State guide
Last updated September 25, 2026
How to start a business in Texas: LLC formation with the Secretary of State, EIN, sales tax permits, franchise tax and local licensing — in the order you actually need them.
Sole proprietorship, LLC, or corporation.
Most first-time Texas owners choose an LLC for liability separation. A sole proprietorship needs no state filing, but your personal assets are exposed. Talk to an attorney or CPA before choosing if you have partners, employees, or outside money.
Search the Texas Secretary of State (SOS) business name database.
Your name must be distinguishable from existing Texas entities. If you'll trade under a different name than your legal one, file an Assumed Name Certificate (DBA) with the SOS and/or your county clerk.
Form 205 for an LLC, filed with the Texas Secretary of State.
Filing is done online through SOSDirect or by mail. Texas charges a filing fee for LLC formation (check the SOS fee schedule for the current amount — it has been $300 for several years). You must also name a registered agent with a physical Texas address.
Free, online, usually issued immediately.
You need an EIN to open a business bank account, hire employees, and file taxes. Apply directly at irs.gov — never pay a third party for one.
Sales and use tax permit, plus franchise tax account.
If you sell taxable goods or services in Texas, you need a sales and use tax permit. It's free to apply. Texas has no personal income tax, but most entities are subject to the franchise tax — small businesses under the annual revenue threshold typically owe no tax while still filing the required report.
Texas has no general statewide business license.
Requirements depend on where and what you operate: food handling permits, health inspections, contractor or cosmetology licensing, signage, zoning, and certificates of occupancy are handled at the city or county level. Check your city's development services department.
Keep business and personal money strictly separate.
Bring your Certificate of Formation, EIN letter, and operating agreement. Mixing funds is the fastest way to undermine the liability protection you just paid for.
General liability, plus anything your industry requires.
Texas is unusual: private employers are not generally required to carry workers' compensation insurance, but non-subscribers must report that status and lose certain legal protections. If you hire, register for unemployment tax with the Texas Workforce Commission.
Fees, thresholds and requirements change. Confirm current amounts with the Texas Secretary of State and the Texas Comptroller of Public Accounts before filing. This guide is general information, not legal or tax advice.
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