How to Register a Business in Texas: Your Guide to Starting a Business

Everything’s bigger in Texas, including opportunities for entrepreneurs like you to build a thriving business. As one of the fastest-growing states, Texas attracts over 50,000 new residents each year thanks to the low cost of living, rapidly expanding cities, and business-friendly legal climate.

But before diving into your new venture, the first course of business is legally registering your business in compliance with state regulations.

While it can seem overwhelming at first glance, our business law attorneys break it down into manageable steps to ensure a smooth and successful launch.

Choose a Business Structure That Works in Texas

One of the first key steps is deciding on the right business structure for your goals and circumstances. The legal structure you select will impact liability, taxes, paperwork, and overall operations down the road.

Take time to carefully weigh the pros and cons of each option:

Sole Proprietorship

A sole proprietorship is the simplest and most common small business structure. There is no legal separation between you and the business, so you retain full control while also assuming unlimited personal liability.

Sole proprietors directly report business income and expenses on their personal tax returns. With easy setup and minimal registration requirements, a sole proprietorship can work for straightforward small businesses.

Partnership

Similar to sole proprietorships, partnerships do not create a legal separation between the business and its owners. You must register a general or limited partnership with the state and establish a partnership agreement covering ownership percentages, responsibilities, and profit/loss distribution. Liability is shared between partners.

Limited Liability Company (LLC)

For many Texas entrepreneurs, forming an LLC provides the ideal mix of simplicity, flexibility, and protection. As the name implies, an LLC shields your personal assets from business debts and claims.

LLCs combine pass-through taxation like a partnership or sole proprietorship with the liability protections of a corporation. Startup and compliance requirements are minimal compared to corporations.

Corporation

For large-scale or high-risk ventures, incorporating as a C or S corporation may make sense. This more complex structure creates a distinct legal entity separate from the owners. Corporations can sell stock and provide officers with payroll and benefits. But they are costly to form and administer. Strict regulations must also be followed.

Consult with business attorneys and accounting professionals to decide which structure best fits your enterprise. But, for most small to mid-size ventures in Texas, forming an LLC provides an ideal balance of affordability, ease of administration, and personal asset protection.

Reserve Your Business Name

Once you’ve selected a business structure, it’s time to make it official by reserving your exclusive company name. Every business in Texas must register a name that is distinguishable from other entities.

Thoroughly search the Secretary of State’s database to confirm your desired name is available for use. Make sure it is free from conflicts both as an identical match and in terms of overall similarity. Also, do a web search to identify any potential trademark conflicts.

To reserve your business name with the state, file a certificate of formation if you are organizing as an LLC or corporation. Sole proprietors and partnerships submit an assumed name certificate.

Finally, register your business name at the county level as well with the county clerk’s office. Doing so establishes your exclusive right to the name within that county. Follow all name registration steps carefully to avoid future disputes or rebranding headaches.

Acquire Necessary Licenses and Permits

While Texas has a reputation for limited bureaucracy compared to other states, securing licenses and permits is a mandatory step. Requirements vary based on your industry, location, business activities, and other factors.

Common Texas permits include:

• Sales tax permit – mandated for selling taxable goods or services
• Health permits – restaurants, grocery stores, food trucks, etc. must comply with state health codes
• Liquor license – required to sell alcohol for on- or off-premise consumption
• Building permits – construction, renovations, housing rentals, and other property uses
• Professional licenses – certification for services like medical, legal, accounting, massage therapy, cosmetology and more

The Texas Department of Licensing and Regulation serves as a helpful one-stop resource for discovering state license requirements. For local city or county permits, contact the appropriate business permit office.

Applying for licenses and permits well in advance of opening gives you time to address any issues. Don’t wait until the last minute.

Open a Dedicated Business Bank Account

Commingling personal and business finances is never a good idea. That’s why establishing a dedicated business checking account is a critical task when forming your enterprise.

Choose a bank or credit union that meets your needs as a Texas business owner. Compare factors like proximity, fees, interest rates, mobile/online banking options, and minimum balance requirements.

You’ll need to provide key documentation like your EIN, business license, ID, and filing paperwork to open the account. Also, be prepared to make an initial deposit. Opening a business savings account in conjunction with checking is also wise for building reserves.

Craft a Strategic Business Plan

Jumping straight into business operations without proper planning is a recipe for failure. Developing a comprehensive Texas business plan forces you to evaluate all aspects of your venture and prepare for success.

While writing a full-fledged plan, you’ll analyze the competitive landscape, refine your operations, nail down cost projections, identify growth opportunities, and determine startup funding requirements.

If crafting a polished business plan seems daunting, consider consulting an experienced business law attorney for guidance. Don’t hit “go” on your business before taking the time to plan properly. A detailed roadmap sets you up to win.

Protect Your Business and Assets with Insurance

Operating any business comes with inherent risks that can lead to expensive claims or lawsuits. The right insurance coverage provides a safety net that can save your company from financial ruin.

Policies like general liability insurance, commercial property insurance, product liability insurance, professional insurance, and other options shield you from the significant costs associated with illness, injury, fires, theft, natural disasters, contractual disputes, and more.

Work with a qualified insurance agent to determine the right customized policies and adequate levels of coverage for your Texas venture. Don’t make the mistake of thinking, “it won’t happen to me.” Unforeseen events can instantly destroy an otherwise healthy business without insurance. Protect your investment upfront.

Starting a Business is More Than Just Paperwork

Trust Titus Law Firm to Guide You Through the Process

Starting a business in Texas is more than just filling out a few forms and calling it a day. It’s a process that requires careful planning, strategic decision-making, and a solid understanding of the legal landscape. That’s where we come in.

At The Titus Law Firm in Houston, our business law attorneys have helped countless entrepreneurs navigate the ins and outs of business registration in Texas. We know that every business is unique, and we take the time to understand your specific goals and challenges. From there, we create a tailored plan to guide you through the registration process and set your business up for long-term success.

Don’t try to tackle business registration on your own. Let us handle the legal work so you can focus on bringing your entrepreneurial vision to life.

Contact us today for a consultation.