Thinking about planting your roots and starting a business in the Lone Star State? You’re in the right market. With the state boasting the second largest gross domestic product in the nation at 1.8 trillion as of 2018, there are plenty of opportunities for you and your business to thrive.
Considering starting a business in Texas? Here are some benefits that are unique to the state, as well as tips on how to begin.
[Read: Location, Location, Location: How to Decide Where to Start Your Business]
Benefits of starting a business in Texas
Here are some reasons to open your business in Texas:
- Low tax burden. One of the main benefits of starting a business in Texas is the low tax burden. Business owners and startups aren’t taxed on corporate or individual income, and Texas also doesn’t have state property taxes. These lower rates will give you an advantage come tax season.
- Simple state regulations. Texas’ easy-to-navigate business laws allow business owners to stay within state compliance without third party assistance. With a greater amount of freedom on behalf of the state as well as simplified guidelines, businesses are able to grow easily and steadily.
- Strong growth in metropolitan areas. An upward trajectory of economic growth in Texas is, in part, thanks to up and coming cities including: Dallas, Austin, Fort Worth, Houston, and San Antonio. More startups and business opportunities are growing out of these major metropolitan areas than ever. Each of their populations are also growing and constantly in demand for new businesses’ goods and services.
- Diverse and supportive business community. With so many businesses and startups in Texas, there’s a strong sense of community for those just starting their own small business. The community’s support and diversity, you’ll find many ways to grow in your field. Additionally, there will be many opportunities to branch out to existing businesses and gain new clients — two chief benefits to getting involved.
One of the main benefits of starting a business in Texas is the low tax burden.
What are the steps to starting a business in Texas?
So you’re set on planting your business’s roots in the Lone Star State. Here are some steps to starting a business in Texas:
- Decide the business structure or entity your business will be housed under, such as a limited liability corporation (LLC), corporation or sole proprietorship.
- Choose your business’ name. Do your research to be sure your name is unique, searchable and appropriate for your brand.
- Register your business with the state. Multiple websites and online software provide packages and assistance to register your business.
- Apply for your Employer Identification Number (EIN), which is essentially the social security number for your company.
- Open a checking account and credit card for your business. This helps you separate your personal and business expenses.
- Obtain necessary business licenses and permits, including registering for state and city taxes.
- Become familiar with the annual and ongoing requirements for your business.
[Read: Startup Checklist: 20 Things to Do Before You Start Your Business]
Opening a business in Texas: Frequently asked questions
What business licenses are required? Texas requires most businesses to operate under a business license, permit or certificate. The Texas Permit Office is the best resource to determine which license(s) you must obtain to operate legally in Texas.
How do I dissolve a Texas LLC? To dissolve a business in Texas, you must first cease all business operations and take actions to close out the business including collecting payments owed, paying off any business debts or settling legal disputes. Then, request a Certificate of Account Status from the Texas comptroller of public accounts. This document states that the Texas secretary of state acknowledges your LLC is up to date on all taxes due. Finally, secure a Certificate of Termination from the secretary of state's office and pay a fee to officially dissolve your LLC.
How do I obtain a DBA? A "doing business as," or DBA, is when a company uses another name to do business than their official name. To obtain a DBA in Texas, you must first make sure the fictitious name you want to use is available. Then, you’ll file an application for registration with the Texas Secretary of State Office to gather the necessary paperwork.
The Lone Star State is not only large in population and economic growth, but also in opportunity for your business. No matter what type of business you're launching, it's important to do your due diligence and thoroughly research your local laws and requirements so you can start off on the right foot.
CO— aims to bring you inspiration from leading respected experts. However, before making any business decision, you should consult a professional who can advise you based on your individual situation.
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CO—is committed to helping you start, run and grow your small business. Learn more about the benefits of small business membership in the U.S. Chamber of Commerce, here.
