How To Start a Business in Texas: 12 Essential Steps (2025)

Read this step-by-step guide to starting a business in Texas, from choosing a business idea and name to selecting a legal structure and creating a marketing plan.

This content doesn’t contain and isn’t meant to provide legal, tax, or business advice.*

Texas is calling entrepreneurs—and for good reason. The state’s business-friendly tax environment makes it an ideal place to build your dream business.

“Texas doesn’t collect personal or business income taxes, and that’s one of the big advantages here for businesses,” says Steve Lawrence, associate dean of the University of Houston’s Bauer College of Business and executive director of the University of Houston Texas Gulf Coast Small Business Development Center (SBDC) Network.

You’ll be in great company: Texas is home to 3.2 million small businesses. And, as the eighth largest economy in the world, the state’s economic climate creates endless opportunities for entrepreneurs like you.

Ready to join Texas’s thriving business community? This guide walks you through everything you need to know.

Ready to start your business? Create your website today or learn more about Shopify’s tools for selling online and in person.

12 steps to start a business in Texas

1. Choose a business idea
2. Name your business
3. Create a business plan
4. Choose a business structure
5. Get an EIN
6. Get a registered agent and register your business
7. Pay state taxes
8. Obtain business licenses and permits
9. Examine business insurance options
10. Set up your finances
11. Secure funding
12. Market your business

Step 1: Choose a business idea

Whether you have a business idea or you’re still dreaming up possibilities, take the time to develop your idea. Nail down these key details:

• What products will you sell?
• Who are your ideal customers?
• What’s your pricing strategy?
• What will it cost to produce goods?
• How will you generate awareness of your offering?

Step 2: Name your business

Finding the perfect business name is exciting—and crucial for your brand. Here’s how to get started:

• Use a business name generator for inspiration
• Search online to see if any other businesses are using your shortlisted names
• Check the US Patent and Trademark Office’s database for existing trademarks
• Look for available domain names that match your business name (hint: try a domain name generator)

Texas has specific requirements for business names:

• Include appropriate designation (Corporation, Incorporated, Company, Limited, or an abbreviation)
• Make sure your name isn;t similar to existing Texas businesses
• Avoid restricted words like “bank,” “trust,” “veteran,” and “college” without authorization

Ready to claim your name? Reserve it online through SOSDirect for 120 days for $40. You can always renew if you need more time.

Want to operate under a different name? Consider a DBA (doing business as). This lets sole proprietors use a business name instead of their personal name, and allows corporations or LLCs to drop legal terms from their public-facing name. File an assumed name certificate to secure your DBA in Texas.

Step 3: Create a business plan

While Texas doesn’t require a business plan, having one keeps you focused and helps secure funding. Think of it as your business roadmap.

Include these essential elements:

• Company description
• Market analysis
• Management and organization
• Products and services
• Customer segmentation
• Marketing plan
• Logistics and operations plan
• Financial plan

“Write a business plan that includes the total business framework, marketing, operations, and the finances. Lay it out in two segments: years one to two, and years three to five,” says Lawrence. “Do not use family or friends for review, because they’re not going to give you an unvarnished, honest opinion.”

Need help getting started? Check out our business plan template and business plan examples to see what’s possible.

Step 4: Choose a business structure

When examining how to start a business in Texas, choosing your business structure is a key decision that impacts everything from taxes to legal protection. Here are three popular types of business structures in Texas:

Sole Proprietorship: This is the simplest way to start your business. It’s quick to set up, inexpensive to register, and has minimal administrative work. The catch? Your personal and business assets are legally the same—meaning you’re personally responsible for any business debts or legal issues.

Limited liability company (LLC): An LLC gives you the best of both worlds: the simplicity of a sole proprietorship with added legal protection for your personal assets. You can choose how you want to be taxed—as a partnership, sole proprietorship, C corporation, or S corporation. 

While Texas doesn’t require an operating agreement for LLCs, creating one helps you:

• Define how you’ll manage your business
• Identify key stakeholders
• Outline profit distribution

Need help? Try an operating agreement template to get started.

Corporation: Ready to think big? A corporation lets you issue stock to attract investors and talent. It offers the strongest separation between your personal and business assets, protecting you from lawsuits and debt collection. 

Texas makes incorporating attractive—there’s no corporate income tax, just a franchise tax for certain businesses.

💡 Tip: Consider using ZenBusiness to set up your business entity. The platform guides you through each step to ensure you’re compliant with Texas state laws. 

Step 5: Get an EIN

Think of an employer identification number (EIN) as your business’s Social Security number (SSN). While sole proprietors don’t need one, you’ll want an EIN if you plan on hiring employees.

Getting an EIN is free and straightforward:

• Apply online through the IRS website.
• Apply by fax, mail, or telephone.
• Have your social security number or ITIN ready.

Step 6: Get a registered agent and register your business

A registered agent receives legal documents if your business faces legal action. Texas requires you to designate someone other than yourself for this role. Check the Texas Secretary of State Registered Agent FAQs for details.

Ready to make your business official? File your Certificate of Formation through SOSDirect. You’ll need: 

• Your business name
• Registered agent details
• Business mailing address
• Your EIN

More information is available through the Texas Secretary of State website, and forms can be submitted via SOSDirect. You can also find out how to file using alternate methods if required.

The filing fee is $300 for professional and for-profit corporations and LLCs, and $25 for nonprofits.

💡Note: Some businesses need to file a Beneficial Ownership Information report with the US Treasury’s Financial Crimes Enforcement Network (FinCEN) for federal compliance. Ask your registered agent if this applies to you. 

Step 7: Pay state taxes

Here’s some good news: Texas doesn’t collect corporate income tax. Instead, you’ll need to know about:

• Annual tax for LLCs and corporations levied by the Texas Comptroller of Public Accounts
• State sales and use tax: fixed state rate, plus up to 2% in local tax for retail sales

Step 8: Obtain business licenses and permits

Texas doesn’t require a general business license, but you’ll need specific licenses and permits depending on your industry and location. For example, selling liquor requires a license from the Texas Alcoholic Beverage Commission.

Local requirements vary, especially in cities like Houston, Austin, and Dallas. Your city or county may have specific rules about business types, signage, parking, and building usage.

Before you set up shop:

• Check zoning permits with your county clerk before leasing or buying property
• Look into home-based business permits if you’ll operate from your residence (some activities like manufacturing aren’t allowed in residential areas)

Find industry-specific requirements in the Texas Business Licenses & Permits Guide, or visit the Texas Economic Development & Tourism’s Business Permit Office. The Governor’s Small Business Resource Portal offers additional guidance.

Step 9: Examine business insurance options

Protect your business with the right business insurance coverage. The Texas Department of Insurance can help you understand your options, including:

• General liability
• Professional liability
• Workers’ compensation

Step 10:. Set up your finances

Start your business on solid financial ground by separating personal and business finances. Consider:

• Opening a business bank account
• Applying for a business credit card
• Working with a business accountant

Build a strong relationship with your bank. “Just having a checking account is not a relationship,” Lawrence stresses. Get to know your local branch manager and small business advisers—they’ll be crucial partners as your business grows. 

Step 11: Secure funding

Starting a business with no money is possible, but launching an online store or wholesale business requires capital.

“The two most significant challenges for small businesses in Texas right now are a tight labor market and accessing capital,” says Lawrence.

Your funding options include:

• Business loans from a bank
• Small Business Administration (SBA) loans
• Angel investors
• Specialized small business financing programs

Shopify Capital offers eligible merchants quick funding based on store performance, with flexible repayments that adjust to your daily sales.

Texas state funding opportunities include:

• Texas Enterprise Fund (TEF): Performance-based grants for job creation and investment
• Skills Development Fund (SDF): Workforce training grants through community college partnerships
• Texas Product Development and Small Business Incubator Fund (PDSBI): Asset-backed loans for innovative startups
• Governor’s Small Business Assistance Program: Tax benefits and abatements for capital-intensive projects

Step 12: Market your business

A core part of marketing your business is your unique value proposition. “Your product or service has to be faster, bigger, or better than the others—it has to be differentiated in some way,” says Lawrence. 

Ready to attract customers? Follow these key steps:

Brand your business: Your brand image is often customers’ first impression, so build a brand that’s recognizable and shows what makes your business unique. Your brand identity includes:

• Your company logo: Create a memorable identity using a logo maker
• Brand colors and imagery: Apply color theory to make strategic choices around your desired brand experience
• A catchy slogan or tagline: Brainstorm ideas or try a slogan maker for inspiration
• Cohesive fonts: Maintain consistent typefaces across your website materials using tools like Fontify
• Tone and voice: Build trust with customers through a distinctive brand voice and personality

Build a business website: Your website is crucial when starting your online business—it’s where many customers first discover your company. Even without development experience, you can launch a professional site using Shopify. Gather these elements:

• Digital logo files in different sizes for your front page, footer, and other branded areas
• High-resolution product photos and imagery to engage users
• Coordinated fonts for a consistent look across promotional materials
• A site map to organize your information effectively
• Business contact information including phone, email, and social media handles

Promote your business: A strong marketing plan helps you promote effectively and sell online. This plan identifies your products, services, and best sales channels for reaching your target audience.

Your marketing plan should include:

• Executive summary outlining your strategy
• Mission statement defining your business goals and philosophy
• Specific objectives for what you want to achieve
• SWOT analysis to identify strengths and opportunities
• Market research on your industry and competitors
• Marketing strategy detailing your action plan
• Budget for growth and training to maintain excellent customer service and solid financials

Looking for examples? Check out our marketing plan examples to get started.

Tips for starting a business in Texas

Texas offers unique advantages for entrepreneurs. The state’s economic powerhouse is driven by Dallas, Houston, and Austin—cities rich with diverse industries like finance, technology, manufacturing, health care, and education. Plus, top-ranked universities like the University of Texas at Austin, Texas A&M, and Rice provide valuable resources for growing businesses.

Here’s expert advice from Lawrence to help your Texas business succeed:

Know your market inside and out

Research your competition, product pricing, location options, and market trends thoroughly. SBDC clients get free access to resources that help with this process.

Plan for the unexpected

Create backup strategies for developing, delivering, and supporting your products or services. Following a business startup checklist helps reduce your risk of setbacks.

Balance passion with strategy

While small businesses thrive on heart and dedication, pair your emotional investment with solid market knowledge to succeed.

*This post is for information only. You are responsible for reviewing and using this information appropriately. This content doesn’t contain and isn’t meant to provide legal, tax, or business advice. Requirements are updated frequently and you should make sure to do your own research and reach out to professional legal, tax, and business advisers, as needed. Businesses outside of Texas will have different steps and requirements. To sell products using the Shopify platform, you must comply with the laws of the jurisdiction of your business and your customers, the Shopify Terms of Service, the Shopify Acceptable Use Policy and any other applicable policies.

**Shopify Capital loans must be paid in full within a maximum of 18 months, and two minimum payments apply within the first two 6-month periods. The actual duration may be less than 18 months based on sales.

How to start a business in Texas FAQ

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

Your timeline depends on your business structure, required licenses and permits, information gathering speed, and processing times.

How much does it cost to start a business in Texas?

A sole proprietorship can cost as little as $25 for an assumed name certificate. More complex businesses requiring multiple licenses and permits typically cost more than $1,000 to establish.

How do I get a Texas sales tax permit?

Apply online through the Texas Comptroller’s website or submit Form AP-201 by mail. You’ll need:

• Your EIN
• Business structure details
• Physical location

Online applications typically process in two to three business days. Once approved, you’ll receive your free permit and must start collecting sales tax on taxable items.

Do businesses pay taxes in Texas?

Sole proprietors are typically exempt from state taxes, since Texas doesn’t collect personal income tax. LLCs and corporations pay franchise tax if revenue exceeds certain thresholds.