Thinking about starting a business in Texas? Good call.

They say everything’s bigger in Texas and that includes the opportunities for small businesses. From zero state income tax to a booming economy, Texas is basically handing you the keys to a small business.

But before you hitch your wagon to entrepreneurship, you’ll want to make sure you’ve got your cows in a row (or your paperwork, permits, and plans). That’s where this guide comes in. We’ll walk you through how to start a business in Texas in 2025 without the headache, jargon, or confusion.

Let’s ride.

TL;DR: How to start a business in Texas in 2025

Short on time and just want the highlights?

Here’s your quick-start checklist to get your Texas small business up and running.

Your Texas small business game plan:

• Refine your business idea: Make sure there’s demand, and that it’s got legs in Texas.
  
  
• Draft your business plan and financial roadmap: A good plan = fewer surprises (and fewer emergency coffee-fueled late nights).
  
  
• Choose your business structure: LLC? S Corp? Sole prop? We’ll break it down.
  
  
• Register your business name and entity: Lock it down with the Texas Secretary of State.
  
  
• Apply for licenses and permits: Keep it legal, keep it simple.
  
  
• Open a business bank account and set up payroll: Keep your business money separate from your personal money.

Why Texas business owners love it here:

• Zero state income tax
• Low franchise tax (and sometimes none at all)
• Booming, diverse economy

Want the full, step-by-step breakdown? Saddle up, and keep reading.

Why Texas is a great state for small businesses (and why it matters for you)

Sure, Texas is famous for BBQ, football, and wide-open spaces, but it’s also a heavyweight champ when it comes to small business success. Over 3.1 million small businesses call Texas home, making up a whopping 99.8% of all businesses in the state.

And that’s not just because the brisket is good.

Texas boasts the second-largest economy in the U.S., worth over $2.4 trillion, and it’s been outpacing national economic growth for six straight quarters as of the end of 2023. That’s a lot of yeehaw.

But here’s what makes Texas extra sweet for small business owners:

• No state income tax: Yep, you read that right. Texas lets you keep more of your hard-earned cash (more on this soon).
  
  
• Low (or no) franchise tax: Small businesses earning under $2,470,000 in 2024 and 2025? You pay no franchise tax at all.
  
  
• Business-friendly everything: From fewer regulations to strong consumer spending, Texas is all about rolling out the welcome mat for entrepreneurs.

In short? Texas makes it easier—and cheaper—to get your business off the ground and keep more money in your pocket while you do it.

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Texas taxes for small businesses

Good news: starting a small business in Texas comes with a lighter tax burden than most states.

Here’s what you need to know:

• No state income tax. That’s right. Texas doesn’t take a slice of your personal income or business earnings. Whether you’re a sole proprietor, LLC, or running an S corp, you won’t pay state income tax. Your federal taxes, of course, still apply.
  
  
• Franchise tax? Maybe.
  Texas has what’s called a franchise tax, which is basically a tax for the privilege of doing business in the state. But here’s the kicker:
  
  
  
  • If your revenue is under $2,470,000 in 2024 or 2025, you don’t owe any franchise tax.
    
    
  • If you cross that threshold, the franchise tax kicks in at a low rate (currently 0.375% for retail or wholesale businesses, and 0.75% for others). But hey—that’s still friendlier than most states.
    
    
• No business license tax.
  Unlike some states that nickel and dime you for basic business licenses, Texas doesn’t have a general state business license fee. You may need industry-specific permits, though (we’ll get to that later).
  
  
• Local taxes still apply.
  Depending on where you start your business, you may have to pay local sales tax, property tax, or other municipal fees. Check with your city or county.
  
  

Lower taxes mean more cash in your business account, which can be a game-changer when you’re just getting started. It also makes Texas an especially attractive spot if you’re choosing between states for your new business venture.

Just remember—low taxes don’t mean zero paperwork. You still need to register your business with the state, file the right forms, and keep those records squeaky clean (hint: Homebase can help make payroll and tax paperwork less painful).

Starting a business in Texas: A step-by-step guide

Starting a business in Texas might sound like a lot of forms, fees, and forehead sweat—but it doesn’t have to be. Here’s your down-to-earth, roadmap to get you from idea to open sign.

Step 1: Refine your business idea

Before you jump into LLC forms and logo designs, make sure your idea is actually something people want (and that you want to spend your nights and weekends thinking about).

Ask yourself:

• Who’s going to buy this product or service?
• How’s my business going to stand out when the competition is already shouting from the rooftops?
• Is this idea going to grow with me or leave me stuck at square one?
  
  

Pro tip: Do a Texas business name search early on. Nothing kills the vibe like falling in love with a name and realizing someone beat you to it.

Step 2: Draft a business plan and financial roadmap

This is your business GPS. It tells you (and investors, if you’ve got ‘em) where you’re headed and how you’re going to pay for it.

What to include:

• A snappy mission statement (what you do and why people should care)
• A breakdown of your products, services, and pricing
• Who your customers are (and how you’ll reach them)
• Realistic financial goals (yes, including the boring spreadsheets)
  

And for the love of all things tax season, open a separate business bank account from day one. Your future self will thank you when it’s time to sort expenses.

Step 3: Choose your business structure (LLC, S Corp, or sole proprietor)

Sole prop? LLC? S Corp? It sounds like alphabet soup, but this is actually important.

Here’s the Texas lowdown:

• Sole proprietorship: You and the business are the same person. Easiest setup, lowest cost, but you get zero personal liability protection.
• LLC: Keeps your personal stuff safe from business drama. Plus, Texas doesn’t tax personal income, which is a win.
• S Corp: Like an LLC, but with some extra tax perks if you start making serious bucks.

Pro move: Chat with a business lawyer or accountant. They'll help you pick what works best and keep the IRS off your back.

Step 4: Register your business name and entity in Texas

Once you’ve got your structure, make it official:

1. Search the Texas Secretary of State database to double-check your business name isn’t taken.
   
   
2. Register your entity (LLC, Corp, etc.) with the state.
   
   
3. Need a DBA? File that too so you can use a catchy business name even if your legal name is less-than-thrilling.
   

Step 5: Apply for the necessary Texas licenses and permits

Texas is pretty chill when it comes to business licensing (no general business license required!), but depending on what you do, you might need industry-specific licenses or permits.

• Check the Texas Business Licenses & Permits Guide.
• Double-check city and county rules because... bureaucracy.

Step 6: Open a business bank account and set up payroll

Business 101: Keep your business and personal money separate.And if you plan to have employees? Use payroll software (hey, Homebase does this!) so you don’t accidentally underpay, overpay, or forget payday altogether.

How Homebase can help Texas small business owners run smoother

Let’s be real—starting a business is already enough of a rodeo. You don’t need the added stress of juggling schedules, chasing down timesheets, or Googling “how do I run payroll without losing my mind?” every month.

That’s where Homebase comes in.

We built Homebase for small businesses like yours—whether you’re running a cozy coffee shop in Austin or a boutique in Dallas. Our all-in-one work management app makes it easy to:

• Hire and onboard your team without the paperwork pile-up.
• Schedule shifts and track time (so you never hear “but I thought I had today off” again).
• Run payroll in a few clicks (and yep, we handle the tax stuff too).
• Stay connected with your crew using built-in messaging and updates that actually get seen.

The best part? It’s designed for small businesses—not corporate giants. No confusing dashboards. No nickel-and-dime pricing. Just a simple app that keeps your day running smoother than a Texas sunset.

Want to see how stress-free team management can feel?
Try Homebase for free today and get back to running your business—Texas style.

How to start a business in Texas FAQs

What do I need to start a small business in Texas?

You’ll need a solid business idea, a game plan (aka your business plan), a registered business name, the right legal structure, any required licenses or permits, and a way to handle your business finances (hello, business bank account). Oh, and maybe a little courage and caffeine too.

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

Texas is one of the more budget-friendly places to start a business. You’ll pay $300 to file an LLC, about $25 to reserve a business name, and various permit or licensing fees depending on your industry. Plus, you'll want to budget for things like business insurance, marketing, and your first inventory (if needed).

Do you need a business license to start a business in Texas?

It depends on your industry and where you’re located. Texas doesn’t have a blanket business license at the state level, but certain industries (like food, health, or childcare) require specific permits or licenses. Always check with your local city or county for any additional requirements.

What are the steps to register a business name in Texas?

First, check if your dream name is available using the Texas Secretary of State’s online tool. Then, if it’s all clear, you can file your assumed name (aka DBA) or register your LLC/corporation name. For LLCs or corporations, the name registration happens during the formation process.

Is an LLC worth it in Texas?

For many small businesses, yes. An LLC protects your personal assets and is taxed as pass-through income (meaning you only pay personal income tax, not corporate tax). Plus, thanks to Texas’s no-franchise-tax threshold for businesses under $2.47 million, many LLCs won’t owe state business taxes at all.