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How To Start a Business In Texas

Starting A Business WorkBook

Free Guide on Starting a Business

September 20, 2022

10 Min Read

How to start a business in Texas
Table of Contents
Writing a business plan?

Being the second highest economy in the USA – Texas’s GDP stands at 1.83 trillion US dollars, according to Statista. Isn’t it huge, right?

The liberty in regulations, minimal taxes, and one of the lowest unemployment rates in Texas make it favorable for all entrepreneurs to start their businesses in Texas. If you are also planning the same, then this is a thorough guide on; how to start a business in Texas.

Why Start A Business In Texas?

Texas’s GDP is high, and it is not the only reason, but here are various other reasons to start your business in Texas:

  • Texas has a lot of talent in it.
  • Tax benefits for residents and immigrants make starting a business in Texas smooth.
  • It has all: advanced tech, aerospace, aviation, biotechnology, energy, computer tech, & petroleum refining.
  • Business liberty is synonymous with Texas.
  • Friendly climate for small businesses.

So choosing Texas to begin your small business is one of the wise decisions. Even in HubSpot’s best & worst states to start a business in, Texas ranked first.

Let’s deep dive into how to start a small business in Texas guide:

1. Choosing The Best Business Idea

Choosing The Best Business Idea

Choosing what kind of business to launch is the first step toward business ownership and your goal of doing business in Texas. Find a concept that aligns with your hobbies, objectives, and talents.

Some of the top businesses to start in Texas includes:

2. Conduct Market Research

Once you choose the right idea, it’s time to test it to the limit to see if the market will support it.

To find the answers to the following questions, conduct market research:

  • Does Texas need your goods or services?
  • Who is your focus audience?
  • Do existing companies in Texas provide comparable goods or services?
  • What distinguishes your company from the competition?

Be patient; you won’t want to go on to the next steps until you are sure that your business idea has a place in the market in Texas.

3. Write Your Business Plan

Write A Business Plan

Entrepreneurs who don’t have a business plan lose the chance to outline their vision for the company and its future. The roadmap to business success is laid out in a business plan.

A business plan is a document that includes:

  • The company’s goals,
  • Industry outlook,
  • A description of goods and services,
  • Competitive advantages,
  • Operational structure, and
  • Financial forecasts

to assist business owners in setting their priorities and strategies.

Business plans are crucial for a company’s internal operations. It is also necessary for getting funds and keeping you organized.

Writing a business plan is fairly to showcase your business idea in a clever & numeric way; to get an idea about how to write a business plan, we have various business plan templates with real-business examples.

4. Choose Your Business Location

Think about your clients’ wants and whether that specific location will attract your target audience or not.

Consider the costs of operating your business in the chosen area, such as rent and utilities, before fixing a location.

For any assistance regarding your location or to know regulations about that location to follow, visit Texas Gov official website.

5. Find The Right Business Name

To start a business in Texas: one of the essential steps is to choose a name, as it will make your brand identity.

Accordingly, you should choose a name for your company that both resonates with your audience and complies with Texas’ naming regulations.

  • Avoid using location-based names if your target market is in more than one location.
  • Be sure that your name is unique and showcases the properties of your products or services.

Even if the name given doesn’t suit your products or services, it should be unique. There are many companies whose names and products don’t match such as Apple, Skype, Google, Netflix, Pfizer, and many more.

6. Choose A Business Structure & Register Your Business

Choose A Business Structure

The choice of the company’s legal structure impacts liability, tax consequences, and the level of compliance complexity required to maintain the business.

Understanding the advantages and disadvantages of the options depending on your specific scenario is necessary when choosing the best business structure. Your business structure should match your business purpose.

In Texas, the majority of enterprises fall under one of the following categories:

  • Sole proprietorship: It is one of the simplest forms of business structure. Only one person engages in business activities. If you are running your business under any name (other than your surname), then you need an assumed name certificate aka DBA.
  • General partnership: When two people associate and carry on the business for profit is known as a general partnership. It generally works in accordance with a partnership agreement.
  • Corporation: A corporation is a legal person and its owners are known as shareholders. Filing the certificate of formation with the Texas Secretary of State is necessary. You can register the corporation on SOSDirect.
  • Limited liability company: A limited liability company is neither partnership nor a corporation but is a combination of both. The owners of LLCs are known as members.
  • Limited partnership: A limited partnership in Texas is a partnership formed by two or more people with one or more general partners and one or more limited partners.
  • Limited liability partnership: It limits the liability of a general partner and protects them from unlimited liability.

For more information about all the legal structures: visit the state’s website.

7. Apply For Business EIN & Book A Registered Agent

Even if some firms don’t intend to hire staff, they still apply for an Employer Identification Number (EIN).

When a business files federal taxes, it is identified by an EIN, also known as a Federal Tax ID Number. Before a firm will open a business bank account, the majority of banks demand an EIN. EINs are freely given out by the IRS.

Note: EIN applications can only be made by those who have a Social Security Number or Individual Taxpayer Identification Number.

Book A Registered Agent

A registered agent will make your process effortless for applying and getting legal documents. Book a registered agent because he will know all the procedures, and they will be able to comply with all the legal requirements without you going back & forth.

8. Apply For A Bank Account, Credit Cards, & Insurance

A Business Bank Account

For the protection of the personal assets of a business employer, it is vital to use business bank accounts and credit cards.

If your firm is sued and your personal & business accounts are combined, then it will put all your personal properties in danger. It is piercing of the corporate veil in business law, so why take the risk?

These four measures are crucial after getting an EIN to differentiate your company’s and personal assets:

Open a Business Bank Account

  • Separation of personal assets from those of your business assets is a requirement for personal asset protection.
  • Simplifies bookkeeping and tax filing if you open a business in Texas.
  • You will require EIN (employer identification number) for opening a bank account in Texas.

Get A Business Credit Card

  • Aids in the division of personal and company expenses.
  • Creates a credit history for your business, which might be helpful in the future when you need to raise money.

Set Up Business Accounting

  • An accounting system makes it easier to file your taxes each year and helps you monitor the performance of your company.
  • You might also employ a business accountant to assist you with all your payroll, sales tax accounting, and filing requirements.

Get Business Insurance

In any case of a natural disaster or any other kind of damage: an insurance policy protects you financially. Here are some insurance policies that a business entity takes:

  • General liability insurance
  • Professional liability insurance
  • Workers compensation insurance

9. Financing Or Apply For A Loan

Starting a business is not possible without resources. Especially, you will have to cover the primary expenses of your startup first for which applying for a loan or getting funds is necessary.

Before searching for any outside financing, calculate all your business costs. It will assist you in selecting the best fund source. Here are some of the ways through which you can get finance:

Business Loans

A bank or other lending organization is where you can apply for a small business loan. Although this funding option involves payback with interest, it will give you enough money to meet your startup expenses and more. Here are some of the banks in Texas that would help you with your loan requirements.

Raise Capital

You can showcase your business idea & plan to investors for raising funds. They invest in the exchange of shares or some part of ownership if interested. Make sure your pitch is lender-ready before you meet investors.

Friends & Family

Getting the money you require to launch your small business through loans from friends and family might be an excellent option. Establishing a formal agreement and payback plan is a wise idea when conducting business with friends and relatives.

Small Business Grants

Grants for small businesses are essentially loans that you don’t have to repay. By applying to a government website, you can get a small business grant.


It is a do-it-yourself method of raising capital for a business in which you use both your existing revenue and personal savings to finance the operation.

10. Obtain Permits & Licenses

You must abide by federal, state, and local laws to legally start a business in Texas. It frequently entails acquiring one or more business licenses and permits.

Depending on the kind of business you’re operating, you’ll need a different license or permit to start a business: click here to check which permits & licenses you will need.

11. Hire Employees And Build A Team

The right talent at the right designation is always a win for any organization. Building a team is to make your foundation robust.

Make sure you know your employment requirements before starting to hire people. You will need a federal employer identification number from IRS to hire people.

Build your brand strong with the help of a great team!

12. Promote And Market Your Business

“Business has only two functions marketing and innovation”
– Milan Kundera

It is no secret that marketing will work wonders for your brand. It will increase brand recognition, awareness, and sales. So, decide your target market and promote the brand through the right medium.

Here are some popular ways to promote your business in Texas:

  • Press releases
  • Google my business (if your business is only for local clients)
  • Right social media platforms (depends on your target market)
  • By doing advertisement
  • YouTube
  • Keeping your online presence strong

The ultimate guide to starting a business

All Set To Start Your Business?

So now you have all the basic information on how to start a small business in Texas: then it is time to give a headstart to your new company.

Isn’t it exciting to open a new firm in one of the most liberal states having no entry barriers? We wish you all the luck.

About the Author

Riya                                                        Shah

Riya Shah

Riya Shah is a skilled content writer experienced in various areas of writing, currently working with Upmetrics. Fascination with reading led her to be a writer. Highly creative, focused, imaginative, and passionate. Read more

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