Texas LLCs and Corporations have trusted MyCompanyWorks to start their businesses since 2001. Click below to start a business in Texas online or follow our 12 steps on how to start a small business in Texas. Registering a business in Texas doesn’t get any easier.
Businesses of all sizes have made the Lone Star state home, thanks to no corporate or personal tax at the state level. Texas businesses currently enjoy the lowest overall tax burden in the United States. Petroleum products remain the largest export, but Texas has become home to many businesses that are not considered conventional in the Lone Star State. With a booming economy and people moving in to take advantage of lower taxes and more land, Texas is considered an ideal place to establish company headquarters.
Zippia’s list of largest companies for 2022 show Foxconn Assembly, Pizza Hut, and AT&T as the top 3 employers, with other major players like Keller Williams Realty, Dell, and American Airlines following closely. Large corporations like HP and The Boring Co. have moved their companies to the Lone Star State in recent years.
With a huge talent pool, low taxes, and competitive business incentives, Texas is very friendly and even inviting toward new startups and businesses of all sizes. Many consider the Lone Star state to be the best state to start a business, which is why so many startups are forming their business registration in Texas.
Before deciding on your company’s entity type, it’s important to understand a few details about the most common DBA, LLC, and Corporate structures. Some entrepreneurs can just choose a unique business name to cover all their business dealings, but most Texas startups will require at least an LLC or Corporation to do business and enjoy the benefits and limited liability of managing a company.
Texas Assumed Name or Texas DBA
DBA or “Doing Business As” is the most common name for an assumed business name or fictitious firm name. In the Lone Star State, this type of name reservation is called an Assumed Name. An Assumed Name Certificate must be obtained to use your unique business name as part of your company’s identity in the Lone Star State. Businesses that own other businesses often use assumed names to keep multiple businesses separate under the same LLC or Corporation structure.
Example: Texas Commodities LLC owns three separate companies – a bakery, a flour mill, and a trucking company to deliver their products. The LLC name doesn’t tell customers what each company does, so an Assumed Name is given to each one. The bakery could be Texas’ Best Buns, the flour mill is known as Flour Power Grains and the trucking company labels their trucks with Texas Bread Deliveries graphics.
Texas Corporation, C-Corp or S-Corp
The traditional C-Corporation model is designed for large companies with either complex business models and/or a large number of employees. Traditional corporations are subject to “double-taxation”, which means the corporation itself is taxed and must file an annual tax return, then shareholders must also pay income tax for any funds they received throughout the year. We can help you form a C-Corporation, but unless your business requires it, we recommend selecting a more suitable business setup.
S-Corporations can be either Texas corporations or LLCs that elect the S-Corporation tax status with the IRS. The S-Corp election allows for what is called pass-through taxation to the owner(s). Qualifying S-Corps report profits, losses, and expenses on Schedule E which is attached to 1040 personal tax returns. In order to become an S-Corporation, you must submit a completed and signed form 2553 to the IRS. If Incorporating is the best option to start a business in Texas, we recommended applying for the Small Business tax election to simplify taxes and paperwork.
NOTE: Corporations are limited to being owned by 100 or fewer shareholders and all shareholders must be US citizens. If you’re not a citizen but want to register a business in Texas, the LLC option below may be the best option for your business.
Texas Limited Liability Company – LLC
Starting a Texas LLC is by far the simplest way to start a business and you can do it fairly quickly once you have your identification and documents together. Creating an LLC in Texas will legitimize your products and services while providing you protection for personal assets. Like the S-Corporation, a Texas Limited Liability Company also offers pass-through taxation to its owner(s), so only a personal tax return with an attached Schedule C is required to report expenses, profits, and losses. An LLC can be owned by an unlimited number of members, non-citizens, and even other companies.
What’s in a name? What should be in your business name are words that tell the public about the products or services you offer and will represent your company well over time. For instance, if you are starting out with selling tires, but you’re going to add tire repair and other services later on, pick a name that can cover all your products, not just the tires. Your name also needs to be original, and easily distinguished from other companies. Taking the time to choose an original business identity will spare you the headache of being mistakenly named in tax audits or lawsuits.
It may seem trivial, but choosing a unique name for your Texas business from the beginning is the most hassle-free approach to naming your business. When you think of all the best business names, they’re unique, they stand out, and they tell the customer what’s being offered in products or services. It would be impossible to confuse Whataburger with Chick-fil-A thanks to unique names and clear branding – more on that in Step 11.
Write down a bunch of different names that include your products and services. For instance, if you’re opening a petroleum trucking company, using the words ‘petroleum’ or fuel and ‘trucking’ or ‘delivery’ could be used to develop a unique name that tells your customers what you offer. Many businesses will include a first or last name, a city name, or even an area code to set their business apart. Try out your proposed names on friends and family to hear them out loud and get feedback. You can even pretend to answer the phone with your name to hear how it would sound to customers.
Search your business name ideas in Google and other major search engines to find one that is not being used. If you do find that the exact name you want is already taken, you still may be able to alter your original name to create a new one, but make sure it’s clearly different from the other name. You’ll at least want to search Texas’ business entity website to ensure no other businesses in your jurisdiction are operating under your proposed business name. National and international businesses should definitely choose distinct business names to prevent tax issues and mistakes in lawsuits.
After you have scanned the Internet and the Texas Secretary of State site, you’ll want to run your proposed business name through the US Patent and Trademark Office to locate any potential conflicts. If you would rather have an expert search for you, there are trademark specialists and attorneys to do the job, but they charge pretty high fees. Our experience has been that if you follow the above steps to vet your name, you should not need the help of a specialist.
TIP: searching various spellings of your name, and even possible misspellings will help you find other names that may be potential conflicts.
Now that you’ve chosen a business structure and picked your business name, follow the appropriate steps below on how to register a business name in Texas and form your business entity.
Contact a Tax Advisor to help you decide which business structure is right for your business.
TIP: Check our order form to see how long Texas is currently taking to process regular and expedited orders.
Do I need a DBA in Texas? Assumed Name Certificates are filed with the county where you do business to obtain DBAs in Texas. You are not required to keep one, but it’s useful if you are running multiple companies under one Texas LLC or Corporation.
Example: Texas Meats LLC can be used as an operating name, but if you want to separate livestock operations from meat sales, you could file for an Assumed Name like Texas Butcher Cuts for the wholesale or retail part of your business. There is no limit to the number of DBAs or Assumed Names you can reserve in Texas.
Before you can file for an Assumed Name, you’ll need to check with your County Recorder by either calling or visiting their website. A search for “YOURCOUNTY county recorder” should return appropriate links and contact information.
Texas Assumed Name Certificates can be requested online at SOSDirect.
NOTE: Your county may require applications to be notarized. You can order a notary online or call your bank to ask if they offer notary services.
Refer to Texas SOS Name Filing FAQs for answers to common questions and more information about Assumed Names.
All Texas LLC and Corporation packages include our 100% Satisfaction Guarantee, unlimited support, and prepared and filed formation documents, plus useful features like a banking solution, startup discounts, and the exclusive Startup Wizard to guide you through the startup process.
Most Texas businesses are required to have an Employer Identification Number, EIN registered with the IRS. If your business falls into one of the following categories, you’ll need to either apply online, by mail, or fax.
NOTE: International clients are required to apply by phone if you’re doing it yourself. We can also apply for you with any of our formation packages.
Follow this IRS link to determine eligibility and file online.
It’s very important to keep all business finances and assets separate from your personal bank and credit accounts. Businesses can be audited at any time, so keeping funds separate will prevent additional taxes from being owed for expenses that are not clearly business-related.
TIP: Take advantage of our free banking solution with every formation order.
All Texas businesses are required to file reports and tax returns, whether it’s the company itself, or the individual members or shareholders filing business schedules with their personal tax returns. Learn more about business taxes. There will also be forms and deadlines for things like business licenses and operating permits.
Your business will need an organized system to manage regular tasks and keep track of documents, deadlines, and accounting, for starters. Most business records should be kept for at least three years. Financial records should be kept for seven years, and employment tax records should be held for four years after taxes have been paid.
If you’re a do-it-yourselfer, there are many free and affordable tools and programs to do things like track expenses, generate invoices, and organize your files. You can also turn your finances and record-keeping over to accounting professionals and virtual assistants if you can afford to pay someone to manage these matters for you.
The type of business you operate will determine which licenses and permits are required to operate in Texas. You can check for your company’s licensing requirements with the Texas Secretary of State.
Our Business License partners can show you how to get a business license in Texas
The Texas Workforce Commission is a great place to start with getting set up to hire employees. You’ll find links to business and employer services, free recruiting, and everything you need to know about being a Texas employer. Our guide to hiring and paying employees for each entity type also offers helpful tips to walk you through the hiring process.
All Texas businesses are required to carry certain insurance policies, and other types of insurance are optional. Our recommended business insurance partners offer comprehensive packages at competitive prices. They’ll also make sure you have the right amount of coverage for your business type.
You’re just getting started with your business, but it’s critical to organize and document business processes from the beginning. These may change over time, but recording how to run your business means others can step in and run it when you can’t. An organized business is also much more desirable to future investors or buyers.
Every business pays bills, taxes, files for permits, etc. Automating these tasks keeps your business compliant and running smoothly even when new people are introduced to the company. Spending less time on these regular tasks means you have more time to grow your business. Read our Guide to Managing Your Company for help with systemizing and automating your business.
Marketing and Sales are critical to the success of every business. Now that your company is formed, you can announce to the world that you’re open. An online presence is increasingly more beneficial these days, but you can also use print posters, banners, signs, and other marketing materials to advertise if you have a customer-facing business. Whatever you do, make sure to include marketing with your overall business plan.
Texas Assumed Names: Assumed Names are valid for 10 years in Texas and are renewable. The average cost is about $15 for sole proprietors and partnerships and about $25 for LLCs and corporations. The county where you register will have the exact cost for your application. Sole proprietorships, general partnerships, joint ventures, estates, and Real Estate investment trusts must apply for Assumed Names with their county instead of with the Secretary of State. Texas Secretary of State accepts Assumed Name applications for corporations, LLCs, LLPs, LPs, foreign filing entities, and professional associations.
Texas LLCs: There is no annual report required for LLCs in Texas. Instead, you’re required to file annual franchise tax returns with the Texas Comptroller of Public Accounts. Even if you don’t owe taxes, you still must submit a No Tax Due information report return to satisfy the state.
Corporations: Every year you’ll need to file a Public Information Report (PIR). Annual report which updates the state on your business address and other things. There is a $400 late fee for all for-profit corporations who do not make the May 1 deadline.
Franchise Taxes: Texas corporations are required to file an annual report with the Texas Comptroller of Public Accounts, due May 15 every year (or the next business day, if May 15 falls on a holiday). There is a $50 penalty for a late filing of a franchise tax, which is calculated as a percentage of the company’s net income for that year.
Other Taxes: If you have employees your business will have to pay employment taxes to the State. Companies that collect sales and/or use tax must also file regular returns and remit the taxes that have been collected. Due dates and filing frequency are determined by revenues.
Let MyCompanyWorks Premium™ automate most of your ongoing compliance tasks.
Texas State Taxation Departments
Texas State Labor and Employment Departments
Texas Startup Resources
Small Business Administration (SBA) Texas State District Office
2. SCORE Mentors
SCORE is made up of active and retired business people who volunteer their time to support startup businesses. From coaching to funding resources, finding a local SCORE mentor can help you build a successful business.
3. Texas State Legal Statutes:
5. Texas Angel Investors
6. Texas Business News
7. Texas State Small Business Development Center
Filing Annual Reports with MyCompanyWorks Premium™ is a breeze. We file your reports so you don’t have to. We also monitor your company for compliance to prevent costly late fees and dissolution. Access documents 24/7 in your Account Dashboard. Set up your account in just a few clicks and we’ll take care of the rest.
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