Starting a business in Texas? This guide breaks down the essential steps you need to take and how we can help you get started today.
Starting a business in Texas, also known as the Lone Star State, can be a fulfilling journey. Not only is it one of the fastest-growing states in the U.S., but its low taxes, ample resources for new businesses, strategic location, and educated workforce make it an ideal place to start a successful business. Texas’s blend of industrious urban centers and charming small towns creates a landscape brimming with opportunities, whether you’re opening a tech startup, a family restaurant, or a retail store.
Before you start a business in Texas, you’ll need a solid business plan. This is your roadmap to success, outlining what your new business does, how it operates, and where you want it to go. It should include an executive summary, a company description, a market analysis, and information about your organization’s management structure.
In your business plan, detail the services or products your company offers. Be clear and precise, letting potential investors know what makes your offerings unique. Your business plan should also include your marketing strategy — how you’ll attract and retain customers. Don’t forget to cover funding. Outline your current funds, future fundraising plans, and how you’ll use the capital to achieve your business goals.
Finally, detail your financial projections. These projections, including revenue and expenses, provide a financial roadmap for your business and are essential for attracting investors. Remember, a business plan isn’t static. As your business grows and the market changes, your plan should adapt, too.
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Once you have your business plan, it’s time to make your business official. Registering your business involves several steps:
Your business name is more than just a title — it’s an integral part of your brand identity. It should be unique, descriptive, and memorable. Texas requires your business name to be distinguishable from other businesses in the state. If you plan to operate under a name other than your legal business name, you’ll need a doing business as (DBA) name, also known as an assumed name in Texas.
Check your desired name’s availability on the state and federal level to ensure it’s not trademarked by another business. You’ll also want to check the availability of the corresponding domain name for your website.
The structure of legal entity you choose for your business significantly impacts your operations, including taxes, liability, and how you raise funds. The four primary structures are sole proprietorship, partnership, limited liability company (LLC), and corporation. Each legal business entity structure comes with its pros and cons.
For example, a sole proprietorship is the simplest business structure, offering complete control to the owner but also putting their personal assets at risk. An LLC provides limited liability protection, separating your personal and business assets. Corporations can be beneficial for larger businesses with multiple employees or those seeking to raise capital publicly.
A great idea is to compare any formal business structures you’re considering. That’s why we’ve created several limited liability company comparison guides to help you do just that:
If you decide to form an LLC or corporation, you must file the required documents with the state. In Texas, the Articles of Organization for an LLC are referred to as a “Certificate of Formation.” These documents outline important information about your business, including its name, structure, management, and more. Sole proprietorships and general partnerships usually don’t need to register with the state.
A registered agent is a person or legal entity designated to receive important legal documents on behalf of your business. In Texas, a registered agent is a legal requirement for state-registered entities like LLCs and corporations, but a registered agent is not required for sole proprietorships and general partnerships. Appointing a professional registered agent service like ZenBusiness helps ensure you never miss any important notices and adds an extra layer of privacy to your business.
Texas offers a broad range of locations to open a business. From vibrant metropolitan areas like Houston, Dallas, and Austin, to smaller towns that still offer many opportunities, the Lone Star State has a place for every kind of business. The location you choose depends on your target customers, proximity to suppliers, and business type.
Consider local zoning laws, as they govern how you can use certain pieces of property. Check with the city or county’s planning office to ensure your desired business location complies with local zoning requirements. Remember, your business’s success can hinge on its location, so take your time and choose wisely.
Most businesses in Texas, especially those with employees or multiple owners, need an Employer Identification Number (EIN), which serves as your business’s social security number. The IRS uses this employer identification number to monitor your business’s tax reporting. You’ll likely also need it to open a business bank account and apply for certain business licenses. While getting an EIN from the IRS is free and can be done online, ZenBusiness’s EIN service can take care of this for you, saving you time and effort.
For state taxes, Texas businesses may need to register for the Texas Comptroller’s sales tax permit, franchise tax, and more. The requirements vary based on your business type and operations.
Licensing requirements in Texas vary by city, county, and the type of business you’re running. You may need a general business license or specific permits such as health permits, building permits, or signage permits. Failure to get the necessary licenses and permits can result in fines or even closure. ZenBusiness’s business license report service can help you identify the licenses and permits your business needs to operate legally.
Separating your personal finances from your business finances is crucial. Not only does it make your life easier during tax season, with accounting and tax filing, but it also helps maintain your liability protection if you’re an LLC or corporation. If you intermingle personal funds and business banking accounts or funds (known as “commingling”), courts could pierce your corporate veil if your business is sued, potentially putting your personal assets at risk. Opening a business bank account helps ensure this separation is clear and consistent.
To start a successful small business in Texas, you’ll need some form of capital. Funding options vary and can include personal savings, loans, investments from friends and family, crowdfunding, or even venture capital. Additionally, Texas has programs to support small businesses, such as the Texas Product/Business Fund and the Skills for Small Business program. Remember, each funding type has pros and cons, so be sure to consider what’s best for your business’s long-term health.
Insurance protects your business from unforeseen circumstances. The type of insurance you need depends on your business activities. Some common types of business insurance include general liability insurance, property insurance, workers’ compensation insurance, and professional liability insurance. You may also need specific insurance types based on your industry, such as malpractice insurance for health professionals or liquor liability insurance for businesses that sell alcohol.
Once you’ve started your own business in Texas, it’s time to attract customers. This is where a good marketing plan comes into play. A well-crafted plan outlines how you’ll reach potential customers and turn them into loyal ones. This could include tactics like social media marketing, search engine optimization (SEO), email marketing, and traditional advertising methods.
Creating a solid online presence is crucial in today’s digital age. A professional website can serve as the home base for your marketing efforts, while also offering a way for potential customers to learn more about what you offer. Good branding and a memorable logo can also help your own business website stand out from the crowd. ZenBusiness’s website builder can help you create a high-quality, professional website without needing extensive technical knowledge.
At ZenBusiness, we’re all about empowering entrepreneurs in their journey to start a business in Texas. Our aim is to help you navigate the complex legal and regulatory landscape so you can focus on what truly matters: growing your business.
Whether you’re kick-starting a tech startup in the bustling city of Austin or opening a charming bakery in the historic city of San Antonio, ZenBusiness is your trusted partner in making your dream of owning a business a reality.
From helping you form an LLC or corporation with our $0 formation services to offering valuable support in obtaining an EIN, staying compliant, or securing the necessary licenses and permits, we’ve got you covered.
Disclaimer: The content on this page is for informational purposes only and does not constitute legal, tax, or accounting advice. If you have specific questions about any of these topics, seek the counsel of a licensed professional.
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The best city to start a business in Texas often depends on the type of business you’re planning to start. However, cities like Austin, known for its thriving tech scene, and Houston, a global hub for energy and healthcare, are often regarded as top choices due to their strong economies, entrepreneurial spirit, and access to resources.
The cost to start a business in Texas can vary greatly depending on the type of business, the business structure you choose, licensing fees, and other factors. For your startup costs for instance, filing an LLC in Texas costs about $300. Remember, this doesn’t include ongoing business costs like rent, utilities, payroll, and marketing expenses.
Starting a self-employed business in Texas involves deciding on a business structure , choosing a business name, registering for tax purposes, obtaining necessary licenses and permits, and possibly setting up a separate business bank account for managing your finances.
As of this writing, the filing fee for the Certificate of Formation for an LLC in Texas is $300. Keep in mind, costs can change and there may be additional costs depending on your specific business needs.
Absolutely! There are many resources for entrepreneurs in Texas. Organizations like the Texas Small Business Development Center (SBDC) and SCORE provide advice and mentorship. Also, ZenBusiness offers extensive resources and services to help guide you through the process of starting a business in Texas.
Starting a new business with little to no money can be challenging, but it’s not impossible. You can start by bootstrapping, which means using your own savings or revenue from the business to fund your operations. Crowdfunding or seeking investments from friends and family are also options. Some entrepreneurs also consider small business grants, loans, or angel investment.
Texas has no state corporate or personal income tax. However, the state does impose a franchise tax on most businesses. The tax is based on a company’s “margin,” which, in simplest terms, is total revenue minus certain exclusions. Sales taxes and federal taxes also apply.
Managing your personal and business accounts finances effectively is crucial to the success of your business. Some key steps include separating your personal and business finances, regularly reviewing and updating your business budget, tracking your expenses, and regularly reviewing your financial statements. Consider using software tools like ZenBusiness Money to automate financial management tasks.
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