How To Start a Business In Texas
Starting a business in Texas offers a wealth of opportunities, given its robust economy, business-friendly policies, and a growing market that spans multiple industries. The process involves more than just a great idea; it demands strategic planning, legal considerations, and a clear vision for growth. This is why around 70 thousand businesses are closing every year in Texas. However, around 100,000 in the same time opening, according to the Small Business Economic Profile report.
One of the foundational steps in this journey is developing a strong business plan, which not only guides the direction of the business but also attracts potential investors and partners.
This guide will walk through the essential steps to help you understand how to start a business in Texas and build a solid foundation for long-term success.
How To Start a Business In Texas
Step 1: Develop a Business Plan
A business plan is critical for any new venture. It details your objectives, target market, competition, and financial projections. A good business plan writer can help with this and guide you through the process. Lenders and investors in Texas look for clear business plans that demonstrate careful consideration of the market and how a business intends to succeed in a competitive landscape.
The business plan should start with an executive summary that outlines your idea in a few concise points. Follow this with sections dedicated to the product or service offering, market analysis, and a breakdown of your management team.
Including a financial plan that forecasts initial funding requirements, anticipated revenue, and expenses also shows potential backers that you have thoroughly prepared.
Step 2: Choose a Business Structure
Texas offers multiple business structure options, each with unique benefits and legal considerations. The primary options include:
Sole Proprietorship: This straightforward setup grants complete control to the owner, with no formal registration required. However, the owner is personally liable for any business debts.
Partnership: In a partnership, two or more owners share the responsibilities, profits, and liabilities. This structure is similar to a sole proprietorship but designed for businesses with multiple owners.
Limited Liability Company (LLC): An LLC is a popular choice for small businesses, as it provides personal liability protection while allowing profits to pass through to the individual owners.
Corporation: As a legally separate entity from its owners, a corporation offers the most substantial liability protection. It requires additional regulation and tax compliance, making it suitable for larger businesses.
The structure you select will impact your taxes, ownership roles, and liability. Consulting a legal or financial professional can help you choose the structure best suited to your goals.
99.8% of Texas companies are small businesses
Step 3: Register Your Business Name
Once you've decided on your business structure, select and register your business name. If you choose a sole proprietorship or partnership, you can operate under your legal name or file for a "doing business as" (DBA) name. An LLC or corporation requires registering with the Texas Secretary of State.
Perform a name search through the Texas Secretary of State website to ensure your desired business name is available. Reserving your name early is wise, as demand can be high, especially in popular business areas.
Step 4: Obtain Necessary Permits and Licenses
Texas businesses often need specific permits or licences, depending on their industry and location. General business permits are required across most industries, but some sectors have additional licensing requirements. Food establishments, for example, must obtain health permits, while certain trades require professional licences.
Cities in Texas may also have zoning laws that regulate business activities, so understanding this will help you realise what is involved when it comes to how to open business in Texas.
Check with the local city or county clerk's office to verify any regional requirements and confirm that your chosen location aligns with zoning regulations.
Step 5: Secure Funding for Your Business
Finding financing can be one of the more challenging aspects of how to open a business in Texas. There are multiple funding options, including bank loans, small business grants, angel investors, and personal savings.
The Texas Economic Development Corporation and other state initiatives offer grants and low-interest loans to start-ups that qualify. Research local banks that are part of the Small Business Administration (SBA) lending program, which may offer financing solutions tailored to new businesses. A well-prepared business plan can strengthen your application by showing potential funders the viability of your business.
Step 6: Register for Taxes
All businesses in Texas must register with the Texas Comptroller’s office for state sales tax permits. This permit is necessary if you sell tangible goods or services, including online sales to Texas residents. Additional tax registrations, such as employer tax, are required if you plan to hire employees.
The Federal Employer Identification Number (EIN) issued by the IRS is also necessary for businesses with employees or those structured as corporations or partnerships. Sole proprietors without employees may use their social security number instead of an EIN, though many prefer an EIN for added privacy.
Step 7: Find a Location for Your Business
The right location can have a significant impact on your business’s success. Consider factors like accessibility for customers, foot traffic, and proximity to suppliers when selecting your premises. Texas is home to a variety of business hubs, from urban centres like Austin, Dallas, and Houston to smaller towns with unique advantages and lower property costs.
Some businesses, especially during their early stages, may benefit from remote operations or virtual office services to save on expenses. However, if a physical location is essential to your business, working with a commercial real estate agent can help identify prime locations that align with your needs.
Step 8: Recruit Employees and Understand Employment Laws
For businesses requiring staff, understanding Texas employment laws is vital. Texas is a "right-to-work" state, which impacts union-related hiring practices, but all employers must adhere to federal regulations on wages, benefits, and workplace safety.
Before hiring, research Texas labour laws regarding wages, overtime pay, and health and safety requirements. An employee handbook can clarify policies, expectations, and benefits, creating a positive work environment that fosters retention.
Step 9: Develop a Marketing Strategy
An effective marketing strategy is essential for building brand awareness and attracting customers. Texas has a vast, diverse market, so tailoring your marketing efforts to reach your specific audience will give you an edge. Marketing channels may include digital platforms like social media, email newsletters, and search engine advertising.
For businesses with a local customer base, consider joining regional business associations and attending networking events to build community connections. Establishing a brand presence across multiple channels maximises reach, and digital platforms allow Texas businesses to connect with a broader customer base.
Step 10: Launch and Monitor Progress
With your preparations complete, it's time to launch. Creating buzz through an opening event or promotional campaign can help attract initial customers and set the tone for your brand. In Texas, where communities often support local businesses, an engaging launch can help build a loyal customer base early on.
After launching, regularly review business performance. Setting clear goals helps track progress, measure customer satisfaction, and adjust as needed to address any challenges. Monthly or quarterly assessments can highlight strengths and uncover areas for improvement, keeping your business on a steady path toward growth.
Checklist for Starting Your Business in Texas
Draft a detailed business plan with market insights and financial projections.
Choose a suitable business structure (e.g., LLC, sole proprietorship).
Register your business name and secure a DBA if needed.
Obtain all required permits and licences based on industry needs.
Explore funding options, such as grants, loans, or personal savings.
Register for state and federal taxes, including a sales tax permit.
Secure an appropriate location and comply with zoning laws.
Understand Texas employment regulations if hiring staff.
Implement a marketing strategy to reach your target audience.
Launch your business, then regularly review progress to stay on track.
Why a Business Plan Matters
In Texas, a solid business plan increases the likelihood of success by providing a clear path forward. A comprehensive plan details market analysis, competition, and specific goals, guiding daily decisions and long-term strategies. Investors and lenders often look for a structured plan as a sign of a well-organised business with growth potential. With a roadmap in place, Texas entrepreneurs can focus on building a profitable business that thrives in a competitive environment.
We can support new Texas business owners with professional business plans tailored to their needs. From structuring plans to presenting financial projections, Oxbridge Content’s expert services ensure your business is prepared for a strong start in Texas’s dynamic market.