To register a small business in Texas, you file a Certificate of Formation with the Secretary of State — $300 for an LLC or for-profit corporation, $25 for a nonprofit — after picking your entity type and confirming your name is available. Formation is the state-level step that creates the legal entity. Once that’s done, you still have federal tax registration, a state sales tax permit if you sell taxable goods or services, an annual franchise tax filing, and any local or professional licenses your business needs before you can operate.
Pick Your Structure and Clear the Name
The Texas Business Organizations Code governs corporations, LLCs, partnerships, and other entity types, each with its own liability rules and management structure.1State of Texas. Business Organizations Code Most small businesses choose an LLC for the flexible management and personal liability shield. A corporation makes more sense if you plan to bring on investors or issue stock. Sole proprietorships and general partnerships don’t require any state filing, but they also don’t separate your personal assets from business debts.
Whatever you choose, the name has to be distinguishable from every filing entity, registered foreign entity, reserved name, and registered name already on file with the Secretary of State.2State of Texas. Texas Business Organizations Code Section 5.053 – Distinguishable Names Required “Distinguishable” is a higher bar than just being spelled differently. Names that sound alike or could confuse the public can be rejected.
Check availability through the SOSDirect online portal ($1 statutory fee per search) or the Comptroller’s Taxable Entity Search, which is free.3Office of the Texas Secretary of State. SOSDirect – An Online Business Service from the Office of the Texas Secretary of State Do this before you spend anything on branding or a website.
Fill Out the Certificate of Formation
The Certificate of Formation is what actually creates your entity. The form number depends on the structure: Form 201 for a for-profit corporation, Form 202 for a nonprofit corporation, and Form 205 for an LLC.4Office of the Texas Secretary of State. Business and Nonprofit Forms All are available as downloadable PDFs or can be filed directly through SOSDirect.
Every version asks for the same core information:
- The exact entity name you confirmed as available.
- A registered agent — a Texas resident, or a business entity authorized to operate in Texas, that agrees to accept legal documents on your behalf. An officer, owner, or employee can serve, but the entity cannot be its own registered agent.5Office of the Texas Secretary of State. Registered Agents FAQs
- A registered office address: a physical street address in Texas, not a P.O. box.
- Names and addresses of your initial managers, members, directors, or officers, depending on entity type.
- A purpose statement — most businesses use a general statement that the entity is organized for any lawful purpose under the Texas Business Organizations Code.
Everything on the form becomes public record once accepted. Check spelling and addresses carefully before you submit, because correcting a filed record means filing again.
File With the Secretary of State
You submit the completed Certificate of Formation to the Secretary of State in Austin. The filing fee is $300 for LLCs, for-profit corporations, and most other entity types, and $25 for nonprofit corporations.6Texas Secretary of State. Business Filings and Trademarks Fee Schedule
Two ways to file:
- Online through SOSDirect. You enter the information directly and pay by credit card. Online filings are typically reviewed within a few business days.
- By mail. Send two copies of the completed form with payment to P.O. Box 13697, Austin, TX 78711-3697. Mail submissions can take several weeks.7Office of the Texas Secretary of State. Filing and Other General FAQs
If you need to move faster, the Secretary of State offers expedited service at three tiers on top of the standard fee: $50 for two-to-three-business-day processing, $500 for next-day, and $750 for same-day.8Office of the Texas Secretary of State. Introducing Texas Express Expedited Business Filings For most startups the standard online turnaround is fine.
Once the filing is approved, you’ll receive an acknowledgment and a file-stamped copy of the certificate. Online filers get it by email; mail filers get a physical copy. That document is your proof the entity exists, and banks and licensing agencies will ask for it.
Get an EIN From the IRS
With the entity created, apply for an Employer Identification Number from the IRS. The EIN is a nine-digit number that functions like a Social Security number for the business. Banks require it to open a commercial account, and you need it to hire employees or file business tax returns. The IRS online application issues the number immediately at no cost.9Internal Revenue Service. Get an Employer Identification Number
Your state entity type and your federal tax classification don’t have to match. An LLC is taxed by default as a sole proprietorship (single member) or a partnership (multiple members), but it can elect S corporation treatment by filing IRS Form 2553. That election must be made within two months and 15 days of the formation date to apply to the first tax year. If S-corp treatment could reduce self-employment tax for your situation, talk to an accountant before the window closes.
Register for a Sales and Use Tax Permit
If your business sells, leases, or rents taxable goods, or provides taxable services, you need a Sales and Use Tax Permit from the Texas Comptroller of Public Accounts. Texas charges a 6.25% state sales tax, and local jurisdictions add up to 2% more.10Texas Comptroller of Public Accounts. Sales and Use Tax
Apply through the Comptroller’s online registration or by mailing Form AP-201.11Comptroller of Public Accounts. Texas Sales and Use Tax Frequently Asked Questions The application asks for your EIN, owner or officer names, and a description of the business. The permit itself is free. The Comptroller will send a letter telling you whether to file monthly or quarterly. An active permit also lets you issue resale certificates so you don’t pay sales tax on inventory you’ll later resell.
Franchise Tax and the Annual Report
Texas has no personal state income tax, but most business entities owe an annual franchise tax — and the report that goes with it catches a lot of new owners off guard.
The franchise tax report is due every year on May 15, or the next business day if that date falls on a weekend or holiday.12Texas Comptroller of Public Accounts. Franchise Tax Entities with annualized total revenue at or below $2,650,000 owe no franchise tax for 2026 reports.13Texas Comptroller. Texas Franchise Tax Report Forms for 2026 Most new small businesses fall under that threshold.
Being below the threshold does not excuse you from filing. You still have to submit a Public Information Report or an Ownership Information Report each year, depending on entity type.14comptroller.texas.gov. Requirements for Reporting and Paying Franchise Tax Miss it and you face a $50 penalty per late report, plus interest starting 61 days after the due date. If you actually owe tax, the penalty is 5% if paid within 30 days of the due date and 10% after that.12Texas Comptroller of Public Accounts. Franchise Tax Ignore filings long enough and the Comptroller can forfeit your entity’s right to do business in the state. Put the May 15 date on a calendar the day you form the entity.
If You’ll Hire Employees
Hiring triggers extra registrations beyond the EIN.
The Texas Workforce Commission requires employers to register for unemployment tax within 10 days of becoming liable.15Texas Workforce Commission. Unemployment Tax Registration – Register a Tax Account For most businesses, liability begins when you pay $1,500 or more in total gross wages in a calendar quarter, or when you have at least one employee during 20 different weeks in a year.16Texas Workforce Commission. Determine Whether You Need to Establish an Unemployment Tax Account Registration is free and takes about 20 minutes online. You get a tax account number immediately and can begin filing wage reports.
Workers’ compensation insurance works differently in Texas than in most states. It’s voluntary for most private employers.17Texas Department of Insurance. Workers’ Compensation Insurance Guide You aren’t required to carry it, but if you go without, you lose the legal protection that normally blocks employees from suing you over workplace injuries, and you can’t raise most common defenses. If you contract with a government entity, coverage becomes mandatory for employees working on that project.
Local Permits, Professional Licenses, and DBAs
Registering the entity with the state is only the state-level piece. Local governments and industry regulators impose their own rules.
Zoning and Local Permits
Texas cities enforce zoning ordinances that control what types of businesses can operate in specific areas. Before signing a lease, confirm with the local planning or zoning department that your intended location allows your type of business. Depending on the industry, you may also need a health permit, a building permit if you’re renovating, or a certificate of occupancy from the city. Requirements and fees vary widely by city and county.
State Professional Licenses
Some occupations need a state license on top of entity registration. The Texas Department of Licensing and Regulation oversees dozens of trades including electricians, HVAC contractors, cosmetologists, auctioneers, tow truck operators, and massage therapists.18TDLR.texas.gov. Programs Licensed and Regulated by TDLR Separate boards handle medicine, law, engineering, real estate, and others. Check the licensing question before you accept your first customer, not after.
Assumed Name (DBA) Filings
Planning to operate under a name other than the one on your Certificate of Formation? You need an Assumed Name Certificate. Filing entities submit Form 503 to the Secretary of State for $25.19Office of the Texas Secretary of State. Form 503 – Instructions for Assumed Name Certificate6Texas Secretary of State. Business Filings and Trademarks Fee Schedule You also file with the county clerk in each county where you maintain a business premises. County fees vary but are generally modest. Sole proprietors and general partnerships that didn’t file a Certificate of Formation file only at the county level.
What About Federal Beneficial Ownership Reporting?
You may have read about a federal requirement to report beneficial ownership information to FinCEN. As of March 2025, FinCEN issued a rule exempting all entities created in the United States from this requirement.20FinCEN.gov. FinCEN Removes Beneficial Ownership Reporting Requirements for US Companies and US Persons If you’re forming a Texas LLC, corporation, or other domestic entity, you do not need to file a beneficial ownership information report. The requirement now applies only to foreign-formed entities registered to do business in the U.S. That could change if Congress or FinCEN revisits the rules, so check the current status if some time has passed since this was written.