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Starting a business venture can be an exciting journey filled with fulfillment. However, navigating the process of registering your business might seem daunting, especially for first-time entrepreneurs. But with the right support and resources, getting your business registered in Texas can be made easy and stress-free.
In this blog post, our goal is to provide you with a detailed, step-by-step guide to help you smoothly register your business in Texas. We’ll also share useful tips and resources to simplify the process, whether you’re launching a new venture or formalizing an existing one, walking you through seven straightforward steps.
Understanding the potential challenges of business registration, we’ve curated a selection of top-notch business registration services, such as Northwest Registered Agent, aimed at aiding you in the process.
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How to Register Your Business in Texas in 7 Simple Steps
Registering a business in Texas is straightforward when you know what to do. Follow these 7 steps to get your Texas-based business up and running as quickly as possible.
Step 1: Choose Your Business Structure
The best choice for your business structure depends on the type of business you’re starting and your expansion plans. We’ve already mentioned the different types of incorporated and unincorporated businesses that you can choose from in Texas, but let’s take a closer look at each of these options and how they function.
Keep in mind that you’ll only need to register your business with the Texas Secretary of State if you choose a structure that requires incorporation, such as the following.
Sole Proprietorship
A sole proprietorship is the simplest business structure in Texas, where the owner and the business are legally considered the same entity. This means the owner is personally responsible for the business’s debts and liabilities. It’s easy to set up and has minimal legal and administrative requirements. In Texas, you don’t need to register your sole proprietorship with the state, but you may need to obtain local permits or licenses.
General Partnership
A general partnership is a business owned by two or more people who share in the profits and losses. Each partner is personally liable for the business’s debts and legal obligations. In Texas, you don’t need to register a general partnership with the state, but you may need to file a “Texas Assumed Name Certificate” (DBA) in the county where your business is located.
Limited Partnership (LP)
In Texas, a limited partnership consists of one or more general partners who manage the business and have unlimited personal liability and one or more limited partners who provide capital but have limited liability. To create an LP in Texas, you must file a “Certificate of Formation Limited Partnership” with the Texas Secretary of State.
Limited Liability Company (LLC)
An LLC is a flexible business structure that combines the liability protection of a corporation with the tax benefits and simplicity of a partnership. In Texas, you need to file a “Certificate of Formation Limited Liability Company” with the Texas Secretary of State and create an Operating Agreement to outline the company’s management and ownership structure.
Corporation
A corporation is a legal entity separate from its owners (shareholders) that offers limited liability protection. There are two types of corporations in Texas:
- C-corporations
- S-corporations
To create a corporation in Texas, you must file a “Certificate of Formation For-Profit Corporation” or “Certificate of Formation Nonprofit Corporation” with the Texas Secretary of State, depending on your business type. Corporations require more formalities, such as creating bylaws, issuing stock, and holding regular board and shareholder meetings.
Choose the business structure that best suits your needs based on liability protection, taxation, and management requirements. Consult with a legal or business professional if you need assistance making this decision.
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Step 2: Select a Unique Business Name
In Texas, there are three ways that you can name your business; by registering a legal entity name, a trademark, or by registering a legal name and operating under a different one. Naming rules and regulations differ from state to state, so you’ll need to check the requirements for Texas.
Similar to incorporating your business, the route you choose for naming your business in Texas will depend on your entity’s needs and circumstances.
You may want to follow all three routes so that no one else can use your name, but you can also simply choose one of the three options. Although it’s not a requirement, it will probably make sense for you to use the same name for each registration method.
Let’s take a closer look at each of the naming options in Texas:
Legal Entity Name
In Texas, businesses must register a legal entity name, which is what the state uses to identify the company. Entity names must be unique, so you’re protected from the possibility of another business having the same name as yours.
Texas naming laws have guidelines relating to company suffixes (e.g., LLC, LP, or Corp) and require that the name reflects the type of business being registered. You can check for name availability using the Texas Secretary of State’s SOS Direct database.
Trademark
A trademark in Texas is a form of intellectual property that protects a business name or logo at a national level. To safeguard a name or logo, it’s crucial to conduct a trademark search in the USPTO database to ensure it’s not already registered.
Once the trademark is registered, it prevents others from using the same or similar name or logo for similar goods or services and provides nationwide protection. Obtaining a trademark does not automatically grant the right to use the name or logo in all circumstances.
Doing Business As (DBA)
In Texas, you also have the option of registering your business under one ‘official’ name and operating under another. This is known as a Doing Business As (DBA) name. You need to file an Assumed Name Certificate (DBA) with the county clerk’s office in the county where your business is located. These names are subject to federal trademark laws, but there’s no requirement for a DBA to be unique at the state level.
By understanding and considering these naming options, you can successfully register your business name in Texas and protect your brand identity.
Step 3: Consider Taxes and Other Costs in Texas
Texas LLCs are required to pay a variety of taxes, including sales tax, franchise tax, and estimated income tax. Here are some details about the taxes an LLC in Texas may have to pay:
- Sales Tax: Texas has a statewide sales tax of 6.25%. The combined sales tax rate can be up to 8.25%, which includes the state sales tax, local sales tax, and special district sales tax.
- Franchise Tax: Texas levies a franchise tax on all corporations, including LLCs. The franchise tax is $300 per year.
- Estimated Income Tax: Texas LLCs are required to pay estimated income tax quarterly based on the LLC’s net income. The estimated income tax rate is based on the LLC’s federal income tax rate.
- Employer Payroll Taxes: All employers in Texas are required to withhold federal taxes from their employee’s wages. The employer payroll tax rate is 6.2%.
- Annual Report: Texas LLCs are required to file an annual report with the Texas Secretary of State. The annual report fee is $200. LLCs that fail to file their annual report may be subject to fines.
By understanding the taxes an LLC in Texas may have to pay, LLC owners can ensure that they’re in compliance with state law and avoid penalties.
To make the registration process easier, business owners in Texas can use online services like ZenBusiness. ZenBusiness offers a variety of services to help entrepreneurs register their businesses, including filing with the Secretary of State, obtaining an Employer Identification Number (EIN), and creating an operating agreement. They can also provide ongoing compliance support to help businesses stay in good standing with the state.
Step 4: Register and Acquire Licenses and Permits in Texas
To operate your business in Texas, it’s important to obtain the necessary licenses and permits. Here are the key requirements:
- Tax Registration: If you’re selling goods in Texas, you must apply for a sales tax permit with the Comptroller of Public Accounts (CPA). You can register online or on paper.
- Employer Identification Number (EIN): If your business has employees or is taxed separately from you, you must obtain a federal EIN from the IRS. You can get your EIN by completing an online application on the IRS website. There is no filing fee.
- Regulatory Licenses and Permits: These cover areas such as health and safety, the environment, building and construction, and specific industries or services. You can find guidance on state licenses and permits from the SOS Guides and Resources webpage. Many business licenses and permits in Texas are issued at the city or county level. For information about these local licenses and permits, check the websites for any cities or counties where you will do business.
- Professional and Occupational Licenses: These cover people who work in various fields. The Texas Department of Licensing and Regulation handles licensing for certain specialized professions and industries. Businesses that provide professional services generally must apply for a Certificate of Authority through the Secretary of State. You can apply through the SOSDirect website.
Here are some additional tips for applying for Texas licenses and permits:
- Start the process early. It can take several weeks or even months to obtain all of the necessary licenses and permits.
- Be prepared to provide documentation. You will need to provide documentation such as your business name, address, and contact information.
- Pay the required fees. There are fees associated with obtaining most licenses and permits.
- Follow the instructions carefully. Make sure you follow all of the instructions carefully when applying for licenses and permits.
By following these tips, you can ensure that the process of applying for Texas licenses and permits goes smoothly.
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Step 5: Open a Bank Account For Your Business in Texas
As soon as you have your EIN, you can open a business bank account in Texas.
Laws regulating LLPs, LLCs, and corporations make opening a business bank account a requirement. Sole proprietors and unincorporated partnerships, on the other hand, aren’t obliged to have separate personal and business bank accounts.
Opening a business account in Texas is as simple as going to your local bank and filling out the required paperwork. Of course, it’s a good idea to shop around and compare the rates and perks different banks offer before you settle on a particular provider.
Even if you’re operating as a sole proprietor or unincorporated partnership in Texas, it’s a good idea to have a designated company bank account to keep your finances separate from those of your business. If you decide to incorporate your business later on, this will save you the hassle down the line.
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Step 6: Protect Your Intellectual Property in Texas
Depending on the type of company you’re starting in Texas, you may have some valuable intellectual property (IP) that you’ll want to protect.
For example, most businesses want to ensure that their name and logo can’t be copied and used by other entities. Depending on whether your business sells goods or offers a service, you may want to safeguard the design of your products or the works (e.g., writing, designs, or music) that you create.
There are several ways that you can do this in Texas, and it’s helpful to get these applications started as soon as possible so that your IP can’t be used by anyone else.
Trademark
A trademark in Texas is a recognizable symbol, phrase, word, or design that distinguishes a product or service from other similar ones in the market.
To have legal protection, trademarks must be registered through the United States Patent and Trademark Office (USPTO). The registration process typically takes four to six months to complete. Once registered, the trademark is safeguarded throughout the USA, and legal action can be taken against anyone who uses it without permission.
In Texas, businesses can protect their trademarks by registering them with the USPTO. This not only helps protect their brand and reputation but also provides legal recourse against unauthorized use of the trademark.
Copyright
In Texas, original works of authorship, such as literary, dramatic, musical, artistic, and certain other intellectual works, are protected by copyright law. This includes written content, software, web content, films, sound recordings, images, and other forms of creative expression.
When you create a new work in Texas, copyright protection is automatically granted to you as the creator of the work. As the owner of the exclusive rights to distribute, reproduce, create derivative works, and sell intellectual property, you have the legal authority to control the use of your work.
However, you may choose to register your copyright with the U.S. Copyright Office for additional legal protection and evidence of ownership. Registering your copyright in Texas can help protect your work against infringement and provide a way to enforce your rights in court if necessary.
Patent
If you invent a new product or piece of machinery in Texas, you’ll want to patent it. A patent gives the holder exclusive rights over an item and prevents anyone else from making, selling, or importing the patented item for a specified period.
The patent process is complex and can take up to five years to complete, so it’s best to get an early start if you have a unique invention that you’d like to protect. Patent applications are submitted to the United States Patent and Trademark Office (USPTO).
By protecting your intellectual property in Texas, you can safeguard your brand, products, and creations, ensuring that your business maintains a competitive edge and continues to grow.
Step 7: Set Up Your Payment Infrastructure in Texas
To ensure that your Texas-based business is ready to start serving customers as soon as it’s registered, you’ll want to ensure that you have an easy, hassle-free way to accept payments.
There are several payment processing services available that offer user-friendly interfaces and easy integration with your website or point-of-sale (POS) system. Some popular options include Square, Stripe, and PayPal. These systems are flexible and easy to set up and customize to meet your business goals.
These payment processors allow you to accept a wide variety of payment methods, including credit and debit cards, ACH transfers, digital wallets like Apple Pay and Google Pay, and many more. By choosing a reliable payment processing service, you can let your customers pay with their favorite methods via a secure platform, ensuring a smooth transaction experience for both you and your clients.
In addition to choosing a payment processor, you’ll also want to establish your sales tax compliance in Texas. This involves obtaining a Texas Sales and Use Tax Permit from the Texas Comptroller’s Office, which allows you to collect sales tax on taxable goods and services.
Once you have set up your payment infrastructure, your Texas-based business will be well-prepared to serve customers and generate revenue efficiently and securely.
By following these steps, you’ll be on your way to establishing a legally compliant business in Texas.
Top 5 Business Registration Services for Texas Entrepreneurs
When it comes to registering a business in Texas, there are several business registration services available to help entrepreneurs and small business owners. These services provide a range of solutions to help businesses get off the ground and stay compliant with state and federal regulations. Here are some of the best business registration services available for Texas entrepreneurs:
ZenBusiness
ZenBusiness is an online business registration service that specializes in business formation, registered agent services, annual report filing, and more. They offer affordable pricing and packages that include personalized support and resources to help businesses stay compliant and grow. They have a user-friendly website and provide a streamlined process to make it easy for entrepreneurs to register their businesses in Texas.
Swyft Filings
Swyft Filings is a popular LLC registration service that offers fast and easy business formation, including LLC formation, incorporation, and compliance. They provide personalized support and resources to help businesses navigate the formation process and stay compliant with state and federal regulations. Swyft Filings has a user-friendly website and provides affordable pricing to make the registration process easy for entrepreneurs.
Tailor Brands
Tailor Brands is an online branding and design service that helps businesses create a professional and cohesive brand identity. They offer a range of branding packages that include logo design, business card design, and social media branding.
Tailor Brands also provides a suite of design tools and resources to help businesses create and customize their own branded assets. While not a traditional business registration service, Tailor Brands can help businesses create a professional brand image to attract customers.
Northwest Registered Agent
Northwest Registered Agent is an online business registration service that specializes in registered agent services, compliance management, and document filing. They have a strong reputation for quality and exceptional customer service, and they offer personalized support to help businesses stay compliant with state and federal regulations. Northwest Registered Agent provides a range of business formation services for LLCs, corporations, and nonprofits.
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Bizee (Previously Incfile)
Bizee is an online business registration service that offers fast and affordable business formation services. They offer a range of packages that include registered agent services, compliance management, and document filing.
bizee platform is user-friendly and streamlined, making the business registration process easy and hassle-free. They also provide ongoing support and resources to help businesses stay compliant and grow.
Each of these business registration services has its unique features and benefits to help entrepreneurs register their businesses in Texas. By researching and comparing these services, entrepreneurs can find the best one to meet their specific needs and make the registration process easy and efficient.
Business Registration Laws in Texas
Registering a business in Texas requires submitting the proper legal documents based on your chosen business structure. To establish a corporation, you must file a Certificate of Formation with the Texas Secretary of State, which is a vital document that officially registers your business within the state.
Submitting a Certificate of Formation in Texas
To establish a corporation in Texas, initiated by filing a Certificate of Formation. You will need to supply the following details:
- Business name
- Purpose of the business
- Names of at least two directors
Filing fees: $300 for a for-profit corporation and $25 for a nonprofit corporation
Obtaining Licenses and Permits in Texas
Businesses with employees must acquire an Employer Identification Number (EIN) issued by the IRS, also known as Form SS-4. In some instances, they may also need to register for additional tax-related licenses and permits:
- Sales tax sellers’ permits
- Unemployment insurance tax
- Income tax withholding
Employees must complete W-4 exemption certificates before or upon starting their job. Employers are responsible for filing these certificates with the IRS and submitting annual tax and wage information to show withholdings. For more in-depth information on registration processes and possible employer tax obligations, contact the Texas Online Tax Registration Application.
Other general business licenses may be required; therefore, it’s crucial to consult the State of Texas website. Local cities and/or counties have specific regulations, which can include various permits:
- Building
- Occupational
- Health
- Alarm
- Zoning
- Signage
Worker’s Compensation and Disability Insurance
Texas employers are not mandated to provide temporary disability insurance. However, employees may benefit from this coverage in case of a non-work-related injury or illness. Employers are also not required to carry workers’ compensation insurance.
Those who do not offer coverage must file with the Texas Department of Insurance, Division of Worker’s Compensation, notifying them of their non-coverage status and providing data on work-related illnesses and injuries.
Alternative Business Registration Methods in Texas
In Texas, there are several alternative business registration methods available in addition to the traditional methods. These alternative methods can provide more flexibility and convenience for business owners. Here are a few options:
Online Registration
The Texas Secretary of State’s office offers an online registration service called SOSDirect. It allows you to register a business entity, such as a corporation, Limited Liability Company (LLC), or limited partnership, electronically. You can access SOSDirect through the Secretary of State’s website.
Professional Service Companies
If you’re planning to establish a professional service company, such as a law firm or architectural practice, you may have the option to register as a professional corporation (PC) or Professional Limited Liability Company (PLLC). These structures are specifically designed for licensed professionals and have additional requirements compared to regular corporations or LLCs.
Assumed Name (DBA) Registration
If you want to conduct business under a name other than your legal entity’s name, you can register an assumed name, also known as a “doing business as” (DBA) name. This allows you to operate under a different name while maintaining your legal entity’s structure. Assumed name registration is typically handled at the county level. You’ll need to contact the county clerk’s office where your business is located for specific instructions and requirements.
Nonprofit Organizations
If you’re forming a nonprofit organization in Texas, you’ll need to follow specific registration procedures with the Texas Secretary of State’s office. Nonprofits are subject to unique regulations and may be eligible for certain tax exemptions.
Franchise Registration
If you’re planning to establish a franchise business in Texas, you’ll need to comply with state-specific regulations. The Texas Business Opportunity Act requires franchisors to register their franchise offerings with the Texas Secretary of State’s office and provide specific disclosures to potential franchisees.
It’s important to note that while these alternative registration methods exist, you should consult with an attorney or professional advisor to ensure compliance with all relevant laws and regulations specific to your business type. They can provide guidance tailored to your specific circumstances and help you navigate the registration process effectively.
Benefits of Registering Your Business in Texas
Registering your business in Texas can bring a variety of benefits, including:
- Limited Liability Protection: By registering your business as a limited liability company (LLC) or corporation, you can limit your liability for any debts or legal issues that arise within the business.
- No Personal Income Tax: Texas is one of only seven states that does not have a personal income tax, which can be a significant advantage for business owners who want to keep more of their earnings.
- Business-Friendly Environment: Texas is known for its business-friendly environment, with low regulations and a favorable tax climate that encourages entrepreneurship and economic growth.
- Access to Capital: Texas has a robust economy and a variety of funding sources for businesses, including venture capital firms, angel investors, and traditional lending institutions.
- Skilled Workforce: Texas has a large and skilled workforce, with many workers trained in industries such as energy, technology, and healthcare.
- Infrastructure: Texas has a modern and efficient infrastructure, including airports, highways, and ports, which makes it easy for businesses to move goods and access markets.
- Quality of Life: Texas is known for its high quality of life, with a low cost of living, excellent schools, and diverse cultural offerings, which can make it an attractive location for employees and business owners alike.
Overall, registering your business in Texas can provide various benefits that can help your company succeed and grow.
Is Business Registration Required in Texas? Find Out Here
Yes, most businesses operating in Texas are required to register with the state. The specific registration requirements vary depending on the type of business entity, the nature of the business, and other factors. Some common types of registration include obtaining a Texas Sales and Use Tax Permit, registering a Texas Limited Liability Company (LLC) or Corporation, and obtaining professional licenses or permits for certain industries.
It’s important to research the specific requirements for your business and comply with all registration obligations to avoid legal and financial consequences.
How to Register Your Business in Texas – Frequently Asked Questions
What Do I Need to Register a Business in Texas?
To register a business in Texas, you will need to choose a business name, determine your legal structure, and file the necessary paperwork with the Texas Secretary of State. The specific requirements will depend on the type of business you’re starting, but generally, you will need to file a Certificate of Formation, appoint a registered agent, and obtain any necessary licenses or permits.
How Much Does It Cost to Register a Company in Texas?
The cost of registering a company in Texas depends on the legal structure of your business and the type of filing you’re submitting. The filing fee for a Certificate of Formation for a Texas LLC is $300. There may be additional fees for other filings and permits required for your business.
Can a Foreigner Start a Business in Texas?
Yes, foreigners are allowed to start a business in Texas as long as they meet the legal requirements for doing so. Foreign business owners may need to obtain the appropriate visas or work permits and may need to register their businesses with additional state and federal agencies.
Do I Need to Register My Online Business in Texas?
If you’re operating an online business in Texas, you may be required to register your business with the state, depending on the type of business you’re operating and the nature of your online activities. Sole proprietorships and partnerships may not need to register, but corporations and LLCs likely will.
You may also need to obtain certain permits and licenses, such as a sales tax permit from the Texas Comptroller of Public Accounts.
It’s important to consult with a qualified attorney or accountant to determine the specific requirements for your business in Texas. They can help you navigate the complex rules and regulations governing businesses in the state and ensure that you comply with all applicable laws and regulations.
Bottom Line on How to Register Your Business in Texas
Enrolling your business in Texas is essential to ensure compliance with state laws and regulations. While there may be initial hurdles, diligently following the required procedures and meeting specific criteria lays a strong foundation for your venture.
Selecting a business name and legal structure that meets the Texas Secretary of State’s guidelines, completing paperwork, and obtaining any required licenses and permits for your industry and location are vital steps. Utilizing a business registration service like Northwest Registered Agent can streamline this process and ensure full compliance.
Investing time in accurately registering your Texas business is a proactive step to avoid legal and financial issues, setting your venture up for long-term success.
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About the author
Dr. Gabriel O'Neill, Esq., a distinguished legal scholar with a business law degree and a Doctor of Juridical Science, is a leading expert in business registration and diverse business departments. Renowned for his academic excellence and practical insights, Dr. O'Neill guides businesses through legal complexities, offering invaluable expertise in compliance, corporate governance, and registration processes.
As an accomplished author, his forthcoming book is anticipated to be a comprehensive guide for navigating the dynamic intersection of law and business, providing clarity and practical wisdom for entrepreneurs and legal professionals alike. With a commitment to legal excellence, Dr. Gabriel O'Neill, Esq., is a trusted authority dedicated to empowering businesses within the ever-evolving legal landscape.