Setting up your Graphic Design Business in Texas

Date: June 18, 2012

Categories: Business Matters, Freshly Cut Design

Really… It’s not too hard, but the steps can be overwhelming when you first sit down to get it all straight. These are the things that I did to establish my design business as a Sole Proprietor. Clearly, I am not a lawyer, so if you have any doubts or concerns, I highly recommend you consult with a business attorney. I can even recommend a few good ones! I can’t be held responsible for any of your business decisions and yadda yadda yadda… so please don’t come after me if you mess it all up and feel the need to kick someone’s ass. Once your business is all set up, it will essentially run itself and will only need a little bit of maintenance from you each month.

1) Register your DBA with the State of Texas - doing business as – This is also called the Assumed Name Records Certificate of Ownership for Unincorporated Business or Profession. (sheesh!) I actually went down to Travis County Clerk’s office and did this. The address is 5501 Airport Blvd, Austin, 78751. You will need to pick your name and then run a check at the Clerk’s office to make sure that no one is already using it.

Here’s the link that tells you how to register your DBA:
http://www.co.travis.tx.us/county_clerk/dba.asp

2) Apply for a Texas Sales and Use Tax Permit: The graphic designs you produce ARE subject to sales tax in Texas. I’ve had clients try to fight me on this one until I called and got the exact tax code and sent it to them. Sales tax is due quarterly (by the 20th after each quarter ends. So, 2nd quarter 2012 sales tax will be due by July 20th). If you’re late, the state will charge you a hefty fee. I think it is $50…. so don’t be late! You can pay online. The amount of Sales Tax you need to collect is dictated by the city you live in, so double check! It varies throughout the state. Sales Tax is not charged for out-of-state clients.

Here’s the link to apply online (you’ll need to have your DBA first):
http://www.window.state.tx.us/taxpermit/

3) Open a bank account using your business name: It is necessary to keep your business funds separate from your personal funds. This allows for clean accounting. Anytime you want to “pay yourself”, just write a check to yourself and record it as Payroll in your accounting. (Uncle Sam will want about 28% of your income, so keep that in mind for the end of the tax year.) You will have to have your DBA set up before you can open a bank account in your business name. Most banks offer free checking to small businesses.

4) Keep track of your income and expenses: I use Intuit (Quickbooks online) to track absolutely everything. It’s really simple to set up and costs $13.80 per month. I have heard too many horror stories of people buying the desktop version of Quickbooks and having their hard drive crash and losing all of their financial data. I like knowing my info is “safe” out there in the clouds and not on my fallible hard drive. I use the Simple Start program. You can send invoices online, and people can also pay online with debit or credit (for an extra small fee per transaction). Once it’s set up, it is very easy and intuitive. Just make sure you enter those receipts and reconcile Quickbooks with your bank statement each month!

Here’s the link for Intuit:
http://quickbooksonline.intuit.com/

5) Register a domain name for your business: Even if you aren’t ready to build a web site portfolio for your business, go ahead and snag the domain. Set up the email right away and begin using it for your business. It looks loads more professional than a gmail or other free email account. I love Vervehosting (http://www.vervehosting.com/) It’s only $5.95 per month, and you can register your domain through them. I’ve been using VerveHosting since 2000. (Yup, the year 2000!) And they are so fast to answer help desk calls that you will be amazed!

6) Come up with a logo for your business as quick as you can and order business cards. I always keep some with me and hand them out when I am talking to people.

Remember, this post is for you solo-preneurs out there. If you have a business partner or wish to form a corporation or LLC, consult a business lawyer and always draft a Partnership Agreement between you and your business partner prior to starting your business. It would be a good idea to form a dissolution contract, too.

Am I missing anything? What did you do different in setting up your business? Leave a comment and let me know.

11 Responses to "Setting up your Graphic Design Business in Texas"

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Krystal
January 18, 2013 at 4:47 pm

Okay Im new to all this and I wanted to know if I am getting print work done from a wholesaler do I report that in my quarterly. I basically need a good breakdown of how to handle invoices and taxes. I live in San Antonio and I belive our tax rate is 0.08125. I need to still get a bank account under my business I have everything else (DBA,and TAX ID, DOmain name) I just really suck when it comes to accounting and stuff so if you could offer me some tips I would greatly appreciate it. I was thinking it would be easier to just put everything I make in my business bank account and dont touch it till the next quarter. IDK. I havent really put myself out there yet because I dont know how to handle this part of it so I havent even made business cards yet. I just post designz on my facebook fanpage. Lets just say I need a little graphic design business mentoring

Thanks,

Krystal
Stephanie
January 28, 2013 at 10:22 am

Hi Krystal,

Thanks for visiting my blog!

I get my print work done from a wholesaler, too, and my accountant doesn’t handle this in any special way. I log the expense under the category “Stationery and Printing” in Quickbooks.

You definitely need to get a bank account under your business name. Keep personal and business expenses separate. When you want to pay yourself, write yourself a check or transfer the funds and record it as Payroll.

The very best thing you can do for your business (in my opinion) is to sign up with Quickbooks online. I do not have any association with them other than I use them myself, and I don’t get paid to plug them. I just love it. I can record my income and expenses from my phone if I want to. I’m not tied to my Mac. It’s perfect for my small business, and I’m able to instantly see my profits & expenditures. Sending invoices to clients is done via email, and they can pay using Quickbooks online pay feature. Paying quarterly sales taxes is super easy, too.

Using any accounting program will take effort on your part. You’ll need to input all your expenses. So every time you pick up an order from your print shop, you need to record the expense. Once you get your bank statement, you’ll need to reconcile it and make sure you’ve input all your expenditures for the month. I sell a lot on Etsy, and every time I make a sale, I input the invoice and receive the payment in Quickbooks. I do spend a fair amount of time each week on accounting, but it is worth it as it makes paying taxes so much easier!!

The link to Quickbooks is in the article. There are free online bookkeeping programs out there, too. You can also use Excel (but the idea of setting it up all the accounting in Excel sounds miserable). I use it because it is the easiest tool for me and because I can give my accountant has access to it at yearly tax time.

I hope this helps! If you have any other questions, please email me. I am NOT an accountant. I just know what works for me, so if you need serious accounting advice, make sure you contact a pro!
Rose Arabia
January 7, 2014 at 4:29 am

Hi Stephanie,

I have just recently decided to go back into freelancing since my area simply doesn’t have enough jobs for the type of work I do. I’ve always had trouble trying to figure out what I should be paying myself out of my total net income. I usually save 30% back for taxes and my expenses of course come out as well. Do I need to, or should I be putting anything else back after taxes and expenses, or is the remaining balance what I pay myself?

Rose
Katherine
March 7, 2014 at 8:24 am

Thanks for this post – it really does make the whole process seem less daunting.

I am curious to your thoughts on how to manage sales tax, say for Austin. On the sales tax permit FAQ page, there is a link to this document which outlines which types of business activities are subject to TX sales tax: http://www.window.state.tx.us/taxinfo/taxpubs/tx96_259.pdf

You’ll note that Data Processing includes web site creation and maintenance and that these activities allow for a 20% exemption on the total amount from sales tax. Is this something you do? Any advice is so appreciated!
Chris
July 23, 2015 at 3:30 pm

About the quarterly reporting, if you are a little late, best to send it in a little late with the $50 added before they let you know you are late. If you are really late, they will send you an “estimate” of what sales you would have reported, in my case 16 times higher than my average quarter, plus the $50, plus the vig.
Chris
July 23, 2015 at 4:25 pm

To file online, you get to the end of a lengthy process before they let you know that they don’t take VISA. When you go to leave without filing, they treat you like a tax cheat.
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September 6, 2015 at 11:48 am

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December 10, 2015 at 2:51 pm

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Pri
July 17, 2018 at 11:41 am

hi Stephanie,
Thank you for this blogpost. It’s just the right amount of information one requires.
I had a query regarding Sales tax. You mentioned that – Sales Tax is not charged for out-of-state clients.
Most of my clients are out-of-state and some out-of-country, does that mean I don’t need to collect or pay sales tax?
Katie
August 6, 2018 at 2:12 pm

Quick question: I noticed when I registered the DBA that the form says to list which county you will be doing business in. How do you answer that as a freelance graphic/web designer? Do I just put the county I will be working from? Or do I need to list every county in Texas I would like to offer services in? I’m hoping to be able to provide services for all of Texas and other states if needed, but am not sure how this works. Thanks!

Setting up your Graphic Design Business in Texas

11 Responses to "Setting up your Graphic Design Business in Texas"

Krystal

Stephanie

Rose Arabia

Katherine

Chris

Chris

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Tax Return

95Rosalina

Pri

Katie

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