← All Posts

How to Start a Business in Texas in 2026

How to Start a Business in Texas in 2026

Texas is one of America's top states for small business. No state income tax, a growing population, and a business-friendly regulatory environment make it an excellent place to launch.

Here's how to start a business in Texas the right way.

---

Why Texas Is Great for Business

  • No state income tax, you keep more of what you earn
  • Massive market, 30+ million people, multiple major metro areas (Austin, Houston, Dallas, San Antonio)
  • Low cost of doing business compared to California or New York
  • Strong startup culture, Austin especially has become a major tech and entrepreneurship hub
  • Growing population, Texas is one of the fastest-growing states, meaning expanding customer base

The tradeoff: Texas has a franchise tax (called the Texas Margin Tax) that applies to most businesses, though small businesses often owe nothing.

---

Step 1: Choose Your Business Structure

LLC is the right choice for most Texas small businesses:

  • Protects personal assets from business debts
  • Simple pass-through taxation (no corporate tax at the entity level)
  • Easy to operate and maintain

---

Step 2: Name Your Texas Business

Your Texas LLC name must:

  • Be unique in Texas
  • Include "LLC," "L.L.C.," or "Limited Liability Company"
  • Not be deceptively similar to an existing Texas entity

Check availability: Texas SOS SOSDirectTexas SOS SOSDirecthttps://direct.sos.state.tx.us, search business name database

Reserve your name: You can reserve a name for 120 days for $40 if you're not ready to file yet.

---

Step 3: File a Certificate of Formation

File online at [Texas Secretary of State SOSDirect](https://direct.sos.state.tx.us)

Filing fee: $300 (Texas has one of the higher LLC filing fees)

What you'll need:

  • LLC name
  • Registered agent name and Texas address
  • Organizer name and address
  • Management structure (member-managed or manager-managed)

Processing time: 3–5 business days standard; same-day expedited available for an additional fee

---

Step 4: Appoint a Texas Registered Agent

Every Texas LLC needs a registered agent with a physical Texas address. This person receives legal documents on behalf of your business.

Options:

  • Be your own agent (if you have a Texas physical address)
  • Use a service like Northwest Registered Agent or Incfile ($49–$125/year)

---

Step 5: Get Your EIN

Free at IRS.gov/EINIRS.gov/EINhttps://www.irs.gov/businesses/small-businesses-self-employed/apply-for-an-employer-identification-number-ein-online, 10 minutes online, instant result.

---

Step 6: Understand Texas Taxes

No state income tax. Texas is one of nine states with no personal income tax. LLC pass-through income is not taxed at the state level.

Texas Franchise Tax (Margin Tax):

Texas has a franchise tax on businesses with annual revenue over the "no tax due" threshold.

  • No Tax Due Threshold (2026): $2.47 million in annual revenue or less, you file a "No Tax Due" report but pay nothing
  • Tax rates above threshold: 0.375% for retail/wholesale; 0.75% for other businesses
  • Due: May 15 annually

For most new small businesses earning under $2.47M, the franchise tax is essentially zero, but you still must file the annual report.

Sales tax: Texas state sales tax is 6.25%. Combined with local taxes, total rate reaches up to 8.25% in most cities.

---

Step 7: Get Texas Business Licenses and Permits

Texas has no single statewide business license, but you likely need:

Sales and Use Tax Permit: Required if you sell taxable goods or services. Free to register at Texas ComptrollerTexas Comptrollerhttps://comptroller.texas.gov.

City/County business license: Austin, Houston, Dallas, and San Antonio have their own local requirements. Check your city's website.

Professional licenses: Required for contractors, healthcare providers, real estate agents, cosmetologists, food service businesses, and many other professions. Check the Texas Department of Licensing and RegulationTexas Department of Licensing and Regulationhttps://www.tdlr.texas.gov.

---

Total Cost to Start a Texas Business

| Expense | Cost |

|---|---|

| LLC Certificate of Formation | $300 |

| Registered agent (optional service) | $49–$125/year |

| EIN | Free |

| Sales tax permit | Free |

| Annual franchise tax report | Free (if under threshold) |

| Total to start | $300–$425 |

---

Texas Business Resources

  • Texas Secretary of State: sos.state.tx.ussos.state.tx.ushttps://sos.state.tx.us, LLC formation
  • Texas Comptroller: comptroller.texas.govcomptroller.texas.govhttps://comptroller.texas.gov, taxes, sales tax permit
  • Texas Economic Development: gov.texas.gov/businessgov.texas.gov/businesshttps://gov.texas.gov/business, incentives and resources
  • SCORE Texas: Free mentoring in Austin, Houston, Dallas, San Antonio

---

*FoundersPie builds a personalized startup roadmap for Texas entrepreneurs, covering every step from formation to first sale. Start your free Texas business plan →Start your free Texas business plan →https://getfounderspie.com*