How to get a business license in Texas: Step-by-Step Guide

Business license in Texas
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Are you considering starting a business in Texas but don’t know where to begin? Or maybe you’ve been in business for a while but not aware that you needed a Texas business license until now?

That’s where we step in to assist.

Obtaining a Texas business license might be difficult due to the fact that your business type has an impact on your licensing and permit needs.

As a result, if you specialize in numerous sorts of employment, you may need to apply for multiple business licenses.

Frustrating? Absolutely. That’s why we’ve outlined steps by step guide for obtaining a Texas business license, as well as a step-by-step procedure to completing your licensing application.

Texas business registration

For a range of enterprises, the state of Texas requires unique business licenses. Each trade and profession has its own set of license, renewal, and certification requirements.

If your firm requires a specific license, you’ll need to get the necessary training, qualification, and licensing.

SOS Direct, which charges $1 and walks you through the entire registration process, can help you find your business name.

Before filing, talk to a CPA or attorney about the costs, liabilities, and benefits and drawbacks.

A $300 cost is required to form a corporation. It costs $200 per partner for an LLC. The filing fee for a DBA is $25.

SOS Direct is available 24 hours a day, seven days a week and may incur a credit card fee, or you can submit it in person at the Austin office.

The Texas SOS can reserve an LLC’s name for 120 days by filing an Application for Reservation or Renewal of Reservation of an Entity Name (Form 501). This costs $40 and can be done online or by mail.

Also read: How to Get a Business License: Step-by-Step procedure including Cost of Application

Creating an LLC in Texas

LLCs are formed in Texas by filing a Certificate of Formation (Form 205) with the Secretary of State, which includes the following information:

  • The LLC’s name
  • The name and address of the registered agent
  • Whether it will be managed by members of managers
  • The governing person’s name and address
  • The organizer’s name and address
  • The purpose for forming the LLC
  • The effective date of the certificate
  • The termination date, if applicable

For a charge of $300, you can file the certificate online, through the SOS Direct website, or by mail. The certificate should be accompanied by the following :

  • The registered agent’s written or electronically signed consent form
  • Names, addresses, and initials of members and managers

An LLC based outside of Texas that wishes to do business in Texas must register with the Texas Secretary of State. You register by completing an Application for Foreign Limited Liability Company Registration (Form 304). For a charge of $750, it can also be filed online or by mail.

If the LLC’s name is not available in Texas, an Assumed Business Name must be obtained. To do so, submit a $25 Assumed Business Name Certificate (Form 503) to the SOS online or by mail.

A Certificate of Formation for a Texas for-profit business costs $300 to file. Nonprofits simply need to pay a fee of $25.

Starting a business in texas checklist

You can choose a business name once you’ve decided on a structure. Make sure your name is one-of-a-kind, easy to read and pronounce, and age-appropriate. A trademark search with the United States Patent and Trademark Office is a good technique to look for disputes, but a skilled Google search can also work effectively.

Search the Texas Department of State’s Division of Corporation’s business name database to see if your company name is available. In case your name is rejected because it is too similar to another company’s, look for misspellings, plurals, variants, sound-alikes, and so on.

Obtain a Federal Employer Identification Number (FEIN or EIN), which functions similarly to a social security number but is specific to your business. DBAs aren’t required to have an EIN, but you’ll have to use your personal SSN if you don’t have one, so it’s a good idea to get one regardless. You can apply for an EIN online or by completing IRS Form SS-4.

Unless you change the name before then, DBAs must be renewed every five years.

Although the Texas Comptroller of Public Accounts (CPA) does not demand yearly reports from LLCs, it does require an annual tax franchise report. Every year, corporations must file a “Statement of Information” or simple modifications, such as a change of address. You’ll be charged a $400 late fee if you miss the May 1st deadline.

Every May 15th or the next business day, corporations in Texas must file their annual reports with the CPA. You’ll be assessed a $50 late fee if you’re late filing a franchise tax, which is a proportion of what the company made that year.

Read also: SMALL BUSINESS LICENSE: Best Practices & Procedures in the US (Detailed Guide)

Texas business license application

Here are steps to fill out your Texas business license application:

  •  Apply for your Sales Use and Tax Permit.
  •  Identify your business type’s licensing requirements
  • Call if you can’t find your industry type

>. Apply for your Sales Use and Tax Permit

The state of Texas, as well as numerous cities and towns throughout the state, do not require a general business license as part of its business-friendly stance.

Permitting requirements to vary depending on the type of your industry, business structure, and location, and are handled at the city or county level.

To find out if your business requires any permits, contact the municipal clerk’s office or the county clerk’s office. You may also need to follow any applicable municipal zoning and building rules, depending on the type of your business.

Furthermore, any firm functioning in the state is required to register for several tax-related purposes. The Texas Comptroller of Public Accounts should receive a Texas Online Tax Registration Application from your company.

>. Identify your business type’s licensing requirements

This is where getting a Texas business license might get a bit tricky. While you are unlikely to be forced to obtain a state-based license, depending on the services or products you supply, you may be obliged to do so.

Fortunately, Texas makes it pretty simple to determine your business type and which websites you’ll need to visit in order to obtain a license.

Listed below is the website of Texas Business Licenses

Also read: How To Become A Mortgage Broker: A Comprehensive Guide for US Citizens (+ Free Tips)

>. Call if you can’t find your industry type

Are you unable to locate your company in the Texas Business Licenses and Permits guide?

If this is the case, you should contact the Comptroller of Public Accounts with your concerns. For more information, call 512-463-4600 or go to their website.

Texas Business License and Insurance

If your company has to obtain a license or permit, you should expect to be asked to produce proof of business insurance.

Why? Because it demonstrates that you’re safeguarding your customers, vendors, and staff from things like accidents, third-party property damage, and more. Furthermore, if your Texas-based company employs any part-time or full-time workers, certain types of business insurance (such as workers compensation) are necessary.

Texas Business License Costs

The application for your Texas Sales Use and Tax Permit is, fortunately, free. Depending on the type of business you run, you may be required to deposit a security bond.

Check out the Comptroller’s website for further information on any additional Texas business licensing and permit expenses.

Conclusion

If you’re thinking about starting a new business in Texas, you’ll find a business-friendly climate and plenty of information on how to secure a small business license.

Texas Wide Open for Business, an online clearinghouse operated by the Governor’s Office of Economic Development and Tourism, provides information on business incentives, industry data, and site selection difficulties for beginning, growing, or relocating a business to the state.

New firms can also learn from and interact with public officials, agency representatives, private sector professionals, and regional businesses through the Governor’s Small Business Forums.

FAQs on How to get a business license in Texas

What types of licensing are available through the state of Texas?

There is no such thing as a “generic” business license in Texas. However, the state does have regulatory authorities that demand permissions and licenses. The type of business or items or services sold determines the license requirements. To find out whether licenses are required, or if any other permissions or regulations are required to operate your business, contact your local county or city government offices.

What types of occupational licensing are available inTexas?

Texas offers approximately 250 professional, occupational, and facility business licenses that can be obtained through the state. The website of the State of Texas can help you figure out which specialized license you’ll require. There is an alphabetical collection of several authorities where you can search for business licenses and permits. Each agency has its own set of conditions that must be satisfied before you can begin doing business with them.

What information is needed to get a Texas business license?

Your chosen business name must first be registered with the County Clerk’s office. You may also need to file for a Federal Tax Identification Number or use your own Social Security Number, depending on your business entity (corporation, sole proprietorship, LLC, etc.).

Do I need a local or county Texas business license ?

A local business license is not required in most Texas cities. Other permissions or zoning regulations may be required to conduct business within the city borders (such as taxi cab drivers, food services, etc.). To find out what is required, contact your city by visiting them online, in person, or by phone.

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