Do you want to start a business in Texas and need to register a DBA? If YES, here is how much it cost to register a business in Texas and the steps involved. There are so many things to love about the Lone Star State. The surplus and good tacos are one.
But perhaps more important is the state’s staunch support of its business community. Texas’ support for small businesses, in particular, is evident in its low business licensing fees, its lack of red tape, and an abundance of relatively cheap real estate.
Few states can boast a similar lack of regulation that lets businesses be established almost as soon as they are conceived, with only a small out-of-pocket investment. For Lone Star State residents (and even out-of-state residents) interested in starting a business, the path ahead is relatively straightforward.
Cost of Registering a Business in Texas in 2022
Generally, the cost of registering a business in Texas will depend on the legal structure you choose. Some structures are free to register while others have a low fee and are subject to the state franchise tax. Some of the most common choices include:
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This is the most common and simplest form of business structure; a sole proprietorship is perfect for one person who owns all the business assets. This person is 100 percent liable for the business.
Their sole proprietorship assumes their name unless they want to create a “DBA certificate” to give it another name, to be filed in all counties where business is conducted. These structures are not subject to the state franchise tax. To establish a sole proprietorship in Texas, you don’t need to file any organizational documents with the state.
This structure is just like a sole proprietorship, but it is for two or more individuals. It is a separate business entity from those people, but creditors can still hit up the partners’ personal assets to satisfy debts and liabilities. They are not subject to the state franchise tax.
To create a general partnership in Texas, you don’t need to file any organizational documents with the state. Although not legally required, all partnerships should have a written partnership agreement. The partnership agreement can be very helpful if there is ever a dispute among the partners.
Limited Liability Company
Note that your LLC is required to designate a registered agent in Texas. If your LLC meets the requirements for having a properly staffed office in Texas, you may be able to have an owner or employee serve as the registered agent. Otherwise, you will need to hire a registered agent, which will probably cost from about $50 to $500 per year.
A new LLC is formed in Texas needs to file a Certificate of Formation—Limited Liability Company (Form 205) with the Texas Secretary of State, and pay a $300 filing fee. If you need a certified copy of the Certificate of Formation, there is a $30 fee. If you need a Certificate of Status, there is a $5 fee.
If you wish to reserve a name for your LLC for a period of 120 days before registering, you may file an Application for Reservation or Renewal of Reservation of an Entity Name (Form 501), and pay a $40 fee. However, if you have formed an LLC in another state, and wish to conduct business in Texas, then you will need to register your LLC with the Texas Secretary of State as a foreign LLC.
This is done by filing an Application for Registration of a Foreign Limited Liability Company (Form 304), and paying a filing fee of $750. If you need a certified copy of the Application for Registration, there is a $30 fee. If you need a Certificate of Status, there is a $5 fee.
If you wish to reserve your LLC’s name for a period of one year before registering, you may file an Application for Registration of an Entity Name (Form 502), and pay a $40 fee. There is no annual registration fee imposed on LLCs in Texas. However, your LLC may need to file an annual franchise tax statement with the Texas Comptroller.
Texas corporations are overseen by a state government agency called the Corporations Section of the Office of the Secretary of State. You are expected to submit your paperwork and payments to this agency, which is frequently referred to as the Section.
If you need to obtain additional licenses, then you should contact the Texas Department of Licensing and Regulation. The overall cost to incorporate a business in Texas depends on several factors. A certificate of formation for a Texas for-profit corporation, for instance, has a $300 filing fee. Texas non-profit corporations only have to pay a $25 fee. A Texas Corporation is created by filing a Certificate of Formation.
Before you can form your corporation, you need to file for a certificate of incorporation in Texas. To complete this certificate, you will need to provide several pieces of information, including the name of your organization, its mission, and the names of at least two directors.
Steps to Registering a Business in Texas
The first step toward business ownership in the state is deciding what kind of business to start. Look for an idea that suits your interests, your personal goals, and your natural abilities. This will help you stay motivated when the going gets tough and will greatly improve your odds of success.
Successful businesses are built through careful planning. Before committing a significant amount of money and other resources toward your business, critically analyze your idea and create a game plan. In Texas, some structures are free to register; others have a low fee and are subject to the state franchise tax.
You will want to consider which business entity structure offers the type of liability protection you want and the best tax, financing, and financial benefits for you and your business.
If you choose not to register your company as a business entity, you will be held personally responsible for the debts and liabilities of your business. In addition, unregistered business owners in Texas may need to file a Trade Name, also known as a “DBA.”
Once you complete these steps, it is now time to head over to the Texas Secretary of State website or visit a local Texas SOS office. The business registration documents can be submitted online as well as by fax, mail or hand delivery. Fill out the registration forms, pay the fees and submit your application. This can be easily done online through SOS Direct, a 24/7 service provided by the Texas Secretary of State.
You will also need to apply for an Employer Identification Number (EIN) on the IRS website. Business owners may also fill out form SS – 4 and bring it to a local tax office or send it by mail. Note that all businesses require an EIN. This number has a role in identifying a legal entity. Without it, you will not be able to file state and federal taxes.
Obtaining your EIN is free of charge. As soon as you complete this step, open a business bank account. You will also need to apply for the necessary licenses and permits. Contact the Business Permit Office to find out more about licensing requirements. These will depend on your industry and the products or services you are going to offer. This state doesn’t require a general business license.
If you are interested in starting a business in Texas, you are definitely in luck: The barrier for entry is low and the number of resources at your disposal is high. Most of the required steps can be completed online. Texas SOS is available around the clock, which allows you to register your business anytime.
Just make sure you comply with the law and obtain the required permits. Texas seems to have a vested interest in helping businesses succeed. It is better not to take this opportunity for granted. It is hard enough to stay afloat in today’s economy, and a state government that has your back is a benefit few should turn down.