Contents:
- Overview of End Result
- What You’ll Need
- Step 1: Choose Your Business Structure
- Step 2: Register Your Business Name
- Step 3: Obtain Your EIN From the IRS
- Step 4: Register for Texas Franchise Tax
- Step 5: Secure Required Local Licenses and Permits
- Quick Answer Box
- Quick Cost Breakdown
- Common Mistakes to Avoid
- FAQ
- Does Texas have a state income tax for businesses?
- How long does it take to register an LLC in Texas?
- Do I need a general business license to operate in Texas?
- Next Steps
Texas welcomes thousands of new businesses every single month, drawn partly by the state’s genuinely business-friendly reputation, and getting your own venture properly set up here is more straightforward than many young entrepreneurs expect.
Overview of End Result
Starting a business in Texas means choosing a legal structure, registering with the Secretary of State, obtaining necessary licenses, and understanding the state’s unique franchise tax requirements from day one.
What You’ll Need
You’ll need a chosen business name, your selected entity structure, an EIN from the IRS, and information about any industry-specific licenses your particular business might require locally.
Step 1: Choose Your Business Structure
Decide between an LLC, corporation, or sole proprietorship, with most small business owners choosing an LLC for its liability protection combined with relatively simple, manageable tax treatment.
Step 2: Register Your Business Name
Search the Texas Secretary of State database confirming your desired name isn’t already taken, then file a Certificate of Formation for LLCs or corporations, currently costing $300.
Step 3: Obtain Your EIN From the IRS
Apply for a free Employer Identification Number directly through the IRS website, since this number is required for opening business bank accounts and filing taxes properly.
Step 4: Register for Texas Franchise Tax
Most Texas businesses must register for the state’s franchise tax, though businesses with revenue under $2.47 million currently owe no actual tax, simply an annual “no tax due” report.
Step 5: Secure Required Local Licenses and Permits
Check with your specific city and county for required local licenses, since Texas has no general statewide business license but does require industry-specific and local permits.
Quick Answer Box
Register your entity with the Texas Secretary of State, obtain a free EIN, register for franchise tax reporting, and secure any city-specific licenses your particular business type requires.
Quick Cost Breakdown
LLC formation filing: $300. Assumed name certificate if needed: $25. Local business licenses: $0 to $150 depending on city and industry. Registered agent service if used: $100 to $300 annually.
Common Mistakes to Avoid
Assuming Texas requires no ongoing filings simply because it lacks a state income tax often leads to missed franchise tax reporting deadlines, which can trigger penalties even when no actual tax is owed.
FAQ
Does Texas have a state income tax for businesses?
No, Texas has no state income tax, though most businesses still owe franchise tax reporting obligations, and some owe actual tax once revenue exceeds the current threshold.
How long does it take to register an LLC in Texas?
Standard processing typically takes three to five business days online, though expedited processing is available for an additional fee if you need faster approval.
Do I need a general business license to operate in Texas?
Texas has no general statewide business license requirement, though specific industries and individual cities may require their own particular licenses and permits.
Next Steps
Once your entity is registered and licenses secured, open a dedicated business bank account and set up basic bookkeeping before officially launching your Texas business operations.
