Texas Business Guide
How to Start a Business in Texas
Everything you need to form your Texas LLC, corporation, or sole proprietorship, with exact fees, timelines, and step-by-step instructions.
Texas has no personal income tax or corporate income tax, making it an attractive state for new businesses. An LLC or corporation costs just a single $300 filing fee to form, with no recurring Secretary of State annual report fees.
This guide covers every step from choosing a business structure to understanding the licenses and permits your specific business activity requires.
Choosing Your Texas Business Structure
This is the first decision and it affects everything: taxes, liability, paperwork. If you are unsure, an LLC is the right default for most Texas small businesses.
| Entity Type | Liability Protection | Taxation | Texas Filing Fee | Annual Cost | Best For |
|---|---|---|---|---|---|
| LLC | Yes | Pass-through | $300 | Texas franchise tax, a privilege tax administered by the... | Most small businesses |
| Corporation | Yes | Double (C-Corp) or pass-through (S-Corp) | $300 | Texas franchise tax, a privilege tax administered by the... | Raising investment, stock options |
| Sole Proprietorship | No | Pass-through | $0 | $0 | Freelancers, side hustles |
| Partnership | No | Pass-through | $0 | $0 | 2+ owners (consider an LLC instead) |
8 Steps to Start Your Texas Business
- 1
Choose your business structure
LLC, corporation, or sole proprietorship. Each has different costs, tax treatment, and liability protection.
- 2
Pick and reserve your business name
Search the Texas Secretary of State database. Reserve for $40 (120 days).
- 3
Appoint a registered agent
Must have a physical Texas street address. Can be yourself (free) or a service ($100 to $300 per year).
- 4
File your formation documents
Certificate of Formation (Form 205) ($300) or Certificate of Formation (Form 201) ($300) with the Texas Secretary of State.
- 5
Get your EIN from the IRS
Free, online, takes about 5 minutes. Do not pay anyone for this.
- 6
Register for a sales tax permit if you sell goods
Through the Texas Comptroller of Public Accounts. State sales tax rate: 6.25%.
- 7
Get required licenses and permits
Texas does not issue or require a general state business license.
- 8
Register for Texas taxes
Personal income tax: none.
How Much Does It Cost to Start a Business in Texas?
| Item | Cost | Notes |
|---|---|---|
| LLC filing fee (Texas Secretary of State) Required | $300 | The Secretary of State does not publish a guaranteed standard turnaround. |
| Corporation filing fee Required | $300 | If forming a corporation instead |
| Annual report | $0 | Not required in Texas |
| Name reservation | $40 | 120 days |
| Registered agent service | $0 to $300/yr | Free if you serve as your own |
| EIN (IRS) Required | $0 | Always free |
| Business license | Varies | Texas does not issue or require a general state business license. |
| Operating agreement | $0 to $500+ | Free template or attorney-drafted |
| Realistic LLC total (year 1) | $300 to $600 |
Start a Specific Business in Texas
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Texas Business Guides
- How to Start an LLC in Texas
- How to Start a Corporation in Texas
- Sole Proprietorship in Texas: How to Start One
- Texas Business License: What You Need and How to Get It
- Texas Home-Based Business Laws: Zoning, Permits and Rules
- How to Get an EIN in Texas
- Texas Business Name Search: How to Check and Reserve a Name
- How to Get a Resale Certificate in Texas
- Texas Registered Agent: Requirements and How to Choose One
- Best LLC Services in Texas
- Texas Business Taxes Explained for New Owners
- How Much Does It Cost to Start a Business in Texas
Why Start a Business in Texas?
- Texas is the second largest state economy in the United States, with output of roughly $2.9 trillion based on preliminary Bureau of Economic Analysis estimates.
- Texas is the second most populous state, with 31,709,821 residents as of July 1, 2025.
- Texas levies no personal income tax and no corporate income tax.
- The franchise tax no tax due threshold is $2,650,000 in total revenue for the 2026 and 2027 report years, so most small businesses owe no franchise tax and file only an information report.
- Forming an LLC or a for profit corporation costs a single $300 filing fee, and there is no recurring Secretary of State annual report fee.
- The state sales and use tax rate is 6.25 percent, local jurisdictions may add up to 2 percent, and the maximum combined rate anywhere in Texas is 8.25 percent.
Texas Business Resources
Texas Secretary of StateEntity filing, name search, online filingwww.sos.state.tx.us →Texas Comptroller of Public AccountsSales tax permits, business tax registrationcomptroller.texas.gov →Texas Small Business Development Center NetworkFree business counseling and trainingwww.sbdctexas.org →SBA Texas District OfficeFederal loans, programs, and mentoringwww.sba.gov →
Frequently Asked Questions
- How long does it take to form an LLC in Texas?
- The Secretary of State does not publish guaranteed standard processing times. Electronic filing through SOSDirect provides faster processing than mailed documents. If you need guaranteed timing, Standard Expedite takes two to three business days for $50 per document, Next Day Expedite takes close of business the next business day for $500 per document, and Same Day Expedite takes close of business the same day for $750 per document.
- What does it cost to start an LLC in Texas in year one?
- The LLC filing fee is $300 with no annual Secretary of State report fee. A sales and use tax permit from the Comptroller is issued at no charge and typically takes two to three weeks to process. Entities with total revenue of $2,650,000 or less owe no franchise tax in 2026 and 2027.
- Can a non-resident form an LLC in Texas?
- Yes. There is no residency requirement to form an LLC in Texas. You can file your Certificate of Formation electronically through SOSDirect.
- What is the cheapest way to start a business in Texas?
- Both an LLC and a corporation cost the same $300 filing fee. Texas does not require a general state business license for most businesses.
- Is an operating agreement required for an LLC in Texas?
- No. An operating agreement is not required to be filed with the Secretary of State. You file only the Certificate of Formation, though many owners choose to create one as a best practice.