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The Lone Star State shines bright for businesses. Texas’s 2.4 million small businesses employ nearly half the state’s workforce. Texas takes pride in offering low taxes, a skilled workforce, diverse geography, low cost of living, and limited regulation. These give the state a business-friendly climate. If you want to make your dream business idea come true, learning how to start a Texas business is a great way to go.
Corporate taxes? Personal income tax? Not in Texas. As one of the country’s largest state economies, Texas is has seen a boom in startups. Between 2019 and 2020, business applications in Texas skyrocketed from 75,858 to 139,476.
Texas also attracts investors, which is good for small business owners. In 2014 alone, the state’s lenders backed 421,254 in loans under $100,000, totaling $6.2 billion. The state also has low startup costs and a wealth of new business incentives. This makes Texas one of the best states in the U.S. to start a business.
Starting a new business in Texas requires following a few important steps. Follow the steps listed out here to launch your business the right way. We can also help you get your business off the ground fast with our simple business formation services.
Before you file your paperwork to start a business, it helps to know what your business will do. Ask yourself:
Whether your business idea is a side gig or your full-time focus, take time to write a business plan. A business plan helps you understand key parts of your business and your path to making a profit. No matter how large or small your new venture may be, having a roadmap to success is important.
Some locations in Texas offer free business classes. For example, Austin’s BizAid gives new entrepreneurs access to education and resources related to starting a business. You can search Google or talk with your local Chamber of Commerce to find support groups for small business owners where you live.
Your business plan helps you identify opportunities and troubleshoot potential problems. You can also use it to figure out who your target customer is and how you can reach them.
As part of your planning, look at how you’ll fund your business. Consider SBA loans, bank loans, bootstrapping, or even small business grants. Other funding programs include:
As a business owner, you can choose from a variety of business structures. A business structure defines how you will run and grow your business. It also determines what taxes you’ll pay.
In Texas, two common business structures are the limited liability company (LLC) and the sole proprietorship (or sole prop).
As a sole proprietor, you’re looking at a low-cost, low-barrier way to start your business. Sole props are simple to set up, have one owner, can hire employees, and are exempt from Texas’s franchise tax. Down the road, you can also change your business entity type. For example, you can file at a later time to become an LLC, or a C or S corporation.
One thing you need to be aware of as a sole proprietor. If you run into legal or financial trouble with your business, your personal assets are at risk. In the event of a lawsuit or debt collection, your assets may be lost.
If you’re still looking for a simple business structure, consider filing as an LLC in Texas. An LLC can shield your personal property from business problems.
An LLC can have one or more owners, known as members. These members can take advantage of possible lower tax rates.
Before you are official, you have to file for a certification of formation from the Texas Secretary of State. Your LLC also needs a registered agent who can guide you through the formation process and keep you compliant. You may also want to file an assumed name, or DBA, with the state.
In Bexar County, home to San Antonio, businesses have to pay business property taxes. These are taxes on property you use to generate revenue. In Austin, the Travis County Appraisal District (TCAD) manages property taxes.
Doing business in Texas can be straightforward, but it comes with costs, including:
Location matters, too. As you develop your business idea, think about your local area, or other parts of Texas. You want to find the right balance of opportunity, zoning laws, and incentives (like the Texas Enterprise Fund). Check out the Texas Department of Licensing and Regulation website to see what rules or or business licenses apply to you.
Keep in mind how you’ll market your business. Plan for a business website, social networking, advertising, and industry events. These have costs you’ll need to factor into your plan, too.
Your business needs a name. It is the first impression you’ll make with customers, and it’s required for legal reasons. But how do you choose a good name, and how do you know if the name you want to use is available?
You can use your own name for the business, or a DBA focused on your brand and market. A business name can also explain your services.
Make sure your business name is available. Businesses, especially in the same industry, need unique names. There can be legal consequences if you try to do business under a name another company already uses.
In Texas, you can check county records or the Secretary of State website to see if your preferred name is free to use. If you find an assumed business name that is no longer in use, you can reserve it for your business. You can do that by filling out and notarizing the required paperwork with the state. You’ll need to renew your assumed name every ten years, but verify requirements in your area. You don’t want to miss any filing deadlines.
Once you’ve chosen a business name, see if the domain name for your business website is available. We provide an easy way for you to secure a domain and build your business website.
If social media is part of your marketing plan, see what handles or accounts you can reserve on the networks you’ll use.
Starting your business on a solid foundation means fulfilling required business registrations. You’ll need to think about DBA applications, licensing, permits, and zoning. For example, the City of McAllen requires home-based businesses to have a Home Occupation Permit to operate.
You also have to designate a registered agent in Texas. The state requires all LLCs to have a registered agent. In Texas, a registered agent receives important legal paperwork. They also receive notifications from the state regarding your business. You have to identify the registered agent for your business before you file any formation paperwork.
You must apply to the IRS for an employer identification number (EIN). You’ll need this taxpayer ID to pay taxes and open business bank accounts.
The Comptroller of Public Accounts collects state franchise taxes. For details about local taxes, check with your county tax assessor. We can also help you track your revenue and expenses through our ZenBusiness Money app. This platform makes filing taxes and managing finances a breeze.
If you are hiring employees, review the state’s employer requirements.
Once you’ve worked out the right coverage for your business, secure your business insurance. Business insurance can cover commercial properties, commercial vehicles, and small employer health insurance.
The last step is to set up a business bank account. You can get,a checking account and apply for business credit cards. Not only does a business bank account help you track finances, but you can also build the company’s credit. This puts you in a good position to manage cash flow.
It’s one thing to open your doors, but what will get customers to come through them?
You have to get word out about your new business. That means identifying your customer base and finding ways to tell them about your company. Another name for this is “marketing.”
Think about what you want your customers to know about your product or service. They’ll need descriptions of what you offer and a location (digital or physical) to find your business.
For example, you could run digital through Google or Facebook. You can also run print ads in local magazines or the newspaper. Broadcast advertising on TV and radio stations is a great way to reach a local customer base.
You also want to optimize your company’s profile on Google My Business. This is one of the top ways people searching for your services will find you.
If social media is part of your marketing strategy, be sure to post relevant content on a consistent basis. Be sure to engage with people who interact with your brand on social channels.
Print marketing is still a powerful tool. You can catch a new customer’s attention with a well-designed business card, brochure, and postcard.
In such a big state, there’s room for all sorts of new businesses in Texas. Here are some trending ideas you may consider:
Texas is a beacon for entrepreneurs to start and grow their businesses. It boasts one of the biggest economies in the nation. Both rural and urban places offer resources and incentives to help people become business owners in Texas. With the right idea, planning, funding, and determination, your business can shine bright in the Lone Star State.
Austin, Dallas/Fort Worth, San Antonio, and Houston can be great cities for starting a new Texas business.
To open your Texas LLC, you’ll need to pay various fees, which may include:
* Name reservation application fee, $40
* DBA filing fee, $25
* Certificate of Formation fee, $300
Mentors from the Service Corp of Retired Executives (SCORE) are available to review business plans, help you refine your business ideas, and advise budding entrepreneurs. Locations, workshops, and mentorships are available statewide. Other resources include:
* Texas Manufacturing Assistance Center (TMAC)
* SBA Office of Women’s Business Ownership
* North Texas Small Business Development Center Network
* Dallas Black Chamber of Commerce
* Greater Dallas Hispanic Chamber of Commerce