you'll only pay for once at the beginning like equipment, set- up fees, utility down payments, pre-opening salaries and leasehold improvements. Start-up expenses can be calculated using our Start-up Costs Calculator worksheet.

Working capital is the total amount of your monthly expenses which are made up of things like payroll, taxes, insurance premiums, advertising, utilities and other costs. Working capital expenses can be calculated using a cash flow projection worksheet.

Typically, to start your business, we recommend that you have enough money to cover all of your start-up costs plus at least 6 – 12 months worth of working capital.

Are there any business grants available to start a business?

The reality is -- there is no such thing as free money from the federal government to start or expand your small business. Although there are government agencies, private organizations and institutions that provide grants to small businesses, their assistance is generally directed toward specific projects, charities, lending institutions, non-profit organizations and educational institutions. Very little money goes to individuals.

The U.S. Small Business Administration (SBA), an agency dedicated to the growth and success of the nation's small businesses, is no different. What few grant programs the SBA has are directed mainly to non-profits, intermediary lending institutions and programs administered by states and localities for purposes such as economic revitalization and technology research.

What do I have to do to get a loan?

Attaining a loan depends on many factors including length of time in business, financial condition, credit history, collateral and amount requested. Your bank is in business to make money. Consequently, when a bank lends money, it wants to ensure that it will be repaid. The bank must consider the 5 "C's" of credit each time it approves a loan. To learn more about the 5 "C's" read The Key Points to Borrowing Money article.

When applying for the loan, you must provide historical and/or projected financial statements as part of a solid business plan. Be prepared to answer these questions:

  • How much do you need to borrow?
  • How will you use the loan?
  • How will you repay the loan?
  • What will you use as collateral?

The specific document requirements vary with each lending institution. To start the process, the bank will provide you with its application and list of documents to submit with the completed application. The process of applying and gaining approval for business financing can be an overwhelming process. In fact, lengthy applications and tough approval processes often deter many businesses from even applying.

Can I borrow money from the SBA?

The SBA offers numerous loan programs to assist small businesses. It is important to note, however, that the SBA is primarily a guarantor of loans made by private and other institutions.

SBA sets the guidelines for the loans while its partners approve the loans to small businesses. SBA backs those loans with a guaranty that will eliminate some of the risk to the lending partners. The Agency's loan guaranty requirements and practices can change, however, as the government alters its fiscal policy and priorities to meet current economic conditions. Therefore, past policy cannot always be relied upon when seeking assistance in today's market.

The loan guaranty, which the SBA provides, transfers the risk of borrower non-payment up to the amount of the guaranty from the lender to the SBA. Therefore, when a business applies for a SBA Loan it is actually applying for a commercial loan, structured according to SBA requirements, which receives an SBA guaranty.

Are there alternatives for funding a business?

There are a number of alternatives for funding your start up or growing business, although some may not be practical for you until the company gets further along in its growth. Here is a list of the types of options available for start up funding:

  • Self financing from the founder's cash assets
  • Investment from family and friends
  • Commercial loan from a bank or other lender
  • SBA loan from a bank or other lender
  • Lease financing, in order to acquire equipment such as computers and office equipment
  • Venture capital financing or angel/private investors
  • Financing from strategic partners
  • Financing from potential customers