Starting your new business in Texas can feel overwhelming, but it doesn’t have to be. While the paperwork and legal requirements might seem daunting at first, registering your business is a critical step in building a strong foundation for long-term success. This guide breaks the process down into 9 straightforward steps to help you get started with confidence.
Remember that certain rules and requirements can vary depending on your business type, location, and industry. Always refer to the official resources, such as the Texas Secretary of State, the Texas Comptroller of Public Accounts, and your local county clerk’s office, to make sure you meet all state and local compliance standards.
Step 1: Choose Your Business Structure
Selecting the right business structure is a foundational decision that affects your personal liability, taxes, and how your business will operate in Texas. Here’s an overview of the most common types:
Sole Proprietorship
The simplest and most common structure for small, one-person businesses. In Texas, you can operate under your own name or file an Assumed Name Certificate (DBA) with your county clerk.
- Liability: Unlimited personal liability. Your personal assets (home, savings, etc.) can be at risk if the business owes debts or faces lawsuits.
- Taxes: All income and expenses are reported on your personal tax return (Form 1040, Schedule C). No separate business tax return is required.
Partnership
A business owned by two or more people. In Texas, partnerships may be informal or formally registered with the Secretary of State for certain types, like LPs or LLPs.
- Liability: In a general partnership, all partners share unlimited personal liability. Limited Partnerships (LPs) and Limited Liability Partnerships (LLPs) offer varying degrees of protection.
- Taxes: Partnerships don’t pay income tax directly; profits and losses “pass through” to each partner’s personal return.
Limited Liability Company (LLC)
A popular choice in Texas because it provides personal liability protection and flexible tax options. Requires filing a Certificate of Formation with the Texas Secretary of State.
- Liability: Protects personal assets from most business debts and claims.
- Taxes: By default, taxed as a pass-through entity (like a sole proprietorship or partnership), but can elect corporate taxation if desired.
Corporation
A more complex structure that creates a legal entity separate from its owners (shareholders). In Texas, you must file a Certificate of Formation to start.
- Liability: Strongest personal liability protection, completely separating owners from business obligations.
- Taxes: A C Corporation faces double taxation. Profits are taxed at the corporate level and again when paid as dividends. An S Corporation avoids this by passing profits and losses directly to shareholders’ personal tax returns, provided it meets IRS eligibility rules.
Quick Tip: In Texas, many small business owners choose an LLC for its balance of liability protection, tax flexibility, and straightforward setup. Sole proprietorships are easy and cheap to start, but carry a higher personal risk.
Step 2: Choose and Secure a Business Name
In Texas, your business will have an official legal name (used on state filings and tax documents) and, optionally, a “Doing Business As” (DBA) name, also called an assumed name. For example, “Lone Star Solutions LLC” could operate publicly as “Lone Star Consulting.”
To ensure your legal name is unique, search the Texas Secretary of State’s SOSDirect database. If it’s available, you can reserve it for 120 days by filing a Name Reservation with the Secretary of State for a $40 fee.
If you want brand protection nationwide, conduct a trademark search with the U.S. Patent and Trademark Office (USPTO) and consider registering your trademark.
Step 3: Draft Your Business Formation Documents
Your required documents depend on your chosen business structure:
- LLC – File a Certificate of Formation with the Texas Secretary of State, listing details such as your business name, address, and registered agent.
- Corporation – File a Certificate of Formation – For-Profit Corporation and create internal bylaws to govern operations.
- Partnership – Draft a Partnership Agreement outlining roles, responsibilities, and profit-sharing. This isn’t filed with the state but is vital for avoiding disputes.
Step 4: Register With the State of Texas
Once you’ve decided on your business structure and name, it’s time to make it official by registering with the Texas Secretary of State. This is required for formal business entities like LLCs, corporations, and certain partnerships.
Filing With the Secretary of State
- LLCs – File a Certificate of Formation (Form 205), which includes your business name, registered agent details, and basic company information.
- Corporations – File a Certificate of Formation – For-Profit Corporation (Form 201), which requires details like your corporate purpose, share structure, and initial directors.
You can file online through SOSDirect, by mail, or in person. Online filing is the fastest, often processed within a few business days.
No Publication Requirement in Texas
Unlike some states, Texas doesn’t require you to publish a notice of formation in newspapers, which simplifies the process and saves costs.
Step 5: Obtain an Employer Identification Number (EIN)
In Texas, most businesses will need an Employer Identification Number (EIN), a nine-digit ID from the IRS that works like a Social Security number for your business. You’ll use it for hiring employees, opening a business bank account, filing federal taxes, and applying for certain licenses or permits.
Sole proprietors without employees can technically use their Social Security number instead, but many still get an EIN for privacy and to keep personal and business finances separate. Applying is free through the IRS website, takes just a few minutes, and you’ll get your EIN immediately after completing the online form.
Step 6: Apply for Licenses and Permits
Getting the right licenses and permits is a must for legally operating your business in Texas. Requirements depend on your industry, activities, and location, and they often come from three levels of government: federal, state, and local.
Federal Licenses and Permits
Most small businesses in Texas won’t need a federal license. However, certain industries are regulated at the national level. Examples include:
- Alcoholic Beverages – The Alcohol and Tobacco Tax and Trade Bureau (TTB) regulates manufacturers, importers, and sellers of alcohol. You may also need a state-level permit from the Texas Alcoholic Beverage Commission (TABC).
- Firearms – Businesses dealing with firearms must comply with the Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF) requirements.
- Transportation – The U.S. Department of Transportation (DOT) regulates certain trucking, freight, and passenger transport services.
State Licenses and Permits (Texas)
Texas doesn’t issue a general state business license, but many industries and professions require specific permits or certifications. Common examples include:
- Sales Tax Permit – If you sell taxable goods or services, you must register for a Texas Sales and Use Tax Permit with the Texas Comptroller of Public Accounts. There’s no fee, but you must apply before making any sales.
- Professional Licenses – Professions like attorneys, physicians, real estate brokers, barbers, and cosmetologists are regulated by state licensing boards (e.g., Texas Department of Licensing and Regulation, Texas Medical Board).
- Environmental Permits – If your business impacts air, water, or waste, you may need authorization from the Texas Commission on Environmental Quality (TCEQ).
Local Licenses and Permits
Your city or county may also have rules that apply to your business location and operations:
- General Business License – Some Texas cities, like Houston and Austin, require specific business permits depending on your type of business.
- Zoning Permits – Check with your city planning or zoning department to make sure your business activities are allowed at your chosen location.
- Health Permits – Restaurants, bakeries, food trucks, and catering services must get permits from the local health department before opening.
Quick Tip: Texas doesn’t have one central place to get all licenses. You’ll need to check with:
- The Texas Comptroller’s website for tax-related permits
- Your industry’s state licensing board
- Your city and county offices for local requirements
Step 7: Open a Business Bank Account
In Texas, opening a dedicated business bank account is more than just good bookkeeping. It’s a critical step to protect your personal assets and maintain your company’s legal standing. Keeping your business and personal finances separate helps:
- Preserve Liability Protection – For LLCs and corporations, separating funds is essential to keep the “corporate veil” intact. Mixing funds could allow creditors to go after your personal property.
- Simplify Taxes & Accounting – A dedicated account makes it easier to track income, expenses, and deductions for both state and federal tax filings.
What You’ll Typically Need in Texas
When you visit the bank, bring:
- Employer Identification Number (EIN) – Issued by the IRS, this is required for most businesses (sole proprietors with no employees may use their SSN, but EINs are still recommended).
- Business Formation Documents – For example: Certificate of Formation (from the Texas Secretary of State) for LLCs and corporations. Assumed Name Certificate (DBA) from your county clerk if you operate under a different trade name.
- Operating Agreement or Corporate Bylaws – Some banks require these to verify ownership and authorized signers.
- Government-Issued Photo ID – Such as a Texas driver’s license or passport for each owner or authorized signer.
Texas Tip: Many Texas banks also require proof of your business address, such as a utility bill or lease agreement. If you’re working from home, be prepared to provide documentation tying your address to your business name.
Step 8: Register for State and Federal Taxes
Understanding your tax obligations in Texas is essential to keep your business compliant and avoid costly penalties. Your business structure will determine how you’re taxed at both the federal and state levels.
Federal Tax Obligations
The IRS requires every business to handle federal taxes according to its structure:
- Sole Proprietorships & Partnerships – These are pass-through entities. The business doesn’t pay income tax directly. Instead, profits and losses “pass through” to the owners, who report them on their personal tax returns (Form 1040).
- LLCs – By default, a single-member LLC is taxed as a sole proprietorship, and a multi-member LLC is taxed as a partnership. However, LLCs can elect to be taxed as an S Corporation or C Corporation by filing the appropriate IRS forms.
- Corporations – C Corporations pay corporate income tax on profits, and shareholders pay personal tax again on dividends (double taxation). S Corporations avoid double taxation by passing income and losses directly to shareholders’ personal tax returns.
Pro Tip: A Texas-based CPA or tax professional can help you choose the most beneficial federal tax classification for your business and ensure full IRS compliance.
Texas State Tax Obligations
Unlike many states, Texas has no personal or corporate state income tax—but that doesn’t mean you’re tax-free. You’ll likely need to register for:
- Texas Sales and Use Tax Permit – Required if you sell taxable goods or services in Texas. Apply online through the Texas Comptroller of Public Accounts website. This is often your first step in state tax registration.
- Texas Franchise Tax – Most businesses, including LLCs and corporations, must file an annual franchise tax report with the Texas Comptroller. No tax is owed if your annual revenue is under the “no tax due” threshold (adjusted annually; for 2025, it’s $2.47 million). Even if you owe no tax, you must still file a “No Tax Due” report on time.
- Local Taxes – Depending on your city or county, you may need to register for additional local business taxes or fees.
Step 9: Maintain Ongoing Compliance
Registering your business in Texas is just the first step. Staying compliant is an ongoing responsibility. If you fall behind on filings or renewals, you could face fines, penalties, or even lose your liability protection.
Key Texas Compliance Tasks
File the Texas Franchise Tax Report and Public Information Report
LLCs and corporations in Texas are required to file both the Franchise Tax Report and the Public Information Report each year with the Texas Comptroller of Public Accounts.
Most businesses, including LLCs and corporations, must file an annual report with the Texas Comptroller of Public Accounts. However, the specific report you file depends on your revenue.
- If your revenue is above the state’s no-tax-due threshold (which is $2.47 million for 2025), you must file both the Texas Franchise Tax Report and the Public Information Report.
- If your revenue is below this threshold, you are only required to file the Public Information Report (PIR). The previous “No Tax Due” report has been discontinued for most businesses.
Renew Licenses and Permits
Many licenses and permits, such as a Texas Sales Tax Permit or a health department permit, have expiration dates. Keep track of renewal deadlines to avoid fines or disruption to your business operations.
Maintain a Current Registered Agent
Texas law requires every business entity to have a registered agent with a physical address in Texas. If your registered agent’s information changes, you must update it promptly with the Texas Secretary of State to maintain good standing.
Keep Business Records Organized
Accurate and up-to-date financial records, meeting minutes for corporations, and any other required documentation should be maintained to ensure smooth operations and protect your legal liability shield.
Frequently Asked Questions About Registering a Business in Texas
Starting a business in Texas is exciting, but it’s natural to have questions about costs, timelines, and whether you need professional help. Below are answers to some of the most common questions new Texas entrepreneurs ask before getting started.
How Much Does It Cost to Register a Business in Texas?
The cost depends on your chosen business structure. For example, forming an LLC in Texas currently requires a $300 filing fee with the Secretary of State, while registering a corporation costs $300 as well.
You may also need to budget for a registered agent (often $100–$300 annually), licenses, permits, and other compliance-related expenses. In total, expect to spend between $400 and $1,500 for the initial setup, depending on your industry and location.
How Long Does It Take to Register a Business in Texas?
Online filings through the Texas Secretary of State’s SOSDirect system are typically processed within 3–5 business days. Mail-in filings can take longer, anywhere from 1 to 3 weeks. If you’re in a hurry, Texas offers expedited processing for an additional fee, which can reduce the timeline to just one business day.
Do I Need a Lawyer to Start a Business in Texas?
You’re not legally required to hire a lawyer. Still, legal guidance can be valuable, especially if your business has multiple owners, complex agreements, or will operate in a highly regulated industry.
An attorney can help you choose the best business structure, prepare customized operating documents, and ensure compliance with Texas laws. For simpler setups, like a sole proprietorship or a single-member LLC, many business owners handle the process themselves using online resources.
For expert planning assistance and resources related to business development and management, consult the Texas A&M AgriLife Extension program.
Conclusion – How to Register a Business in Texas
Navigating the business registration process in Texas doesn’t have to be overwhelming. By following the right steps, you can establish a solid legal foundation for your venture.
Proper registration isn’t just paperwork. It’s a crucial move toward safeguarding your personal assets, building trust with customers, and positioning your business for long-term success.
Taking the time to get it right from the start can save you from costly legal and financial problems down the road, allowing you to focus on what matters: growing your Texas business.
