THE 8 Steps to Starting a Business in El Paso
If you’ve ever thought about starting your own small business, you’ve probably fantasized about quitting your 9-to-5 job, becoming your own boss, and making money while pursuing something that you love. You’ve probably even thought about becoming an overnight success and having a thriving business; however, that is sadly not the reality for a lot of new small business owners.
According to Small Business Trends, only 40% of new small businesses become profitable, and only 56% of new small businesses survive after being open for more than 4 years. Such a low chance of success may seem depressing, but knowledge is power. The more you know, the better you’ll be at ensuring your company will not fail.
With El Paso being an affordable city to live in and one of the fastest growing cities in the country (I want to link the other article I wrote here if possible, the one about El Paso being a good place to start a business), it’s the perfect place to start a new business. In order to beat the odds and start a profitable business here, you must set up a solid foundation. The following is a step-by-step list for creating a new small business in El Paso.
1. Pick an Idea & Research it
Small Business Trends cites the number onereason new businesses fail is due to people starting up companies not demanded by the community. A staggering 42% of small businesses fail for this reason alone. In order to avoid this mistake, you must make an informed decision on what type of business to open.
To do so, you need to know what types of businesses are already operating, both big and small, and what industries currently exist in El Paso. You can search Google Businesses to get a good idea of this or search through some of the tables Gaebler complied. Only after doing so can you assess if your business is a viable option.
Some good questions you should ask yourself:
- What service(s) did you find is missing in your research?
- What are people saying the community is missing?
- What am I passionate at and think others will enjoy?
If you have a hard time figuring out what kind of business you want to pursue, perhaps the article “8 Ways to Come Up With a Business Idea” will help generate some ideas.
2. Plan your Business
After picking out a business idea, you will need to create a business plan, which consists of more research. A good business plan will understand your company’s potential profitability, budget, and goals.
The following is a list of questions you need to consider and answer:
- How do you describe your business? How is it similar and different from other businesses?
- Who are your customers?
- How do you plan on marketing to them?
- How many competitors are there in the city? Who are the competitors? Where are they located in the city? How profitable are they?
- What is your budget? How much does it cost to run a business? How many customers would you need to break even?
- Do you need to hire other people to help you?
- What is your timeline?
- How do you plan on marketing your business?
Of course there are many other questions you should consider. To make sure you’re asking all the right questions, you should examine other business plans. You can take a look at one here.
It is also important to remember—you should share your plans with others. Getting feedback will only help you out, especially if you ask experts. SCORE‘s a non-profit organization in El Paso that provides training, insight, education, and mentors for business owners. You can reach out to them and they can offer you feedback, or you can check out other resources available in the community (I want to link the article about resources here if possible).
3. Register Your Business
Once you have a solid idea of your business, you need to register your company as a business entity. There are several options available to you. You can have sole ownership, a limited partnership, or a corporation, to name a few. Setting your small business up as an LLC is the most common option for many small businesses.
They cost $300 in the state of Texas and help protect business owners from personal liability, as well as let you choose the income tax structure your business will operate under. To set up an LLC, you need to name it, choose a registered agent, file The Texas Certificate of Formation with the Secretary of State, create an operating agreement, and obtain a Tax ID.
You may also create a DBA (doing business as) that allows you to operate your business under a different name, which some states require from you if you don’t have an LLC or corporation. Creating a DBA in El Paso takes a few steps.
1. You must first make sure your business name is not taken by someone else. You can check this by using the Texas Comptroller of Public Accounts website. You need to make sure no one’s trademarked your business name and that a web domain‘s available. In addition, you need to check the business name via www.epcounty.com.
2. You need to register your business with the EL Paso county clerk, located in city hall. They have the necessary forms you will need to fill out. You will pay a small fee and your business name will be published in the local paper for a week, giving people the chance to object to your use of that name.
3. Finally, you must register your business with the Secretary of State. You need to download the 503 form online, fill it out, and send out a duplicate copy to The Secretary of State.
If you have any questions regarding this process, One Stop Shop is a great organization for you to contact. They handle licensing in the city and are open Monday—Friday.
4. Register for Taxes
Depending on how your business is structured, if it’s an LLC or single ownership, you will need to file for a Tax ID from the IRS. For single-member LLC’s and sole ownership, typically your personal social security number will be used for federal and state taxes. Partnerships and multi-member corporations receive an EIN number, an Employer Identification Number.
Applying for an EIN number is free and applications are available through online, by phone, or fax. If you do your application online, your EIN number will be issued and validated right there and then.
5. Create Business Banking Accounts
Using dedicated business accounting is essential for running a business. If not, you put your personal finances at risk. For example, if you’re being sued by someone and your business and personal accounts are mixed, both of them are could be drained. Save yourself from the possible financial mess and create new business accounts.
One of the benefits from having a business account is having a credit line separate from yourself. If used wisely, you can build your company’s credit and use it to invest in your company or pay for unplanned emergencies.
All banks offer business accounts. You should research which banks offer the best incentives that aligns with your company.
6. Obtain Permits and Licensing
To operate your business legally in El Paso, you need to comply with federal, state, and local government regulations. Most of the time, that means you must obtain permits and/or licenses. You can get them yourself or use a professional service to help you out. If you decide to do them yourself, you should contact the City License Bureau.
El Paso doesn’t usually require new businesses to obtain a license or permit, only if your business is in food, drink, and air contamination, to name a few. You will likely need a sales tax license though, if your business sells any goods that collect sales tax from customers.
To register for a sales tax license, you need to fill out a form online on the Texas Comptroller of Public Accounts and submit it, either online or by mail.
7. Get Insured
Business insurance is vital. Lawsuits account for many small businesses closing down. In an article from American Express, 74% of businesses report that they had to raise their prices and stop hiring employees after a lawsuit, which only impacted business negatively.
The three most common business insurances are general liability, workers compensation, and professional liability. As a small business, you usually only need general liability insurance, unless you offer personal services, such as consulting and accounting—that’s when you should consider professional liability insurance.
Owning a business means you are responsible for its survival, which means you need to keep your business up-to-date and constantly active. This means you must have an online presence on one of the big social media platforms (Facebook, Twitter, Yelp, Instagram).
Most people say you should be on all platforms so you can target as many people as possible. Which makes sense. However, according to TIME, when first starting a business, you should start small and become an expert at one platform at a time. If you do that, then you’ll be able to more effectively target the demographics you want. You won’t be posting without seeing who is engaging with your posts and how your content is being received. If used efficiently, you can expand your brand around the El Paso community and beyond.
Truthfully, there is no right way to start a business, since the businesses we want to start are so different from one another. Even so, hopefully this step-by-step guide will make the process of opening your new business in El Paso easy. You need to remember, you’re going to have a lot of trial and error. Your plans will probably change. You will do extensive research. You might cry a lot. But, if you put in the hard work, create solid plans for your business, and submit all the necessary paper work—the sky’s the limit!