This updated guide outlines the essential steps to start a business in Texas in 2025. Key actions include writing a business plan, choosing and registering a legal structure with the Texas Secretary of State (when required), obtaining an EIN from the IRS, registering for sales and franchise taxes with the Texas Comptroller, and registering as an employer with the Texas Workforce Commission. It stresses checking state and local licensing boards, setting up payroll, and keeping separate business finances, and notes Texas has no state personal income tax. Professional accounting or legal advice is recommended.

Start with a plan and solid research

Before you open your doors, write a concise business plan that covers your product or service, target customers, startup costs, pricing, and basic cash flow. Research competitors, industry rules, and local market demand. Good planning reduces surprises and helps when you seek funding or professional advice.

Choose a legal structure and register

Decide whether you will operate as a sole proprietorship, general partnership, limited partnership, LLC, C corporation, S corporation, professional corporation, or nonprofit. Your choice affects taxes, liability, and recordkeeping.
  • File formation documents with the Texas Secretary of State for entities such as LLCs, corporations, and nonprofit corporations. Sole proprietors and general partnerships typically do not file entity formation documents at the state level but may file an assumed name (DBA) with the county.

Obtain tax IDs and register for taxes

  • Get an Employer Identification Number (EIN) from the IRS if you hire employees, form a corporation or partnership, or otherwise need a federal tax ID.
  • Register with the Texas Comptroller of Public Accounts for a Sales Tax Permit if you will sell taxable goods or services. Many business entities also register with the Comptroller for franchise tax (the "margin" tax) reporting when applicable.
  • Register as an employer with the Texas Workforce Commission to cover unemployment tax obligations if you hire employees.
Note: Texas does not have a state personal income tax, but employers must still collect federal payroll tax withholdings and pay related employer taxes.

Licensing, permits and local rules

Identify industry-specific licenses and state boards (for example, contractors, health care, cosmetology, or real estate). The Texas Department of Licensing and Regulation and various professional boards regulate many occupations. Also check local city and county requirements for zoning, health permits, and occupational permits.

Hiring, payroll, and insurance

If you hire, set up payroll systems to handle federal withholding, Social Security, Medicare, and employer payroll taxes. Workers' compensation insurance is not required by Texas law for most employers, but many employers carry it to manage workplace risk and liability.

Financial management and pricing

Open a separate business bank account and maintain clear books. Consider hiring a CPA or experienced bookkeeper to set up accounting, payroll, sales tax collection, and to advise on pricing, deductions, and cash flow management.

Final points

Starting a business in Texas requires planning and compliance with state and local rules. Follow the right registration steps, secure the permits you need, and keep accurate financial records. With preparation and the right advisors, you'll reduce risk and focus on growth.

FAQs about Starting A Busi In Texas

Do I need to register my business with the state of Texas?
If you form an LLC, corporation, or nonprofit, you must file formation documents with the Texas Secretary of State. Sole proprietors and general partnerships usually do not file state formation documents but may register an assumed name (DBA) with the county.
When do I need an EIN?
Get an EIN from the IRS if you hire employees, operate as a partnership or corporation, or need a federal tax ID for banking or tax reporting.
What taxes should I register for in Texas?
Register with the Texas Comptroller for a Sales Tax Permit if you sell taxable goods or services. Many entities must also report franchise (margin) tax. Employers must register with the Texas Workforce Commission for unemployment taxes and handle federal payroll taxes.
Does Texas require workers' compensation insurance?
Texas does not generally require most employers to carry workers' compensation insurance, but many businesses choose to carry it to limit liability and protect employees.
How do I find out which professional licenses I need?
Check state licensing agencies such as the Texas Department of Licensing and Regulation and relevant professional boards, and contact city or county offices for local permits and zoning requirements.

News about Starting A Busi In Texas

How To Start an LLC in Texas (2025) - MarketWatch [Visit Site | Read More]

Texas HUB program change sparks confusion for business owners - The Texas Tribune [Visit Site | Read More]

4 Reasons Why Texas Is a Hot State for Starting a Business - Business.com [Visit Site | Read More]

Devoyd Jennings Business Assistance Center (BAC) - Fort Worth City Hall (.gov) [Visit Site | Read More]