How to start a business in Texas (7 Simple Steps)

Step 1: Plan Your Business Idea

Write a Business Plan

Before starting your business in Texas, you’ll need to have a game plan. A well-crafted business plan is an absolute necessity for securing funding, managing cash flow, and tracking your progress as your business grows.

When creating your business plan, here are some important things to include:

  • A pitch. A quick, one-page summary of your plan that succinctly covers all the key points below (and more).
  • A Unique Selling Proposition (USP). A short phrase that captures the core mission of your business. For example, our USP at Startup Savant is “Entrepreneurship Simplified.”
  • A target market. Who you’re selling to and where to find them. It’s essential that you define your target demographic and the most effective ways to communicate with them.
  • A marketing plan. How are you planning to market your business? Establish a primary marketing strategy and decide how much you’re able to spend.
  • Milestones. Where do you see your business in 6 months? 12 months? 5 years? Setting up some initial goals is a great way to stay focused and track your business’ performance over time.

Resource Recommendation:

For a more detailed resource, check out our business planning guide. We run through creating a USP, marketing plan, executive summary, sales forecast, and everything else you’ll want to include.

If you’re feeling overwhelmed by this task, you might consider using business planning software. There’s a ton of reliable programs out there that can help with every aspect of your business plan. Take a look at our top 7 business planning software tools for an overview of our favorites!

Business Ideas: Find the Idea That Fits You Image

Don’t know what kind of business to start?

Our friends over at howtostartanllc.com have compiled a massive list of business ideas, ranging from personal styling to axe-throwing businesses.

If you’re having trouble finding the perfect business idea for you, we encourage you to check them out!

Step 2: Form Your Business

How to Choose a Business Structure

Now that you’ve got a plan, it’s time to choose a structure for your Texas business. There are quite a few options to choose from, and each will differently affect your business’ leadership, liability and taxes. That said, the most popular structures are:

  • LLC (Limited Liability Company): LLCs are the most popular business structure because they offer the protection of a corporation without all the legal upkeep or double taxation. Forming an LLC offers more flexibility when it comes to federal taxes as well!
  • S Corporation: A much more formal structure than an LLC, including up to 100 shareholders, a board of directors and corporate officers. No corporate taxation, though -- all profit/loss goes directly through the shareholders’ personal tax returns.
  • C Corporation: C corps are organized similarly, but there’s no limit to the number of shareholders you can have, and you’ll face double taxation. This means the business and the shareholders are both required to pay taxes on the profits. (Read our guide for more information on forming a corporation in Texas.)
  • Sole Proprietorship: Definitely the path of least resistance, but it comes with some risk in terms of liability. If you’re operating without any partners and haven’t registered a formal business structure, you’re automatically classified as a sole proprietor. No need to file formation documents, although you may benefit from filing a DBA.

If you’re unsure which structure is right for you, head over to our comparison guide for a more detailed look at each.

Resource Recommendation:

Once you’ve decided on a structure, you’ll need to take care of all the legal paperwork -- which can be a pretty involved process. If you don't have time to handle it all on your own, there are some excellent incorporation services that can help you.

Step 3: Tackle License & Tax Obligations

Small Business Taxes

Depending on the nature of your business, you may require a variety of different licenses and permits to legally operate in Texas. With that in mind, here are a few resources for you to check out to ensure your business is compliant with all federal, state and local requirements:

  • Federal: You can find a ton of helpful information on federal licenses and permits on the Small Business Association website. As far as federal taxes go, head straight to the IRS business taxes page.
  • State: The SBA also offers state-specific guides, so check out their Texas guide for all the information you’ll need on Texas business licenses, permits and registration. You can also head directly to the Texas SOS website to get the ball rolling!
  • Local: For information on municipal business requirements, contact your local chamber of commerce.

Resource Recommendation:

The complexity of this process will depend on the nature of your business activity. If you find that your business requires a variety of special permits and licenses, you may benefit from using a business license service. These companies will tackle all of the research on federal, state and local requirements on your behalf!

Step 4: Separate Your Personal and Business Assets

Best Business Bank AccountUsing dedicated business banking and credit accounts is essential for personal asset protection.

Now that you’ve made it through registering and setting up taxes and licensing for your business, you’ll need to take steps to protect your personal assets and establish your business as an independent entity.

When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your business is sued. In business law, this is referred to as piercing your corporate veil.

You can go a long way in protecting your assets with these three steps:

  1. Open a business bank account.

A business bank account separates your personal assets from your company's assets, which is necessary for personal asset protection. A designated business bank account also makes accounting and tax filing easier.

To open up a bank account for your business, you’ll need to obtain an EIN (Employer Identification Number). You’ll use your EIN in place of your social security number so that this account is completely separate from your personal finances. After this, start doing your research on various business bank accounts. Local options, like PlainsCapital and Texas Trust Credit Union, and national banks, like Chase, both have their perks.

Get $200 when you open a business checking account with Chase. Learn more

  1. Get a business credit card.

A business credit card helps you separate personal and business expenses. A business credit card will also build your company's credit history, which can be useful to raise capital later on.

Learn about the best small business credit cards here.

  1. Designate an authorized representative.

Make sure all documents are signed by a representative of your LLC and not by you (or other LLC members) directly. This will help separate you from liability incurred by the LLC.

  1. Keep your accounting and bookkeeping up to date

Make sure to sync up your banking and credit card accounts with an accounting software like QuickBooks as soon as you get the chance. It’s never too soon to start organizing your business’ finances!

Step 5: Finance Your New Business

How to Choose a Business Location

With a bit of research, you’ll realize that there are tons of financing opportunities out there. From angel investors to microloans to crowdfunding, there’s funding to be found -- but not every funding method is right for every business.

I highly recommend reading about the Texas Product Development and Small Business Incubator Fund and the Capital Access Program.

Resource Recommendation:

In addition to the state-specific resources above, we encourage you to check out our guide on how to finance a business. We outline all of the major funding strategies and when to choose them!

Step 6: Build A Brand

How to Finance a Business

Now that you’ve taken care of everything above, it’s time to work on building your brand. Tons of factors play into your brand image, but two of the big ones are your business logo and website.

When you're ready to create your business logo, keep the following goals in mind:

  • Capture the essence of your business. Aim for a design that reflects the core mission of your company.
  • Differentiate yourself. Scope out your direct competitors’ logos and consider heading a different direction to help you visually stand out in the market.
  • Make it memorable. Select a sleek, bold design that will leave a lasting impression in people’s minds.
  • Hire a professional. This is a huge step for your business, so it’s worth investing some money to get your logo professionally done. (Sites like Fiverr can be great for this.)

For a more in-depth look at business logo design, check out our guide to choosing the perfect logo!

Resource Recommendation:

Again, another hugely important aspect of your brand image is your business website -- but that doesn’t mean you have to build a website from the ground up. A simple way to craft a professional, inviting website is to use an existing web-building platform. These services can save you the time and money involved in building a site from scratch.

Step 7: Market Your Business

Social Media ChannelThis last step is one that never really ends: marketing your business. We could talk for hours on this topic, but instead here are just a few things to get you started on the right foot:

  • Identify and locate your target market. To effectively market your business, you need to know exactly who you’re selling to and where to find them. For example, if you’re planning on doing social media marketing, you’ll need to identify which platforms your target market is most active on.
  • Quality over quantity. There are countless marketing strategies out there, and too many entrepreneurs make the mistake of trying to do all of them at once. Instead of trying to succeed at content marketing, social media, SEO and email campaigning simultaneously, pick one or two and put your full effort behind them.
  • Be willing to evolve. Once you’ve established a solid marketing strategy, stick with it long enough to see if your efforts pan out. But, if they don’t, be willing to make any necessary changes to successfully engage with your target market.
  • Don’t get distracted by vanity metrics. Sure, it’s great to get clicks, likes and views, but if your efforts aren’t generating any sales, it’s time to adjust your strategy.
  • Leverage software. Luckily there are dozens of free/inexpensive programs designed to aid busy entrepreneurs like you. From scheduling social media activity to calculating ROI, there’s a variety of ways to use software to your advantage. Marketing a business is a huge undertaking, so keep an eye out for ways to lighten your load. (Specific resources listed in our guide below!)

Resource Recommendation:

There’s so much more to say on this subject, but we won’t get into it here. We encourage you to read our definitive guide for a more detailed look at the art of marketing!

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