How to Start a Business in Texas

The Lone Star state is hot right now for business.

Texas leads the country in small business growth, according to the recent Paychex / IHS Markit Small Business Employment Watch. There are 2.8 million small businesses in the state employing 4.8 million people and accounting for 99.8% of all businesses. If you are a Texas resident or moving there, it might be time to kindle your entrepreneurial dreams. If you are looking to launch a small business in Texas and you’re unsure how to proceed, then read on.

Starting a Business in Texas

Here are ten steps to starting your business in Texas:

Research a Business Idea

Begin your search for a lucrative business by asking yourself what type of company you want to start. Suppose you have a business idea already, great. If you don’t, you may ask a friend or niche down from a company already existing in the industry you like or want to venture into.

Write a Business Plan

As we know, most people write a business plan only when they need individual investors or need a loan from the bank to fund their business. However, a business plan goes beyond financial modelling. A complete one would contain an operating plan, marketing and sales plans, competitive analysis, market analysis and strategy and so on. So, why wait to write a business plan only when you need funding? No, don’t wait until then. If you want proven blueprints to follow for the success of your business, then you must write a business plan from the start of your business.

Select a Business Entity

Popularly known as a legal entity, the business entity comprises four types of business, so you ought to be aware. The four are a sole proprietorship, general partnership, a corporation, and the Limited Liability Company (LLC) — the structure most businesses fall under.

The Limited Liability Company protects the liability of a corporation. It also has the highest tax flexibility of the four entities mentioned. Like the other three, you can tax income as a pass-through that goes to your personal taxes. To acquire a Texas LLC, you’ll need to fill a certificate of Formation with the Texas Secretary of State and pay a state filing fee of $300.

Register a Business Name

Any serious business start-up must be prepared to get their business name registered under the right body.

After you’ve planned your business, selected a name, the next step is to decide what category the name falls under: is it proprietorship and general partnership or LLC? Once you’ve known where the name belongs, go ahead and register.

If your business name contains your full personal name, you are not going to need to fill out anything. Your business name may include a branded name (people usually call this a DBA — Doing Business As). In that case, you’ll need to acquire an Assumed Name Certificate from the County Clerk’s office.

P.S.: Before you eventually decide on your business name, do research that another business is not using it to avoid a breach of trademark.

Acquire an EIN

You need to get the Employer Identification Number (EIN) for your business. It’s a nine-digit tax identification number. The Internal Revenue Service issues it. EINs makes your business identifiable in the United States. They are also used for paying payroll taxes, filing tax returns, etc. You may see an EIN as a social security number for a business. However, not all companies need to get one.

You might have come across it somewhere else; an EIN is also known as a FEIN or Federal Employer Identification Number.

Open a Business Bank Account

It helps significantly and makes bookkeeping easier when you create a separate account for daily business transactions. Therefore, it’s important to create a separate bank account for your business. Research local banks and choose one that is competitive and has exceptional customer service.

Apply for Business Licenses & Permits

As a proposed business owner in Texas, you will need to register with federal, state and local regulations. You’ll need to register for a Business licence, Sales Tax Permit, and Professional Licensing. All these permits and licensing will have varying impacts on your launch.

Seek Funding

As stated earlier, soliciting funds is one of the components of a good business plan. Be prepared to present financial modelling to banks or individual investors to receive funding.

Hire Employees

Hiring workers is crucial for a small new business preparing to launch in Texas. Be sure to register with Texas Workforce Commission and other state bodies and comply with their requirements.

Obtain Business Insurance

As a small business, obtaining business insurance is highly recommended. It’s going to give you peace of mind and a reliable backup if any hazards trip up your new venture. Insurance offers Texas businesses fast recovery these days if there is an incident like a natural disaster that impedes the bottom line.


It is not easy starting a business in Texas, but this easy-to-follow guide helps significantly from brainstorming a business idea, planning and choosing a business entity, acquiring an EIN, opening a business bank account, applying for a license and permit, funding, hiring and obtaining business insurance.

Once launched, you should study various digital marketing strategies such as Google Ads, Facebook ads, local Search Engine Optimization (SEO) and so on to promote your new venture. By building demand for your product or service, your business will reach the right audience at the right time.

If you would like assistance or clarification on any of these steps, click or tap here and we can assist!


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Chris Fuller