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!

Quick Note: If you still need a business idea and want to explore some great options, Business Ideas by TRUiC has an awesome resource for helping you find the right one.

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: Create a Financial Foundation

Best Business Bank AccountIn order to start out on solid financial footing, it’s important that you keep your personal and professional expenses entirely separate. No running your business out of your personal bank account!

If you’ve already slipped up on this, there’s no need to panic. There’s still time to separate your finances, simplify your taxes, and take advantage of all the benefits of having a business bank account.

A couple pieces of advice:

  • Shop around Texas-based banks and credit unions like PlainsCapital and Texas Trust Credit Union and find out what they have to offer. Local banks often have great customer service and perks for small businesses, so it’s worth it to do a little research on local options.
  • Don’t disregard the big banks. Read up on what features they offer small businesses and compare them to your local options. Remember to consider online banking capabilities, national ATM accessibility, customer service, or whatever your top priorities are.

Take a peek at our top business bank accounts to get started on your research!

Resource Recommendation:

While separating your personal and business expenses is an important first step, it’s also essential to properly manage your finances going forward. Investing in a reliable accounting software program is a key step toward effectively monitoring your finances — especially if you haven’t brought in an accountant yet.

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.

That said, here are a few resources to check out:

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!

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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!