12 Steps to Start Your Business in Texas

Starting a Business in Texas: 12 Essential Steps

1. Develop an Idea

Every great business begins with a spark of inspiration. Ask yourself:

• What product or service can I offer that fills a gap in the market?

• How does my idea improve or refine something that already exists?

• Does this align with my strengths, interests, and values?

• Am I passionate enough to market and sell this myself?

A great idea backed by genuine belief is the fuel you'll need for the long haul.

2. Do the Research

Validate your idea with solid market research:

• Is there demand in Texas?

• Who is your target audience?

• What are your competitors doing—and how are you different?

• What makes you stand out in the marketplace?

Take your time here. It's better to pivot early than stumble later.

3. Draft a Business Plan

Think of your business plan as your roadmap. It should include:

• Executive Summary – A high-level overview of your venture

• Business Description – What problems you solve and how

• Market Research – Industry data, competitor insights, and target audience profiles

• Organization & Staffing – How your business is structured and who’s on your team

• Products or Services – Clear descriptions of what you offer

• Marketing Strategy – How you’ll attract and keep customers

• Funding Plan – How much money you need and where it’s going

• Financial Forecast – Revenue, expenses, and growth projections

• Appendix (optional) – Resumes, licenses, reference letters, and more

🛠 Tools like Google Workspace and QuickBooks can help keep you organized.

4. Secure Funding

Money fuels momentum—and without it, most businesses stall before they ever take off. In fact, a recent U.S. Bank study found that 82% of business failures are due to cash flow problems. That’s why your business plan should include a detailed estimate of the funds needed to cover at least one year of expenses.

If self-funding isn’t an option, you’ve got options. Consider these potential funding sources:

• SBA Loans – Backed by the U.S. Small Business Administration and offered through participating lenders.

• Traditional Bank Loans – Available through commercial banks and credit unions.

• Equity Crowdfunding – Raise capital by offering shares of your company to online investors.

• Angel Investors – Wealthy individuals who provide early-stage capital.

• Venture Capitalists (VCs) – Investment firms that offer larger sums in exchange for equity and influence.

💡 Angel vs. VC:

• Angel investors typically fund startups in their earliest stages with smaller amounts of capital.

• Venture capitalists tend to invest larger sums but will expect a more active role in your business decisions.

Startups often begin with angel investment, then pursue venture capital as they scale. The good news? Texas is home to a robust network of both.
AngelList: Texas Angel Investors has over 5,000 listed investors.

5. Choose a Legal Structure

Your business structure affects taxes, liability, and more:

• Sole Proprietorship – Simple, but no liability protection

• Partnership – Shared responsibilities and risks

• Corporation – Separate legal entity with stronger protections

• LLC (Limited Liability Company) – A hybrid of simplicity and protection (most popular for small businesses)

Consult an attorney to choose the best structure for your goals.

6. Register Your Business

This step varies by structure:

Sole Proprietors:

• If using a name other than your own, file an Assumed Name Certificate at your county clerk’s office

• 💡 Use the Texas Comptroller's Taxable Entity Search to ensure your name is available

LLCs & Corporations:

• Appoint a Registered Agent with a physical Texas address

• File:

  • Certificate of Formation (LLC) – Form link | Fee: $300

  • Certificate of Formation (Corporation) – Form link | Fee: $300

7. Get Your Tax IDs

• EIN (Employer Identification Number) from the IRS (required for LLCs and corporations)

• Texas Franchise Tax ID from the Texas Comptroller

💡 Even sole proprietors may benefit from getting an EIN for banking and payroll purposes.

8. Open Business Bank & Credit Accounts

Separate personal and business finances:

• Open a business checking account 🏦

• Apply for a business credit card to build credit and track expenses

9. Get Licenses & Permits

Check if your business requires:

• Local licenses (via your county clerk)

• State licenses (via the Texas Department of Licensing and Regulation)

🍽 For example: Restaurants need health permits, bars need liquor licenses, pawn shops need reseller permits.

10. Choose a Location

Consider:

• Demographics – Will locals support your business?

• Competition – Are you oversaturating a market?

📍 Your location impacts foot traffic, visibility, and community engagement.

11. Get Insured

Insurance protects you and your business:

Required (if you have employees):

• Workers' Compensation

• Unemployment Insurance

Recommended:

• Professional Liability Insurance

• Commercial Property Insurance

• Disability Insurance (required in some states)

Speak with a licensed agent to customize your coverage.

12. Build Your Internet Presence

Digital visibility is a must:

• Register your domain (via GoDaddy, Bluehost, Namecheap, etc.)

• Build a website with platforms like Bluehost or Squarespace

• Create business profiles on Google, Yelp, TripAdvisor, etc.

• Engage on social media (Facebook, Instagram, X, TikTok)

A strong online presence builds trust and draws traffic.