Bigger is better—that’s the Texas way!
Home to the world’s largest cowboy boots and Miss Pearl, the towering squirrel statue, Texas takes pride in making everything larger-than-life. And if you’re planning to start a business here, it’s the perfect place to think big, too!
But in true Texas fashion, starting a business isn’t just about dreaming big; it’s about taking some strategic, bold steps to make it happen.
In this article, we’ll walk you through everything in our starting a business in Texas checklist in 2025. Let’s dive in.
1. Business Idea
Any business starts with an idea, and in Texas, the top business ideas according to our research are food trucks (Tex-Mex fusion, anyone?), boutique fitness studios, tech consulting services, and, of course, BBQ joints.
Texas is a hotbed for innovative concepts, but the trick is to find an angle that’s both unique and true to you.
In a state as bold as Texas, a well-defined idea that stands out is key to catching people’s attention!
2. Business Plan
Business plans outline your business’s mission, goals, target market, and strategies for growth.
While there’s no legal requirement to write one, having a well-thought-out business plan can make a huge difference in setting your business up.
It helps you clarify your goals, understand your target market, and create a roadmap for growth. Plus, if you’re looking for financing, investors or lenders almost always want to see a solid business plan to understand how you plan to make money and manage risks.
Use free templates available from the Small Business Administration (SBA) or SCORE to make this process easier.
3. Business Location
When choosing a business location in Texas, consider cities ranked highly by local employers for their business-friendly environments.
Take Fort Worth, for example—it’s known for its quick and painless permitting and zoning processes, making it a great choice if you’re looking to get up and running fast. Then there’s Dallas, with its strong telecom infrastructure and business-friendly vibe that helps keep operations smooth.
Don’t forget to look into local perks like tax breaks or grants. Austin, for instance, offers programs like the Business Expansion Program and the Creative Content Incentive Program, designed to help new businesses grow and innovate.
4. Financing
No matter what kind of business you’re running, there’s a financing option to fit your needs in Texas. From SBA loans for reliable funding to CDFI loans tailored for underserved communities, and the Texas Small Business Credit Initiative (TSBCI) offering expansion capital, the options are plentiful.
The best part? Many of these programs go beyond just funding. They often include mentoring, strategic advice, and tips on securing contracts—helping you not just grow but grow smart.
5. Registration
5.1 Choose Your Business Structure
The structure you choose affects everything from taxes to liability, so think it through. Here are your main options:
- Sole Proprietorship: A sole proprietorship keeps things simple, with one person calling the shots and handling all responsibilities. You’re the boss, but here’s the catch: you’re also on the hook for any debts or liabilities. It’s low-cost and straightforward, perfect for small, low-risk businesses.
- Partnership (General and Limited): In a general partnership, two or more people team up to share the work, profits, and responsibilities equally—along with any debts. Liability is personal for all partners, so clear agreements are a must. In a limited partnership, you get flexibility: general partners manage the business and take on liability, while limited partners invest without risking more than they put in. It’s a win-win if you want shared ownership with some built-in protection.
- Limited Liability Company (LLC): An LLC is a popular pick for entrepreneurs who want protection without the hassle of corporate structure. With an LLC, your personal assets are safe from business debts, and you get the flexibility to set up management and profit-sharing as you like.
- Corporation: Corporations have more rules to follow and cost more to set up, but they come with major perks: liability protection, longevity, access to capital, and the ability to raise funds through stock.
5.2 Settle on a Business Name
Choosing your business name is exciting, but before you commit, make sure it’s yours for the taking.
You can use the Texas Comptroller’s Taxable Entity Search for free—just type in your desired name, hit search, and see if any matches pop up.
You can also use the Texas Secretary of State’s SOSDirect service, but it requires setting up an account and costs $1 per search.
5.3 Get an EIN
An Employer Identification Number (EIN) is a unique nine-digit number assigned by the IRS to identify your business for tax purposes. You will need it to file taxes, open a business bank account, hire employees, and establish credit.
To get your EIN quickly, visit the official IRS website and complete the online application—you’ll receive your EIN immediately.
5.4 Designate a Registered Agent
Every business must have a registered agent with a physical address in the state who is available during business hours to accept important paperwork, like lawsuits or tax notices.
You can choose to be your own registered agent if you meet these requirements, but many businesses prefer to hire a professional service for privacy and convenience.
Professional registered agents typically charge between $50 and $300 annually.
5.5 Understand Your Tax Obligations
While there’s no state income tax for individuals, businesses need to be aware of the franchise tax. This tax applies to most entities, including LLCs, corporations, and some partnerships.
The good news is, if your business’s annualized total revenue is $2,470,000 or less, you’re exempt from paying this tax.
For those above this threshold, the rates are 0.375% for retail and wholesale businesses and 0.75% for others.
5.6 Secure Licenses and Permits
While the state doesn’t require a general business license, specific industries and professions have their own licensing requirements.
For example, if you’re working in Texas’s booming real estate market, you’ll need to be licensed by the Texas Real Estate Commission (TREC). Contractors and electricians must obtain licenses from the Texas Department of Licensing and Regulation.
Fees for these licenses vary depending on the type and scope of your business.
6. Open a Business Bank Account
Mixing business and personal finances is a big no-no, not only because it complicates your bookkeeping, but also because it can blur the lines for tax purposes and make you personally liable in legal matters. It can also cause problems during audits.
7. Secure Business Insurance
At a minimum, most Texas businesses should consider general liability insurance to cover accidents or injuries (typically costing around $500-$1,500 annually, depending on size and industry).
For businesses in Texas’ flood-prone areas, additional flood insurance might be a wise investment.
For businesses with employees, workers’ compensation insurance is recommended, to cover workplace injuries.
Final Thoughts
Starting a business in Texas is as exciting as it is rewarding, especially when you have the right steps lined up.
However, the journey to opening your doors can feel confusing and overwhelming, particularly for first-time business owners.
That’s where we come in.
At Traktion, we help small business owners like you with everything from business entity setup and bookkeeping to budgeting, cash flow forecasting, and more. If it impacts your bottom line, we handle it!
If you’re looking for financial support to get your business off the ground, we’re here to help.
Use the calendar below to schedule an introductory call and get started.
Until next time!