How to Start a Business in Texas

Texas offers everything small business owners, entrepreneurs, and LLC members could want: a diverse economy, a skilled workforce, and flourishing world-class cities that would make the perfect headquarters. There are a few steps you'll need to take to make your business official in the state, along with formation fees and other details you should know before you start.

This article covers the 10 required steps to start a business in Texas, key fees you'll pay, and what makes the state a great place to establish your small business.

Why Start a Business in Texas?

There are several unique and compelling reasons to launch your small business in the state, including:

• Texas regularly ranks as either the best or among the top states to start a business in.

• Texas has no corporate or personal income tax, a popular feature among pass-through entities like LLCs and S corps, which avoid state-level taxation.

• Texas has one of the largest workforces in the country, with nearly 16 million workers.

How Much Does it Cost to Start a Business in Texas?

Be prepared to spend several hundred dollars while setting up your small business in Texas. The exact cost will vary and depends on whether you use an optional expedited service, which has a fee.

10 Steps to Starting a Business in Texas

Step 1: Business Idea

The first step to starting your business in Texas is to develop your business idea. As you focus on development, envision how it will stand out from competitors and businesses in similar fields.

You can also write a business plan. A business plan covers essential aspects of your business operations, such as a company description, management, organization, and funding.

There are two types of business plans used by small businesses: a lean startup plan and a traditional business plan. Either business plan will provide a structure that you can use to propel your small business from an idea to a reality.

Step 2: Entity

For the second step, you’ll want to select your business entity. This may be the most crucial step in the process because it will determine your business structure. In Texas, you can choose from a:

• C corporation

• Limited liability company

• Partnership

• Sole proprietorship

• S corporation

Note that general partnerships don't require a partnership agreement to be in writing, and there’s no requirement to file the agreement with the state.

For owners seeking guidance on choosing and registering the right structure, use 1-800Accountant's entity formation service as a resource.

Step 3: Name

A name is one of the focal points of a small business, so it’s important to understand the naming process in the state.

Naming your small business in Texas depends on the business structure you form. The state allows you to operate a business using an assumed name, which doesn’t include a surname. A legal entity name, like for an LLC, is the official registered business structure that limits your personal liability. A DBA (assumed name) is simply a "nickname" that your legal entity uses to operate and market to the public in Texas.

For sole proprietors, the assumed business name won’t include the sole proprietor’s surname, and for general partnerships, the assumed business name won’t include the surname of all the partners.

If you’re using an assumed name, you’ll file to receive the assumed name certificate with the county clerk where your business will operate. If you don’t operate your business in one location, you’ll file for the assumed name certificate in every county where you operate.

There are fees to be aware of when naming your business in Texas, which are covered in the first table in this article. This includes fees for name reservations, an assumed name certificate, and a transfer of name reservation.

Check name availability by using the Texas Secretary of State's SOSDirect database.

Step 4: Registration

Once you've selected your business structure, you must register with the state of Texas. This is a crucial step as it legally establishes your business.

If you operate your small business as one of the following entities in Texas, excluding sole proprietorships and general partnerships, you’ll complete a Certificate of Formation with the Texas Secretary of State:

• Corporation

• LLC

• Limited liability partnership

• Limited partnership

• S corp

The Certificate of Formation must include your business name, the purpose of your business, the address of your registered office, and the names and addresses of your owners. There are a few registration fees, but they depend on your business entity.

• Certificates of formation for all entities except cooperative associations, limited partnerships, and professional associations have a $300 registration fee.

• Certificates of formation for a limited partnership or professional association have a $750 registration fee.

• Registration or renewal of a limited liability partnership incurs a fee of $200.

An operating agreement is not legally required for Texas LLCs, but we strongly recommend drafting one.

Step 5: Obtain an EIN

Once you've filed your Certificate of Formation, you'll need to obtain an EIN from the IRS. This is like a Social Security number for your business and is necessary for filing taxes, hiring employees, and opening a business bank account.

Sole proprietors with no employees are an exception. They can use their Social Security number instead of an EIN, but an EIN is recommended for privacy and to open a business bank account.

Step 6: Choose a Registered Agent

Another requirement for starting a business in Texas is choosing a registered agent. This is a person or entity designated to receive legal documents on behalf of your business. Your registered agent must have a physical address in Texas and be available during regular business hours. You can also serve as your own registered agent, provided you meet the requirements.

While a registered agent is required for LLCs, corporations, and limited partnerships in Texas, sole proprietors and general partnerships are exempt.

Step 7: Licensing and Permits

A Texas business license isn’t required, but the state has other license and permit requirements. City and county business permits vary and may be required even when no state license is needed.

A sales tax permit is a requirement if your business leases, rents, or sells taxable goods, provides taxable services, or acquires taxable goods or services from out-of-state suppliers without a Texas Sales and Use Tax Permit. Use tax is a requirement for small businesses under a few notable circumstances. First, the buyer must consume, store, or use the goods or services in Texas, and the seller doesn’t charge sales tax in Texas.

You’ll need a state license or permit if your business specializes in certain industries, including:

• Cosmetology

• Food service

• Construction

• Healthcare

• Childcare

To receive a license or permit in these industries, you’ll work with the Texas Department of Licensing & Regulation (TDLR).

Step 8: Taxes

Texas small business taxes have a few requirements. First, there’s a Texas franchise tax, which is what companies pay to conduct business within the state. This tax varies with a company's annual revenue. 2026 franchise tax rates:

Franchise taxes are due on May 15th unless the date falls on a holiday or weekend. When that happens, taxes are due the next business day.

Managing proactive tax planning and quarterly estimated tax submissions for pass-through entity owners is easy with 1-800Accountant's year-round tax advisory service.

Step 9: Open a Bank Account

Opening a business bank account lets you separate your personal finances from your business finances, making it easier to track expenses and income. Clean, full-service bookkeeping from 1-800Accountant at launch makes tax season significantly easier to manage.

To open a business bank account in Texas, you will need to provide the bank with documentation that proves your business is registered, such as your Certificate of Formation or Certificate of Incorporation, your EIN, your business license, and other documents that the bank may require.

Step 10: Insurance

Business insurance in Texas is one of the last things to consider, and the state doesn’t require workers’ compensation insurance. Commercial general liability insurance, while not legally required, is expected by many:

• Clients

• Landlords

• Contractors

Professional liability (E&O) insurance should be considered for service-based businesses and may be required for home inspectors, plumbers, and daycare providers.

Other Considerations

There are other considerations to keep in mind before taking the steps to start a business in Texas.

Business Grants & Loans

Texas offers 7(a), microloans, and 504 loans on behalf of the U. S. Small Business Administration. Depending on your industry, you may apply for grants and loans from the following organizations:

• Non-Profit Lenders, such as BCL of Texas, LiftFund, and PeopleFund

• Product Development and Small Business Incubator Fund (PDSBI)

• Texas Angel Investors

• Texas Workforce Commission

Additional Funding & Business Location

Additional funding resources are available for specific industries in Texas. If your business works in the following industries, funding may be available with these Texas-based organizations:

• Texas Department of Agriculture (for farm and ranch producers)

• Texas Film Commission (for the creative arts and film industries)

• Texas Music Office (artists and music industry professionals)

You may also want to consider your business location. Texas is one of the largest states in the country, and certain areas specialize in specific industries. When considering your location, weigh how difficult it may be to source supplies locally.

Frequently Asked Questions

Do I need a business license to operate in Texas?

No, because Texas does not issue a general, statewide business license. However, depending on your industry and location, you may need to obtain specific occupational licenses or local permits. You can check the Texas Business Permit Office to find the exact requirements for your specific trade.

How long does it take to form an LLC in Texas?

Formation times depend on the method you use. Online formation typically takes 2 to 5 business days, whereas filing by mail can take anywhere from 2 to 3 weeks. You can expedite the process online through SOSDirect for an additional fee to get approval in 1 to 2 business days.

Can I be my own registered agent in Texas?

Yes, you can act as your own registered agent as long as you are a Texas resident over 18 years old. Your agent must maintain a physical street address in Texas and be available during standard business hours to accept legal documents. To be your own registered agent, you must also meet that standard.

What is the difference between a DBA and an LLC in Texas?

A DBA (Doing Business As) is simply a registered assumed name that allows a sole proprietor or existing company to operate under a different name. An LLC, on the other hand, is a formal legal entity that protects your personal assets from business liabilities. A tax professional can help weigh what's best for your business.

Does Texas require an operating agreement for LLCs?

An operating agreement isn't a requirement in Texas. Texas law does not require you to file an operating agreement with the state, but there are benefits to drafting one. It is highly recommended to draft one that outlines the ownership structure, voting rights, and internal operating procedures.

When do I need to collect sales tax in Texas?

You need to collect sales tax if you sell or lease tangible personal property or taxable services to customers in Texas. Once you begin making taxable sales, you must register for a Sales and Use Tax Permit through the Texas Comptroller before conducting business. Once sales tax is collected, you'll remit it to the state.

What taxes does a small business pay in Texas?

Texas does not impose a personal state income tax or a traditional corporate income tax. Instead, businesses pay a Franchise Tax (if their gross receipts exceed a certain threshold) and must remit state and local sales taxes on retail goods. You will still be responsible for paying federal taxes.

Can I start a business in Texas with no money?

Yes, you can start a Texas business with no money. This includes certain service-based businesses, such as freelance writing or virtual assisting, with virtually zero out-of-pocket overhead. However, if you want to formally register an LLC, you will need to pay the state’s $300 Certificate of Formation filing fee.

Setting Your Texas Business Up for Long-Term Success

Getting your Texas business off the ground involves managing more moving parts than most new owners probably expect. Once the registration, licensing, and tax accounts are in place, your focus shifts to ongoing tax planning and year-round compliance measures. While some owners are better equipped to handle this workload than others, professional tax support makes it easy.

If you think you could benefit from a dedicated accounting team in your corner from launch, explore our small business tax and accounting services to see what year-round support looks like for your Texas operations.