How to Start a Business in Texas

Fact-checked by the LegalGlass editorial team against primary sources · Published Aug 20, 2026 · Last updated Aug 20, 2026

Starting a business in Texas means choosing a structure, clearing the name, and filing with the Texas Secretary of State - $300 for an LLC Certificate of Formation (Form 205). You then get a free federal EIN and register with the Texas Comptroller. Texas has no personal income tax.

Quick Answer

LLC formation fee: $300 - Certificate of Formation, Form 205
Assumed name certificate: $25 - Form 503
Change of registered agent: $15 - Form 401
Foreign LLC registration: $750 - Form 304
Franchise tax no-tax-due threshold: $2,650,000 for the 2026 report
Franchise report due: May 15 each year
Sales tax permit: Free from the Texas Comptroller
Personal income tax: None in Texas

Step 1: Choose a Business Structure

The structure decision determines whether you file anything with the state at all. A sole proprietorship and a general partnership require no formation filing with the Texas Secretary of State - you simply begin operating - but they give the owner no liability shield. A limited liability company or a corporation exists only once its formation document is filed, and only those entities separate the owner's personal assets from business liabilities.

For most new Texas small businesses the practical choice is between operating as a sole proprietor and forming an LLC. The LLC costs $300 to create and carries an annual franchise tax report; the sole proprietorship costs nothing and carries none, but exposes personal assets. Read what an LLC is and S-corp vs LLC before deciding, since the tax election is a separate question from the legal structure.

Step 2: Clear and Secure the Name

Texas will reject a formation document whose name is not distinguishable from an existing entity on the Secretary of State's records. Search first - see Texas business entity search - and confirm through SOSDirect before you pay.

If you will operate under a name other than your legal name or the entity's registered name, file an assumed name certificate. Texas uses Form 503, and the Secretary of State's fee schedule sets the fee at $25. This is the filing a sole proprietor makes to trade under a business name, and the filing an LLC makes to operate a second brand. See Texas DBA filing and what a DBA is. Registering a name in Texas is a registry act and confers no nationwide brand rights; for that, see trademark registration.

Step 3: File the Formation Document

For an LLC, the document is the Certificate of Formation - Limited Liability Company, Form 205, filed with the Texas Secretary of State. The Secretary of State's fee schedule sets the filing fee at $300. You can file through SOSDirect, the state's online filing system, or by mail or fax.

Form 205 asks for the LLC's name, whether it is member-managed or manager-managed, the initial governing persons, the registered agent and registered office, the organizer, and any delayed effective date. The LLC exists once the certificate is filed - not when you decide to start the business - so sign leases and client contracts in the entity's name only after filing. See Texas certificate of formation, Texas articles of organization, and the detailed walkthrough at how to form an LLC in Texas.

Step 4: Appoint a Texas Registered Agent

Every Texas filing entity must continuously maintain a registered agent and a physical Texas registered office. The agent must consent to the appointment and is the address where service of process and official state notices are delivered. A post office box alone does not satisfy the registered office requirement.

Changing the agent later is its own filing: Texas Form 401, Change of Registered Agent and/or Registered Office, with a $15 fee for a for-profit LLC. Because the agent address is where a lawsuit arrives, keeping it current is the single cheapest piece of risk management in the entity's life. See Texas registered agent requirements and the national registered agent guide.

Step 5: Get an EIN and Open a Bank Account

An Employer Identification Number is the business's federal tax ID. The IRS issues it at no charge. A multi-member LLC, any business with employees, and any entity taxed as a corporation must have one; a single-member LLC with no employees usually wants one anyway because banks require it to open a business account and because it keeps the owner's Social Security number off vendor paperwork. See how to get an EIN. Owners who are not eligible for a Social Security number should read what an ITIN is.

Open the business bank account before the first dollar moves. Commingling personal and business funds is the most common factual pattern used to argue that an LLC's liability shield should be disregarded, which undoes the reason you paid $300 to form it.

Step 6: Register with the Texas Comptroller

The Texas Comptroller of Public Accounts handles two things most new businesses need.

Franchise tax. Texas imposes a franchise tax on taxable entities, including LLCs. For the 2026 report the no-tax-due threshold is $2,650,000 in annualized total revenue, set under Tax Code Section 171.006. An entity at or below that threshold owes no franchise tax and, for reports due since 2024, is not required to file a Franchise Tax Report - but it must still file an information report each year, either a Public Information Report or an Ownership Information Report. Franchise tax reports are due May 15; if May 15 falls on a Saturday, Sunday, or legal holiday, the next business day becomes the due date.

Sales and use tax. If you sell or lease taxable goods or provide taxable services in Texas, you need a Texas sales and use tax permit. The Comptroller issues the permit at no charge. See Texas LLC tax filing requirements, Texas annual report and franchise tax, and the national business tax overview.

Step 7: Licenses, Permits, and Employees

Texas issues no single general state business license. Licensing is by occupation and by locality instead, which means the answer to "what license do I need" depends entirely on what you do and where you do it. Work through three layers:

State occupational licensing - regulated trades and professions are licensed by the relevant Texas agency, not by the Secretary of State.
City and county permits - zoning, health, signage, and certificate of occupancy requirements are local.
Federal permits - a narrow set of federally regulated activities.

See business licenses for how to work the three layers. If you will hire, register with the Texas Workforce Commission for state unemployment tax, set up federal employment tax withholding and deposits with the IRS, and report new hires as required. Employment obligations begin with the first employee, not at a revenue threshold.

What It Costs to Start in Texas

Item	Form	Cost	Agency
LLC Certificate of Formation	Form 205	$300	Secretary of State
Assumed name certificate (DBA)	Form 503	$25	Secretary of State
Change of registered agent / office	Form 401	$15	Secretary of State
Foreign LLC registration	Form 304	$750	Secretary of State
Certificate of termination (Texas entity)	-	$40	Secretary of State
Sales and use tax permit	-	$0	Comptroller
Franchise tax (revenue at or below threshold)	PIR / OIR	$0 tax, report still required	Comptroller
Federal EIN	Form SS-4	$0	IRS

The striking number is the $750 foreign LLC registration fee - two and a half times the $300 domestic formation fee. A business genuinely operating in Texas should generally form in Texas rather than form elsewhere and register in. Cross-state comparison is at how much an LLC costs.

Ongoing Texas Obligations

Texas does not require LLCs to file an annual report with the Secretary of State the way many states do. The recurring obligations run through the Comptroller instead:

Annual franchise tax filing by May 15 - a Franchise Tax Report if revenue exceeds the threshold, and in all cases the Public Information Report or Ownership Information Report.
Sales tax returns on the frequency the Comptroller assigns, if you hold a permit.
Employment tax deposits and returns, federal and state, if you have employees.
Registered agent maintenance - keep the agent and registered office current.
Internal records - adopt and maintain a company agreement. See Texas LLC operating agreement.

When the business ends, file a certificate of termination with the Secretary of State ($40 for a Texas entity), obtain the Comptroller's tax clearance, close tax accounts, and file final federal returns. See how to dissolve an LLC. Terms are defined in the glossary, and federal self-employment tax on pass-through income can be estimated with the self-employment tax calculator.

Frequently Asked Questions

How much does it cost to start a business in Texas?

An LLC costs $300 (Form 205). An assumed name certificate is $25. A sales tax permit and a federal EIN are both free.

Do I need to register a sole proprietorship in Texas?

Not with the Secretary of State, but you must file an assumed name certificate to trade under a name other than your own.

Does Texas require a general business license?

No statewide general license. Licensing is by occupation and by city or county.

What is the Texas franchise tax threshold for 2026?

$2,650,000 in annualized total revenue. Below it no tax is due, but an information report is still required.

When is the Texas franchise tax report due?

May 15, moving to the next business day if that date falls on a weekend or legal holiday.

Does Texas have a state income tax?

No personal income tax. Texas uses the franchise tax and sales and use tax instead.

Sources

Texas Secretary of State - Filing Fee Schedule ($300 Form 205; $25 Form 503; $15 Form 401; $750 Form 304; $40 certificate of termination).
Texas Secretary of State - Formation of Texas Entities FAQs.
Texas Secretary of State - Business Organizations Forms (Form 205, Form 503, Form 401).
Texas Comptroller - Franchise Tax.
Texas Comptroller - Requirements for Reporting and Paying Franchise Tax (May 15 due date; information report requirement).
Texas Comptroller - 2026 Franchise Tax Report Forms ($2,650,000 no-tax-due threshold).
Texas Comptroller - Texas Sales and Use Tax Permit (no fee).
Texas Statutes - Business Organizations Code, Title 1, Chapter 5 (entity names).
Texas Statutes - Tax Code Chapter 171, Franchise Tax.
Texas Workforce Commission - Unemployment Tax Services (new employer registration).
IRS - Get an Employer Identification Number (free EIN).
IRS - Limited Liability Company (LLC) (federal classification).

LegalGlass provides general information for educational purposes and is not legal advice, is not a law firm, and is not a substitute for advice from a licensed attorney or tax professional. Laws, fees, and thresholds change; verify current amounts with the Texas Secretary of State and the Texas Comptroller of Public Accounts before acting.