Why Texas is a great state to start a business
Texas combines pro-business policy with one of the largest consumer markets in the country.
- No state income tax for individuals or LLCs
- $300 one-time LLC filing fee
- Filings approved in 3–5 business days online
- 5 of the 15 largest U.S. cities are in Texas
- Strong support for minority-owned businesses (HUB program)
How to start a Texas LLC
The Texas Secretary of State accepts online filings through SOSDirect.
1. Choose your name
Search the Texas SOS Taxable Entity database to make sure your name is available.
2. Appoint a Texas registered agent
Must have a physical Texas address. Can be you, a partner, or a paid service.
3. File the Certificate of Formation (Form 205)
$300 filing fee. File online at SOSDirect or by mail.
4. Get your EIN from the IRS
Free, takes 10 minutes online.
5. Get a Texas Sales Tax Permit
Free from the Texas Comptroller — required if you sell taxable goods or services.
6. File your Texas Franchise Tax Report annually
Due May 15. Most small businesses owe $0 because of the no-tax-due threshold (~$2.47M).
Want optional setup services?
Done-for-you technical setup is available as a separate service.
Local resources by city
Texas cities offer free programs for new entrepreneurs.
Houston
Houston SCORE, Houston Public Library Business Center, LiftFund microloans.
Dallas–Fort Worth
Dallas SCORE, PeopleFund DFW, BCL of Texas.
Austin
BiGAUSTIN, Austin SCORE, City of Austin Small Business Program.
San Antonio
LiftFund (HQ in SA), San Antonio SCORE, UTSA SBDC.
Texas-specific compliance to remember
Most new owners forget these — and lose their LLC status.
- Annual Public Information Report (free, due May 15)
- Annual Franchise Tax Report (file even if you owe $0)
- DBA / Assumed Name filing if you operate under any name other than your LLC's exact name
- City and county business permits where required
Want optional setup services?
Done-for-you technical setup is available as a separate service.
Choosing a business structure in Texas
Texas recognizes sole proprietorships, general partnerships, LLCs, and corporations. The LLC is the most common choice for a first business because it separates personal assets from business liability without corporate formalities, but the right answer depends on your risk, your partners, and how you plan to be taxed.
- Sole proprietorship — no state filing required, but no liability separation and no true business credit identity.
- General partnership — created automatically when two or more people run a business together; each partner is personally liable.
- LLC — filed with the Texas Secretary of State on Form 205; members are shielded from most business debts and can elect S-corp taxation later.
- Corporation — filed on Form 201; makes sense when you plan to issue stock or bring on outside investors.
- Nonprofit corporation — filed on Form 202, with separate IRS 501(c)(3) recognition required before most foundation grants.
Licenses and permits Texas businesses commonly need
Texas has no general statewide business license, which surprises many new owners. Requirements come from your industry, your city, and your county instead — so check all three before you open.
- Sales and use tax permit from the Texas Comptroller if you sell taxable goods or services (free).
- Occupational or professional licensing through the Texas Department of Licensing and Regulation for trades such as cosmetology, electrical work, HVAC, and towing.
- Food establishment permits and food handler certification through your city or county health department.
- City certificate of occupancy or home occupation permit for a physical or in-home location.
- County Assumed Name Certificate if you operate under a name other than your exact legal entity name.
Want optional setup services?
Done-for-you technical setup is available as a separate service.
Banking, bookkeeping, and taxes
Once the entity exists, the operating side is what keeps liability protection intact and makes the business fundable later.
Open a dedicated business bank account
Bring your stamped Certificate of Formation, EIN letter, and operating agreement. Mixing personal and business money is the most common way owners weaken their own liability protection.
Set up bookkeeping from day one
Track income and expenses monthly rather than annually. Clean books are what lenders, grant reviewers, and your CPA all ask for first.
Understand your federal tax picture
A single-member LLC is taxed as a disregarded entity by default and reports on Schedule C; multi-member LLCs file Form 1065. Owners generally make quarterly estimated payments to the IRS.
Handle state obligations
Texas has no personal income tax, but the annual Franchise Tax Report and Public Information Report are still due each May 15 — even at $0 owed. Sales tax returns are filed on the schedule the Comptroller assigns you.
Register for payroll before your first hire
Employers report new hires to the Texas Attorney General and set up unemployment tax with the Texas Workforce Commission.
Funding options for a new Texas business
Most new Texas businesses start with a mix of owner capital and small credit rather than a single large loan. Program availability changes, so verify current terms directly with each organization.
- Community lenders and CDFIs such as LiftFund, PeopleFund, and BCL of Texas offer microloans to owners who don't yet qualify at a bank.
- SBA microloans and 7(a) loans are issued through participating lenders, not the SBA directly.
- Business credit — net-30 vendor accounts and a D-U-N-S number build borrowing capacity in your EIN's name over 6–12 months.
- Grant programs are competitive and usually require an active entity, an EIN, and clean financials before you apply.
- The Texas HUB program and other certifications open contracting opportunities rather than cash awards.