How to start a business in Texas in 14 steps (2025 guide)

Starting a business is an exhilarating adventure, and in Texas, you've got a great business climate to fuel your entrepreneurial journey. We're here to guide you through every step—from navigating state registration and uncovering funding opportunities to connecting you with local resources that can help turn your business vision into a thriving Texas success story.

Why start a business in Texas in 2025? 

The opportunities are growing in Texas, just like its population—which has been increasing steadily. In fact, in 2024, the growth rate in the state’s metropolitan counties is expected to be around 16%, which is double the national average. Some of the state’s largest industries are restaurants, healthcare services, and computer systems designs, and of course, Texas is known for its leadership in the oil and gas sector. All this combined with no corporate or personal income taxes, a skilled workforce, and a strong infrastructure, set the stage for a business-friendly climate that welcomes entrepreneurs. 

Wondering how to start a business in Texas? Our small business guide will walk you through the steps. 

Wondering how to start a business in Texas? Our small business guide will walk you through the steps. 

Here are the topics we’ll cover in this step-by-step guide: 

• 14 steps to starting a business in Texas
• Step 1: Decide what type of industry is best for your business
• Step 2: Conduct industry research
• Step 3: Create a business plan
• Step 4: Choose your business entity: Types of business entities in Texas
• Step 5: Secure funds: Texas small business funding, loans, and grants
• Step 6: Choose your Texas business name and Texas DBA
• Step 7: Pick a business location in Texas
• Step 8: Find a Texas registered agent 
• Step 9: Get a Texas EIN and file your tax and employer identification documents 
• Step 10: Register as a small business in Texas 
• Step 11: Register for your business license and permits in Texas
• Step 12: Secure insurance for your Texas small business 
• Step 13: Prepare to pay taxes on your business in Texas
• Step 14: Set up your business bank account
• Additional resources to get your business started
• Frequently asked questions 

14 steps to starting a business in Texas

Launching a business in Texas is a journey of innovation and opportunity. Whether you aspire to break into the oil and gas industry, open a recording studio in Austin, or launch a cybersecurity firm in Dallas, the Lone Star state has a place for your small business dreams. Get started on the right path by exploring this guide that breaks down the steps and provides a wealth of Texas-tailored small business resources.

Step 1: Decide what type of industry is best for your business 

Maybe you're dreaming of opening a food truck or launching a tech startup. Regardless of your small business aspirations, choosing the right industry is a crucial first step.

Consider your interests, skills, and experience, and how they align with market demand in your chosen location. Research industry trends, connect with your local chamber of commerce, and identify potential gaps in the market that your business could fill. This research will help you refine your business idea and position yourself for success in Texas's diverse and dynamic economy.

Not sure where to start? Begin by exploring a variety of small business ideas to spark inspiration.

Step 2: Conduct research in your business’ industry

Understand how your business concept aligns with or complements Texas' key industry sectors. This is vital for uncovering opportunities and achieving long-term success. 

Analyze how your products or services fit into the state’s thriving industries—such as oil and gas, technology, manufacturing, agriculture, tourism, or financial services—to identify market gaps, meet unmet customer needs, and enhance existing offerings. Conduct thorough research and a competitive analysis to gain deeper insights into industry trends and your position within the market. State and local resources, such as the Texas Economic Development and Tourism can provide valuable guidance.

Step 3: Create a business plan

Start your Texas small business on a solid foundation, and make sure you build a business plan. This important document helps you define your goals and how you plan to get there. It can also be a tool to help you secure funding. Here's a breakdown of the key components:

• Executive summary: A snapshot of your business, highlighting its purpose, goals, and key strategies.
• Company description: Your company's story, mission, and vision for the future.
• Market research and potential: An in-depth look at your target market, industry trends, and opportunities for growth.
• Competitive analysis: An assessment of your competitors and what sets your business apart.
• Products and services: A showcase of your offerings and their value to customers.
• Marketing and sales: Your plan for attracting and retaining customers.
• Business financials: Financial projections and key performance indicators.
• Management and leadership: An overview of your team's expertise and experience.
• Funding request: A clear explanation of your funding needs and how you'll use the funds.
• Appendix: Supporting documents like market research or financial statements.

Take the time to construct a comprehensive business plan. It's an investment in your success, providing clarity, and potentially attracting investors. Need help getting started? Use a free business plan template or connect with a Texas Small Business Development Center in your local area for no-cost guidance and support.

Step 4: Choose your business entity: Types of business entities in Texas

Next, you’ll need to choose your business entity structure. A business entity structure defines the legal framework of your business, determining its ownership, taxation, and liability responsibilities.

Here are the main types of structures for Texas small businesses. 

Sole proprietorship

A business owned and operated by one person, with no legal distinction between the owner and the business.  

General partnership

A business owned by two or more people who share profits, losses, and management responsibilities.

Corporation 

A legal entity separate from its owners, with shareholders who have limited liability for the company's debts and obligations.

Limited Liability Company (LLC)

An LLC is a hybrid business structure combining the limited liability of a corporation with the tax flexibility of a partnership.

Step 5: Secure funds: Texas small business funding, loans, and grants 

Establish how you will fund your business. Will you self-fund? Take out a loan? Explore other financing options? In Texas, the basic cost to form a business can be a few hundred dollars—even nothing if you’re a sole proprietor. However, overall startup expenses can quickly add up to several thousand dollars, depending on your business structure, industry, and specific needs. You’ll need to consider costs for equipment, supplies, licenses, marketing, labor, inventory, and permits, as well as your unique business goals. To help you get started, here's a rundown of some common funding options for Texas entrepreneurs:

You can also access an array of funding specifically for small businesses in Texas. Visit the Texas Economic Development and Tourism website for resources on a wide array of grants and loans. Some other funding opportunities include:

Texas Product Development and Small Business Incubator Fund

The Product Development and Small Business Incubator Fund (PDSBI) offers long-term, asset-backed loans to product development companies and small business incubators or accelerators located in Texas with a focus on financing the development and production of new or improved products in Texas.

Texas Grant Watch

You can also check out Texas Grant Watch for a variety of Texas-specific funding opportunities.

Step 6: Choose your Texas business name and Texas DBA

Choose a business name that sets you apart from competitors and highlights what makes your products or services unique. In Texas, your business name must be entirely distinct, so it’s essential to conduct a Texas entity search to ensure its availability. Visit the Secretary of State website and use the SOSDirect service to search for a business name. There’s a $1 fee for each search. 

You can also visit the Texas Comptroller of Public Accounts website to use its free taxable entity search tool. Enter your desired business name to check its availability and review registered entities, including their status and relevant details.

How to reserve a business name in Texas

Once you’ve determined your business name is available, you can fill out Form 501 to reserve it. 

Filing a DBA (Doing Business As)

If you plan to use a trade name or DBA in Texas, you’ll need to register it with the Texas Secretary of State or your county clerk's office. Incorporated businesses must register with the Texas Secretary of State, while unincorporated businesses must register with the county clerk's office. Sole proprietors must register at the county level for each county where they plan to do business. Learn more about DBAs and the pros and cons about getting one.

Step 7: Pick a business location in Texas

While Texas is known for its pro-business environment, choosing the right location to start your venture can significantly impact your success. Your business location will influence your operating costs, taxes, and your ability to attract customers and a skilled workforce. Before finalizing a spot, consult your local municipality to confirm any required permits, licenses, or local taxes. For some businesses, running operations from home can be a cost-effective option, eliminating the need for expensive office space.

If you’re eyeing a space in a metropolitan area, consider factors like zoning laws, local business regulations, and potential incentives offered by different cities or counties. Here’s an overview of the major business hubs in Texas.

Houston 

• The largest city in Texas and the fourth largest city in the U.S., Houston offers a pro-business climate, a strong economy, and a relatively low cost of living.
• Top industries in Houston include energy, aerospace and aviation, life sciences and healthcare, technology, advanced manufacturing, and transportation and logistics.
• For more information, visit Houston’s Office of Business Opportunity. 

Dallas

• With its central Texas location, expanding population, and strong economic climate founded in energy, technology, finance, and healthcare, Dallas has made a name for itself as the “Silicon Prairie.”
• Rapid growth in the tech sector combined with tech talent that has been fleeing high cost locations in California have made Dallas a particularly favorable location for innovative businesses.
• For more information on bringing your small business to Dallas, visit the city’s Small Business Center. 

San Antonio

• Famous for its 15-mile River Walk, which winds its way through the center of the city, lined with restaurants, shops, and hotels, San Antonio not only has a rich history, reflected in its beautiful Spanish colonial architecture, but also offers a mild climate with lots of sunshine.
• Joint Base San Antonio makes the military a big driver of the local economy. Other major industries include healthcare, tourism, education, and financial services.
• To learn more about starting a small business here, reach out to the Small Business Division of San Antonio’s Economic Department. 

Austin

• Known as the “Live Music Capital of the World,” Austin rivals Nashville with its thriving music scene and industry. Other key industries here include technology (the city is known as “Silicon Hills”), healthcare, education, and government contracting. 
• Attractive to young professionals, the city has a burgeoning entrepreneurial scene, a diverse economy, and a lower cost of living than other tech industry hubs. 

For more information, check out the small business resources offered by the City of Austin.

Step 8: Find a Texas registered agent 

Your Texas small business will need to have a registered agent, whether a professional service or an individual. Your registered agent acts as a point of contact for your business’ important state and legal mail. Requirements of a registered agent include that they have a physical mailing address (not a P.O. Box or remote location) in the state. They’ll also need to keep regular business hours. You can also choose to be your own registered agent, or you can appoint a trusted friend or family member to do so, as long as they meet the above requirements. If you use a service for a Texas registered agent, you’ll pay a fee likely ranging from $100 to $300 per year.  

Step 9: Get a Texas EIN number and file your tax and employer identification documents

An EIN (Employer Identification Number) is a nine-digit number the IRS uses to identify your business for tax purposes. Although Texas doesn't require a state EIN, you'll need one to file payroll taxes and federal tax returns, open a business bank account, and apply for loans. You can apply for a free EIN through the IRS website. 

Step 10: Register as a small business in Texas

When launching a small business in Texas, you’ll need to register it. The process varies depending on your business structure. The easiest way to register is electronically through SOSDirect or SOSUpload. Make sure to look up current filing fees before sending in applications.

Step 11: Register for Texas business licenses and permits in Texas

Depending on your industry, you may need business licenses and permits to operate in Texas. Some localities also require permits, so perform your due diligence and ensure you obtain any required licenses or permits.

Do you need a business license in Texas?

In Texas, a general business license is not required, but specific industries and locations may have licensing and permitting requirements. For example, if you plan to open a restaurant, you’ll need to obtain a health permit and a food establishment license through the Texas Department of State Health Services. Serving alcohol will require a permit from the Texas Alcoholic Beverage Commission (TABC). Check this Texas Business Licenses & Permits Guide to ensure you’re in compliance.

Step 12: Secure small business insurance in Texas

To protect your Texas business assets and tangible property, you’ll likely need business insurance to help mitigate costs from accidents, property damage, or liability. Hurricanes, flooding, and ice storms are not uncommon in Texas, so make sure you’re adequately protected if you have a brick-and-mortar store, warehouse, or industrial facility, and make sure you have liability insurance as well in case someone is injured on your business property or files a lawsuit against your company.

Step 13: Prepare to pay taxes on your business in Texas 

Before you begin operations, make sure you understand all your Texas tax obligations. Many such taxes are industry-dependent, so do your homework. 

Corporate income tax

Texas is one of the few states that doesn’t collect corporate income taxes. 

State income tax

Texas does not have income taxes.

Franchise tax

While Texas does not levy corporate income tax, it does have a franchise tax payable upon business formation and annually thereafter. The franchise tax is a privilege tax imposed on taxable entities formed or doing business in Texas. Rates vary depending on the type of business and revenue. Check the Texas Comptroller website for the most updated information. 

Sales tax

Texas levies a 6.25% statewide sales tax. With local taxes included, that average rate is 8.2%. 

Payroll taxes

If you have employees, you’ll be liable for payroll taxes, including state unemployment tax, but there is no withholding for state income taxes.

Federal taxes

In addition to state and local taxes, all businesses must pay applicable federal taxes, including:

• Federal income tax
• Self-employment tax (for sole proprietors and partners)
• Employment taxes (if you have employees), including the Federal Unemployment Tax Act (FUTA tax)
• Excise taxes (for certain industries)

To ensure you understand your federal tax obligations, check out these IRS resources: Publication 334, Tax Guide for Small Business and Publication 583, Taxpayers Starting a Business and Keeping Records.

Tax credits and incentives for Texas employers

Texas offers a wide array of business tax credits and incentives, including financial incentives, grants, and tax exemptions. Here are a few examples:

Texas Enterprise Fund

The Texas Enterprise Fund provides performance-based financial incentives for projects that create jobs and invest capital in Texas.

Skills Development Fund

The Skills Development Fund offers grants to help businesses and labor unions partner with community colleges and technical schools to provide customized job training.

Media Production Development Zones

This sales and use tax exemption provides for the construction or renovation of permanent moving image production sites in the state. 

Texas Enterprise Zone Program (EZP)

A state sales and use tax refund program, the EZP encourages job creation and private investment in economically distressed areas.

Step 14: Set up your business bank account

One of the first things you need to do when starting your business is to set up a business bank account to manage your finances. Maintaining a separate bank account for your business simplifies bookkeeping, taxes, and helps build your credibility. 

1. Collect all your business paperwork, including your EIN, business formation documents, registrations, permits, and licenses to open your small business bank account. 
2. Choose a bank or credit union that offers products and services you need, whether loan offerings, checking, or high-yield savings accounts. 
3. Establish business credit using a bank credit card for business-related purchases and expenses. 
4. Set up your financial records by selecting the right accounting software for your organization. 
5. Hire a professional accountant well-versed in local tax codes and your industry to help with financial and other bookkeeping services.

Additional resources to get your business started 

Several state and federal resources can support your business with guidance, training, potential funding, and more. 

State resources

Texas Secretary of State Office: Find guides and resources to navigate the legal side of starting your business, including choosing a business structure and filing the necessary paperwork.

Office of the Texas Governor: The Texas Economic Development & Tourism Office (EDT) as part of the Office of the Texas Governor is a state agency responsible for attracting businesses and tourists to Texas. EDT helps businesses by providing financial incentives, assisting with permitting and licensing, and promoting the state's competitive advantages to decision-makers.

Texas Comptroller’s Office: Get information on state taxes, permits, and licenses required for your business.

Texas State Small Business Development Center: Get training and advice from experts on launching, managing, and growing your business. The center offers workshops and resources on topics like business plans, funding, and marketing.

Federal resources 

Small Business Administration (SBA): The SBA supports small businesses through various loan programs, including the 7(a) loan, provides resources for government contracting, and offers counseling and training programs to help entrepreneurs start and grow their businesses.

Grants.gov: This centralized platform simplifies the process of searching for and applying for federal grants across various sectors. It also provides grant writing tips and has a Grants Learning Center featuring the basics of grants, eligibility, and more. 

Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR): SBIR and STTR programs provide research and development funding to innovative tech companies. 

SCORE: SCORE is a national nonprofit organization that partners with the U.S. Small Business Administration (SBA) to provide free mentoring and educational resources to entrepreneurs and small business owners. While not a direct federal agency, SCORE is an independent organization with a network of volunteer business mentors across the United States.   

U.S. Department of Agriculture (USDA): The USDA website lists grants, loans, and other programs and resources for farmers and other businesses serving rural America. 

Frequently asked questions

How long does it take to start a small business in Texas?

Starting a small business in Texas can take anywhere from a few weeks to a few months. 

Do businesses pay taxes in Texas?

While Texas doesn’t have a corporate income tax, businesses must still pay franchise taxes, sales and use taxes, property taxes, and local taxes. 

Do I need a local business license if I only operate online in Texas?

Even if you operate an online-only business, you may still need to comply with various licensing and registration requirements in Texas. While there is no statewide general business license, you will need a sales and use tax permit if you sell taxable goods or services within the state. Local municipalities in the state may require a basic business license or other permits, so it's important to check with your local government for specific regulations. Certain industries also require additional state licenses and certifications.

Disclaimer: 

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