How to Start a Business in Texas in 2026: Steps, Costs, and Checklist

Texas made starting a business faster this past year and changed a few numbers most guides still get wrong. The franchise tax threshold moved. The old $25 expedite fee is gone, replaced by a tiered service called Texas Express. The veteran fee waiver ended in January. This guide walks through every step to start a business in Texas the way it works in 2026: the current fees, the real processing times, and a checklist you can work down.

The short version. Pick a structure (an LLC, for most people). Clear the name. File a Certificate of Formation with the Secretary of State for $300. Get a free EIN. Register for the taxes that apply to you, pull the permits your city and industry require, and open a business bank account. Filed online, the state usually approves a new LLC within a few business days. The state's share of the cost for a simple LLC is about $308.

Starting a business in Texas, at a glance

Eight steps, in the order they actually happen. Everything below expands on this table.

Step 1: Choose your business structure

For most new Texas businesses the answer is an LLC. It costs $300 to form, keeps your personal assets separate from business debts, and lets you choose how the IRS taxes you. Corporations make sense when investors are involved. Sole proprietorships are free and fast, and they leave you personally on the hook for everything.

Limited liability company

An LLC is the default for a reason. One filing, one $300 fee, and a legal wall between the business and your house. You can run it yourself as a member-managed LLC or name managers. You do not have to live in Texas to form one; you only need a registered agent with a Texas street address.

Licensed professionals (physicians, attorneys, CPAs, architects, engineers, and the other professions the Business Organizations Code lists) form a professional LLC instead, using Form 206. Same fee, same protection, with the licensing board's rules layered on top.

Corporation

A corporation is the right shape when you plan to raise money from investors, issue stock options, or eventually sell shares. It costs the same $300 to form and much more to run: bylaws, a board, annual meetings, and minutes that someone has to keep.

Partnership

Two people working together with no filing at all are already a general partnership, whether they meant to be or not. That gives neither of them liability protection. If you want the partnership form with a shield, Texas offers limited partnerships and limited liability partnerships, both registered with the Secretary of State.

Sole proprietorship

No state filing, no fee, and nothing between a lawsuit and your savings. It is fine for a side business with little risk. The moment you sign leases, hire, or sell anything that can hurt someone, form the LLC.

Step 2: Name the business and make sure it is available

Texas will reject a formation whose name is the same as, or not distinguishable from, an existing entity. Check before you print anything. The Comptroller's taxable entity search is free. The Secretary of State's own SOSDirect search costs $1 per search and is the one that matches the state's filing rules exactly.

A few rules trip people up. An LLC's name must include "LLC," "L.L.C.," or "Limited Liability Company." A corporation needs "Inc.," "Corp.," "Company," or a similar designator. Names that imply a government agency, a bank, an insurer, or a licensed profession you are not licensed in need consent or are simply refused.

Reserve it if you need time

A name reservation (Form 501) holds the name for 120 days for $40. Useful if the paperwork is weeks away and you have already ordered signs.

Trade names and DBAs

If an LLC or corporation wants to operate under a different name, it files an assumed name certificate (Form 503) with the Secretary of State for $25, good for ten years. Sole proprietors and general partnerships file their assumed name with the county clerk where they do business instead; most counties charge under $25.

Check the domain and the social handles at the same time. The state does not care whether the .com is taken. Your customers will.

Step 3: File the Certificate of Formation

This is the filing that creates the company. For an LLC it is Form 205; corporations use Form 201, professional LLCs Form 206. The fee is $300 for each. File online through SOSDirect and the state adds a 2.7% card convenience fee, which brings a $300 filing to about $308.

The certificate asks for the entity name, the registered agent and registered office address, whether the LLC is managed by its members or by managers (with names and addresses), the organizer, a purpose, and an effective date. Ten minutes if you have the answers ready.

The registered agent

Every Texas entity needs a registered agent: a person or company with a Texas street address, available during business hours, to receive lawsuits and official mail. You can be your own agent, or name a friend, an attorney, or a commercial service (roughly $50 to $300 a year). Whoever it is must consent in writing (Form 401-A), and the address becomes public record. That last point is why many home-based owners pay for a service.

How long approval takes in 2026

Online filings through SOSDirect or SOSUpload are usually approved within a few business days. The Secretary of State does not publish a guaranteed turnaround, so build a small buffer into any launch date that depends on the certificate.

Paper filings by mail, courier, or in person can now be expedited through Texas Express, the tiered service that replaced the old flat $25 expedite fee. Standard Expedited is $50 per document and typically comes back in two to three business days. Next-Day is $500. Same-Day is $750 for documents received by noon. Since July 14, 2026 every business filing the office handles qualifies. Online filings cannot be expedited, and fax filing was retired in September 2025.

Write the operating agreement anyway

Texas does not file or require an LLC operating agreement. Banks ask for one, partners fight without one, and the courts respect one. Write it the week you form the company, even for a single-member LLC.

Step 4: Get your EIN from the IRS

An Employer Identification Number is the business's tax ID. You need it to open a bank account, run payroll, elect S-corp treatment, and apply for most permits. It is free on the IRS website and takes about ten minutes online. Any site that charges for one is reselling a free form.

A single-member LLC with no employees can technically use the owner's Social Security number. Do not. Keep your personal number out of vendor paperwork and get the EIN.

Step 5: Know the Texas taxes that apply in 2026

Texas has no personal income tax and no corporate income tax. What it has is a franchise tax on entities above a revenue threshold, a sales tax on most goods and some services, property taxes set locally, and the usual employer taxes.

Franchise tax: the $2.65 million line

Every LLC and corporation files a franchise tax report each year, due May 15. For the 2026 and 2027 report years the no-tax-due threshold is $2,650,000 in annualized total revenue. Below that, you owe nothing. Above it, the rate is 0.375% of taxable margin for retailers and wholesalers and 0.75% for everyone else.

One change that catches people: the Comptroller discontinued the No Tax Due Report. Being under the threshold no longer means filing nothing. LLCs and corporations still file the Public Information Report (Form 05-102); partnerships and trusts file the Ownership Information Report (05-167). Miss it and the Comptroller charges a $50 late-filing penalty and can eventually forfeit the entity's right to do business in Texas.

Sales and use tax

The state rate is 6.25%. Cities, counties, transit authorities, and special districts can add up to 2%, so the most you will ever collect is 8.25%, which is what applies across most of Houston. If you sell taxable goods or taxable services, apply for a sales tax permit with the Comptroller before your first sale. The permit is free.

Property tax

Counties and school districts tax real estate and business personal property (equipment, inventory, furniture). Businesses report their personal property to the county appraisal district on a rendition due April 15 each year. Harris County will find you either way; filing on time avoids the penalty.

Step 6: Licenses and permits

Texas has no general state business license. What it has instead is a long list of activities that need their own license, plus whatever your city and county require. The Governor's business permit office keeps the state-level list; our Texas business license guide walks through Houston, Dallas, San Antonio, and Austin in detail.

State licenses by activity

• Trades and services: electricians, HVAC, plumbers, cosmetologists, tow operators, and dozens more through the Texas Department of Licensing and Regulation and the state plumbing board.
• Professions: physicians, attorneys, CPAs, engineers, architects, real estate agents, each through its own board or commission.
• Food and alcohol: manufacturers and distributors through the Department of State Health Services; anything with alcohol through the Texas Alcoholic Beverage Commission; restaurants through the local health department.
• Childcare, healthcare facilities, transportation, and security: each has a state agency with its own application.

City and county permits

Houston does not issue a general business license either, but it does require a certificate of occupancy for commercial space, sign permits, health permits for anything serving food, alarm permits, and fire inspections for public-facing businesses. Home-based businesses in most Houston-area cities need to respect deed restrictions and any home occupation rules. Katy, Sugar Land, and Pearland each add their own layer, and The Woodlands routes through the Township and Montgomery County, so call before you sign a lease.

Federal licenses

Only a few industries need federal permission: alcohol, tobacco, and firearms (TTB and ATF), interstate trucking (FMCSA and DOT), broadcasting (FCC), aviation (FAA), and investment advice (SEC or state securities board). If none of those is you, skip this paragraph.

Step 7: Open the bank account, insure the business, and keep the books

The liability shield only holds if the business's money stays separate from yours. Open the account the week the certificate arrives.

What the bank will ask for

• The filed Certificate of Formation
• The EIN confirmation letter from the IRS
• The operating agreement (LLC) or bylaws (corporation)
• Identification for every signer, and an opening deposit

Insurance, including the Texas workers' comp decision

General liability covers injuries and property damage. Professional liability covers the advice you give. Commercial property covers the equipment and the space. Which ones you need depends on what can go wrong in your business, and a Houston independent agent will tell you in one call.

Workers' compensation is where Texas differs from every other state: private employers can opt out. Employers who do (the state calls them non-subscribers) must file an annual notice with the Texas Department of Insurance (DWC Form-005, due April 30 if you have five or more employees), post a notice at the workplace, and tell each new hire in writing. Opt out and you also lose the usual legal defenses if an employee sues over an injury. Most small employers who can afford coverage buy it.

Bookkeeping

Pick accounting software before the first invoice, reconcile monthly, and keep sales tax records for at least four years, which is how far back the Comptroller can audit. A bookkeeper for a few hours a month is cheaper than the cleanup.

Step 8: Hiring in Texas

The first employee adds three registrations and a decision.

• Texas Workforce Commission: open an unemployment tax account once you become liable, which happens when you pay $1,500 or more in wages in a calendar quarter (or have an employee in 20 different weeks of a year).
• New-hire reporting: report every new employee to the Texas Employer New Hire Reporting program within 20 calendar days of the start date.
• Federal forms: Form I-9 for work eligibility, Form W-4 for withholding, and federal payroll deposits.
• The workers' comp decision from Step 7, made before the first day, not after the first injury.

Texas uses the federal minimum wage of $7.25 and follows federal overtime rules. Employers with 50 or more employees pick up the Family and Medical Leave Act.

Veteran-owned businesses: what changed on January 1, 2026

For four years Texas waived the $300 formation fee and the first five years of franchise tax for new veteran-owned businesses. That program, created by Senate Bill 938, expired on January 1, 2026. Businesses that qualified between January 1, 2022 and December 31, 2025 keep their exemption for the rest of their five-year window. A veteran forming a company today pays the standard $300 and files like everyone else.

What remains is contracting preference. The state rebuilt its veteran certification as VetHUB, run by the Comptroller's Statewide Procurement Division for businesses owned by service-disabled veterans with a disability rating of 20% or more. If you sell to state agencies, it is worth the application.

The step every state guide skips: the website

Before your first customer calls, they search your name. Before they search your name, they search what you do and where you are. The formation certificate does nothing for either search.

Claim the Google Business Profile the day the LLC is approved, using the exact legal name and the address on the certificate. Then build a site that says what you do, where you work, and why someone should trust you with the job, with a phone number that is easy to tap. That is the whole brief for a new business, and it is the part we build for Houston firms, usually alongside the local SEO that makes the site show up in the map. If you are pricing it out, this is what a website costs in 2026.

Texas business startup checklist

Work down the list in order. Most owners finish it in two to three weeks, with the bank account and permits taking the longest.

Questions people ask about starting a business in Texas

How much does it cost to start an LLC in Texas in 2026?

$300 to the Secretary of State, or about $308 online with the card fee. Everything else is optional or specific to your industry: $40 to reserve a name, $25 for an assumed name, $50 to $300 a year for a registered agent service, and whatever permits and insurance your business needs.

How long does it take to form an LLC in Texas?

Online filings are usually approved within a few business days; the state publishes no guaranteed timeline. Paper filings can be expedited through Texas Express: $50 for standard expedited handling (typically two to three business days), $500 for next-day, $750 for same-day.

Do I have to pay anything every year for a Texas LLC?

There is no annual registration fee. You file a franchise tax report by May 15 each year, and you owe tax only if annualized revenue passes $2,650,000. Under the threshold you still file the Public Information Report. If you use a registered agent service, that renews annually too.

Can I be my own registered agent?

Yes, if you have a Texas street address (no P.O. boxes) and someone is there during business hours. You must consent in writing on Form 401-A, and the address becomes public record.

Do I need a business license in Texas?

Not a general one. Texas licenses specific activities and professions, and cities add permits for occupancy, signs, food, and alarms. Check the state list for your industry and call your city before you sign a lease.

What happens if I skip the LLC and just start?

You are a sole proprietor. You can operate today, filing only a county assumed name certificate if you use a trade name. Your personal assets are exposed to every business debt and lawsuit, and you cannot bring in a partner or investor cleanly. Most owners form the LLC the moment there is real money or real risk involved.

Can I form a Texas LLC if I live in another state or country?

Yes. Texas has no residency requirement. You need a registered agent with a Texas street address, and if the company was formed elsewhere and is only expanding into Texas, it registers as a foreign LLC (Form 304, $750) instead of forming a new one.

What changed for 2026?

The franchise tax threshold rose to $2,650,000 and the No Tax Due Report was discontinued. Texas Express replaced the $25 expedite fee with $50, $500, and $750 tiers and now covers every business filing. The veteran fee waiver and franchise exemption ended January 1, 2026. Fax filing was retired in September 2025.

Your next steps

Choose the structure this week, clear the name, and file. The certificate will be back before you have finished the operating agreement. If you want the filing walked through screen by screen, read how to register a business in Texas. If your industry needs permits, the Texas business license guide covers them city by city.

When the company exists and needs to be found, that is the part we do. Talk to Nimbus about the website.