Starting a Business in Texas: The Tax and Registration Checklist
Starting a business in Texas takes a few registrations with the state and the IRS. Get them right at the start and you'll avoid penalties, a mess at tax time and trouble with the bank. Here's the checklist.
By the Enrolled Agents and CPAs at A&W Tax Services · Updated
1. Choose your structure
- Sole proprietorship: simplest, but no separation between you and the business
- LLC: liability protection, taxed like a sole proprietorship or partnership by default
- LLC or corporation taxed as an S corp: can reduce self-employment tax once profit is steady
- C corporation: usually for businesses raising outside investment
2. Register with the state
LLCs and corporations file a certificate of formation with the Texas Secretary of State. If you'll do business under a name other than your legal or company name, file an assumed name certificate. Some cities and counties also require local permits or licenses for certain types of businesses.
3. Get an EIN
An Employer Identification Number from the IRS is free and takes minutes online. You need one to open a business bank account, hire employees or file most business returns, and it keeps your Social Security number off invoices and W-9s.
4. Set up Texas tax accounts
- Sales and use tax permit from the Comptroller if you sell taxable goods or services
- Franchise tax: most LLCs and corporations file an annual report by May 15, even when no tax is due
- Texas Workforce Commission account once you have employees
5. Keep business money separate
Open a business bank account and card and run every business transaction through them. It protects the liability shield of your LLC, makes bookkeeping far easier, and gives you clean records if the IRS ever asks. Set up QuickBooks or another accounting system from day one.
6. Plan for taxes from the first sale
Nobody withholds tax for a business owner. Set aside part of every payment and make quarterly estimated tax payments. Collect a W-9 from every contractor you pay, and know your filing deadlines: March 15 for partnerships and S corps, April 15 for sole proprietors and C corporations.