How to Start a Business in Texas
Starting a business in Texas is reasonably straight forward. The difficulty of the process will depend on the entity type you select.
References and Other Information Sources
Texas Governor’s Small Business Resource Portal
Texas Business Licenses and Permits Guide
Veteran, Minority, and Women Owned Business Resources
Steps to Register Your Business
Check business name availability at SOS Direct
File a Certificate of Formation with the Secretary of State using the SOS Direct website.
Determine Your Texas Franchise Tax Obligations
The Franchise Tax in Texas is a privilege tax imposed on each taxable entity formed or organized in Texas or doing business in Texas. There is a minimum revenue threshold, after which, a taxable entity is assessed a franchise tax.
To learn more about the Texas Franchise tax, click HERE.
Determine Sales and Use Tax Obligations
Depending on the products and/or services that your business provides, you may be obligated to collect and remit a sales and use tax. The state of Texas imposes a 6.25% sales and use tax on the sales of certain goods and taxable services. Additionally, the local taxing authority can impose an additional sales and use tax up to an additional 2%.
If you anticipate that your business will be required to collect sales tax, it is critical that you hire a bookkeeper with experience managing sales tax. Additionally, using software to collect and remit sales tax will be critical to staying compliant.
Apply for and Employer Identification Number
After your filings with the state of Texas are complete and approved, you will need to apply for an Employer Identification Number (EIN) with the Internal Revenue Service (IRS). When this article was written, a business could obtain an EIN from the IRS within minutes if certain requirements were met.
Closing
The process of structuring a business can be simple or complicated depending on the nature of the business and the ownership team. If your business situation is complicated, you should consider hiring a lawyer to assist with the structuring process to avoid compliance issues later.
Best of Luck.