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How to Start a Business in Texas

Do you want to start a new business in the state of Texas, but you’re not sure how to get started? You’re in the right space.

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Frequently showing up on an impressive array of “top 10 states for business” lists, entrepreneurs in Texas can build on a strong local economy signaled by the state’s $61,136 per-capita GDP, the ninth-highest in the nation. Despite the expanding economy, however, the cost of living is low in this state, helping small businesses keep expenses low and profit margins growing. Texas also has lower business taxes and more access to small business loans than most states. These factors could explain why Texas has the eighth-highest business survival rate in the country. “The Lone Star State” is in a class by itself for consistent business strength. It is the second largest state in both size and population in the country, which may contribute to the larger-than-life attitude and the saying, “Everything is bigger in Texas!”

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General resources for starting a business in Texas

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Fun facts about starting a business in Texas

Famous business founded in Texas American Airlines

American Airlines Group, Inc. is a publicly traded airline holding company founded and headquartered in Fort Worth, Texas. It was formed in 2013, in the merger of AMR Corporation and US Airways Group. The airline groups together form the largest airline in the world.

Famous entrepreneur born in Texas Mary Kay Ash

Mary Kay Ash (1918-2001) was an entrepreneur and founder of Mary Kay Cosmetics, Inc. She was born in Hot Wells, Texas. Mary Kay Ash also wrote four books, which all became best sellers.

“Everyone has an invisible sign hanging from their neck saying, ‘Make me feel important.’ Never forget this message when working with people.”

Mary Kay Ash
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Which type of legal structure is best for my business in Texas?

We strongly recommend you incorporate, but you must consider the tax, legal, and liability implications carefully before deciding on the best structure.

Here are 5 helpful steps to determine what is the best legal structure for your business:

Click one of the buttons below to learn more about the different types of business legal structures and how to start them in the state of Texas.
LLC (Limited Liability Company)
An LLC is a specific form of a private limited company. It is a business structure that combines the pass-through taxation of a partnership or sole proprietorship with the limited liability of a corporation.

Steps to starting an LLC in Texas:

  • Step 1 — Name your LLC.
  • Step 2 — File a Certificate of Formation.
  • Step 3 — Find a Registered Agent.
  • Step 4 — Prepare and sign an Operating Agreement.
  • Step 5 — Comply with any publication requirements.
  • Step 6 — Comply with other tax and regulatory requirements.
  • Step 7 — Annual Reports -- not required in Texas.
  • Step 8 — Register foreign LLCs doing business in Texas.

For help forming your LLC in Texas we recommend CorpNet (there are fees for their service).

Alternatively, visit the Texas Secretary of State website.

Other Texas resources for LLCs:

Secretary of State Business Name Database: Search for the availability of your LLC name here.
File your “Application for Reservation of an Entity Name” here.
File your “Certificate of Formation” here.
File your Annual Report here.

Registered Agents: Every Texas LLC must have an agent for service of process in the state. Search this site to find a registered agent for your business.

Business Licenses: Search this site to see if, depending on your business activities, you will need to acquire a license.

IRS EIN Online: Apply for an Employer Identification Number (EIN) for your LLC here. If your LLC has more than one member, you must get an EIN, even if you have no employees.

Texas Comptroller of Public Accounts: If you will be selling goods or will hire employees, you’ll need to register with this site.

Sole Proprietorship
A sole proprietorship is an unincorporated business with one owner who pays personal income tax on profits from the business. With little government regulation, they are the simplest business to set up or take apart, making them popular among individual self contractors or business owners.

Steps to starting Sole Proprietorship in Texas:

  • Step 1 — Name your sole proprietorship.
  • Step 2 — File an assumed business name.
  • Step 3 — Obtain licenses, permits, and zoning clearance.
  • Step 4 — Get an Employer Identification Number (EIN).

For help forming your sole proprietorship in Texas we recommend CorpNet (they have fees for their service).

Or, you can visit the Texas Secretary of State website.

Other Texas resources for Sole Proprietorship:

Business Name Search: Search for the availability of your business name here. A sole proprietor may use his or her given name, or an assumed business name.

U.S. Patent & Trademark Office: Federal database for existing trademark registrations. Click on the “TESS” link to conduct a search.

Business Licenses: Search this site to see if, depending on your business activities, you will need to acquire a license.

IRS EIN Online: Apply for an Employer Identification Number (EIN) for your sole proprietorship here, if you will hire employees.

Texas Comptroller of Public Accounts: If you will be selling goods or will hire employees, you’ll need to register with this site.

Partnership
A partnership is created whenever two or more people do business together for profit and share ownership, even if there is no written agreement to form the partnership. Each partner contributes to all aspects of the business, and each partner shares in the profits and losses of the business.

Steps to starting Partnership in Texas:

  • Step 1 — Choose a name for your partnership.
  • Step 2 — File an assumed business name.
  • Step 3 — Create a partnership agreement.
  • Step 4 — Obtain licenses, permits, and zoning clearance.
  • Step 5 — Obtain an Employer Identification Number (EIN).

For help forming your partnership in Texas we recommend CorpNet (there are fees for their service).

Alternatively, you can visit the Texas Secretary of State website.

Other Texas resources for Partnership:

Business Name Search: Search for the availability of your business name here. A partnership may use the surnames of the individual partners, or a fictitious business name.

U.S. Patent & Trademark Office: Federal database for existing trademark registrations. Click on the “TESS” link to conduct a search.

IRS EIN Online: Apply for an Employer Identification Number (EIN) for your partnership here. Partnerships must have an EIN, whether you have employees or not.

Business Licenses: Search this site to see if, depending on your business activities, you will need to acquire a license.

Texas Comptroller of Public Accounts: If you will be selling goods or will hire employees, you’ll need to register with this site.

S Corporation
An S corporation (or S Corp for short), is a special type of corporation created through an IRS tax election. An eligible domestic corporation can avoid double taxation (once to the corporation and a gain to the shareholders) by electing to be treated as an S corporation. In general, S corporations do not pay any federal income taxes. Instead, the corporation's income or losses are divided among and passed through to its shareholders. The shareholders must then report the income or loss on their own individual income tax returns.

Steps to starting S Corporation in Texas:

  • Step 1 — Choose a corporate name.
  • Step 2 — Prepare and file Certificate of Formation.
  • Step 3 — Appoint a registered agent.
  • Step 4 — Set up a corporate records book.
  • Step 5 — Prepare corporate bylaws.
  • Step 6 — Appoint initial corporate directors.
  • Step 7 — Hold your first Board of Directors meeting.
  • Step 8 — Issue stock.
  • Step 9 — Comply with other tax and regulatory requirements.
  • Step 10 — Register foreign corporations doing business in Texas

For help forming your S corporation in Texas we recommend CorpNet (they have fees for their service).

Alternatively visit the Texas Secretary of State website.

Other Texas resources for S Corporation:

Secretary of State Business Name Search: Search for the availability of your corporate name here.
File your Name Reservation here.
File your “Certificate of Formation” here.

IRS EIN Online: Apply for an Employer Identification Number (EIN) for your corporation here.

IRS S corporations: Specific instructions for your tax requirements as an S corp.

Business Licenses: Search this site to see if, depending on your business activities, you will need to acquire a license.

Texas Comptroller of Public Accounts: Register here to fulfill business tax requirements.

C Corporation
A C corporation (or C corp), under U.S. federal income tax law, refers to any corporation that is taxed separately from its owners. A C corporation is distinguished from an S corporation, which generally is not taxed separately.

Steps to starting C Corporation in Texas:

  • Step 1 — Choose a corporate name.
  • Step 2 — Prepare and file a corporate charter.
  • Step 3 — Appoint a registered agent.
  • Step 4 — Set up a corporate records book.
  • Step 5 — Prepare corporate bylaws.
  • Step 6 — Appoint initial corporate directors.
  • Step 7 — Hold your first Board of Directors meeting.
  • Step 8 — Issue stock.
  • Step 9 — Comply with Texas Annual Report requirements.
  • Step 10 — Comply with other tax and regulatory requirements.

For help forming your C corporation in Texas we recommend CorpNet (there are fees for their service).

Or visit the Texas Secretary of State website.

Other Texas resources for C Corporation:

Secretary of State Business Name Search: Search for the availability of your corporate name here.
File your Name Reservation here.
File your “Certificate of Formation” here.

IRS EIN Online: Apply for an Employer Identification Number (EIN) for your corporation here.

Business Licenses: Search this site to see if, depending on your business activities, you will need to acquire a license.

Texas Comptroller of Public Accounts: Register here to fulfill corporate tax requirements.

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Why choose Texas for my business?

  • 1

    Forbes: “Best States for Business” (2015)
    Texas ranks #6. “The $1.65 trillion Texas economy is the second biggest in the U.S., behind only California. Texas ranks first for current economic climate thanks to the second fastest job and economic growth over the past five years.”

  • 2

    CBS: “The 10 Best States for Entrepreneurs” (2015)
    Texas ranks #6. “Entrepreneurs in Texas can build on a strong local economy as signaled by the state's $61,136 per-capita GDP, the ninth-highest in the nation. Even with an expanding economy, however, costs in this state are low. Texas is among the 10 cheapest states to live in, which helps small businesses keep expenses low and profit margins growing.”

  • 3

    CNBC: “America’s Top States for Business” (2015)
    Texas ranks #2.

  • 4

    Forbes: “What Makes Texas The Most Small Business-Friendly State" (2015)
    “Fortunately, Texas and Utah show a different path—one that encourages business ownership through lower taxes and less burdensome regulations. And, with the growing prevalence of automation, combined with international competition, Americans need greater opportunity for small business ownership, not less.”

  • 5

    Texas Wide Open For Business: Incentives and Financing
    “Texas takes the initiative to invest in the future by offering competitive incentives to companies who create jobs and drive innovation as they do business in our state and its communities.”

  • 6

    Texas Wide Open For Business: Tax Incentives
    “The State of Texas has worked hard to develop and sustain a business-friendly operating environment. State and local government provides tax incentives, financing assistance and an array of services to help companies establish or expand in Texas.”

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