How to Start a Company in Texas

This page is a part of the McNair Center's Guide to Small Business in Houston.

This is an overview on how to create a business in Texas. For more comprehensive guidance and assistance, consult the Texas Small Business Handbook.

Basic Process

Step 1: Business Structure and Name

Determine the legal structure of the business and properly file the business name with the state and/or county.

• Search for existing trademarks - Free

• Reserve a name for 120 days:
  • Complete Form 501 located at - $40
  • Or reserve a name online at SOSDirect - $50 per class

• Prepare a certificate of formation:
  • Download the form - $300
  • Or file online at SOSDirect ($300) and prepare the following necessary information:
    • The name and type of entity being formed;
    • The names and addresses of directors and registered agents;
    • The number and value of initial authorized shares;
    • The business purpose for which the entity is being formed;
    • The name and address of the organizer (i.e., the person responsible for incorporating the company);
    • The effectiveness of the filing, which means when you want the document and the entity to become effective; and
    • The signature of the organizer.

Business Filing Fees

Business Type	Filing Fee ($)	State Franchise Tax
Sole Proprietorship	0	Yes
For-Profit Corporation	300	Yes
Professional Corporation	300	Yes
Professional Association	0	Yes
General Partnership	0	No
Limited Partnership	750	Yes
Limited Liability Partnership	200	Yes
Limited Liability Company	300	Yes

Step 2: Tax Responsibilities

Determine the potential tax responsibilities of the new business on the federal, state, and local level.

• Apply for a Employer Identification Number (EIN) (alternatively called Federal Tax Identification Number)
  • Texas requires that an EIN for businesses, which is used for tax purposes.

• Federal Taxes
  • The Internal Revenue Service will identify and determine your tax liability.

• State Taxes
  • The state of Texas imposes a state sales tax on "all retail sales, leases and rentals of goods, and services that are expressly enumerated as taxable under the Texas Tax Code." Additionally, any taxable business chartered, organized, or doing business is subject to a state franchise tax. That said, most small businesses are exempt from this kind of tax.

• Local Taxes
  • Business Inventory Taxes will be collected at the local level, although many municipalities do not tax items that fall under “Goods in Transit Exemption” or the “Freeport Exemption.”

• Other Taxes
  • The Texas Workforce Commission will collect Unemployment Insurance tax from most businesses.

Step 3: Licensing and Permits

Determine necessary licenses, permits, certifications, registrations, and/or authorizations for a specific business on the federal, state, and local level.

• Create bylaws. While Texas does not set out any concrete requirements for a corporation's bylaws, the bylaws usually contain information about internal rules and procedures, responsibilities of officers, the size of the board, how shareholder meetings will be held.[1]
  • You don't have to file these bylaws with the Secretary of State. However, Texas law requires you keep this document at your main office.[2]
  • You can also look up sample Texas bylaws in order to get an idea of what should be included.

• There is no general "business" license in the state of Texas.
• There are different licensing procedures for various professions.
  • The Texas Department of Licensing and Registration has a full list of the specific professions that need additional accreditation.
• You should also contact the local government of the city you are choosing to operate in to find out if there are any specific licensing needed to conduct business.

Step 4: Federal and State Employer Requirements

Determine federal and state employer requirements. There are various laws relating to employment of personnel.

Small business owners must fulfill requirements related to:

• Americans with Disabilities Act requirements
• Equal Employment requirements
• Safety requirements
• Wage and Labor requirements
• New Hire Reporting
• Workers' Compensation Insurance reporting
• Labor Posters placement
• Other relevant requirements

Common Forms and Fees for Texas Small Businesses

Common Forms and Fees

Filing Type	Additional Form(s)	Filing Fee ($)
Certificate of fact		15
Expedited processing of a request for a certified copy or certificate of status or fact		10
Certificate of formation for an entity (except nonprofit corporation, cooperative association, PA or LP).		300
Certificate of formation for a nonprofit corporation	202	25
Certificate of formation for a cooperative association corporation		25
Certificate of formation for a limited liability partnership or LLLP	701, 703	750
Name reservation (120 days) or renewal	501	40
Registration of trademark	901	50 (per class)
Expedited processing of a document submitted for filing (except trademark documents)		25

Payment Methods

Fees may be paid by:

• Check (personal or firm checks accepted) or money order payable to the Secretary of State through a U.S. Bank or financial institution
• Credit card (Credit card payments are subject to an additional statutory convenience fee of 2.7% of amount charged.)
• LegalEaseSM debit card
• Prefunded SOS client account
• Cash (for in-person submissions only)