In a state as big as Texas, entrepreneurs abound. The Lone Star State is full of land, people, and opportunity. Starting a business in Texas may sound complex, but it’s easier than you might think!
Some entrepreneurs may have questions, such as: is it legal to run a business from home in Texas? The answer is yes. Is there funding for business in Texas? This answer is also yes for larger, competitive projects, and yes for small businesses that are vital to local economies.
In this article, we’ll build a starting a business in Texas checklist, with everything you need to know about opening a food business in the Lone Star State.
IS TEXAS GOOD FOR STARTING A BUSINESS?
First, is starting a business in Texas even a good idea? For many people, that will depend on the type of business they want to open. Texas has a very competitive landscape, so someone entering a saturated market should consider their options carefully.
However, Texas has an incredibly favorable tax climate for business. With no corporate tax or individual income tax, Texas businesses potentially make more profits than they would in another state. The Tax Foundation ranks Texas 13th on its 2024 State Tax Climate Index.
For franchise businesses, Texas is incredibly franchise-friendly. Texas is a filing state where a franchise is classified as a “business opportunity” if the franchisor complies with the Federal Trade Commission orders relating to franchises.
Franchisors must file a Business Opportunity Exemption Notice, (a form 2703) with the Texas Secretary of State and pay a filing fee of $25 before offering franchises for sale in the state. It’s a one-time filing and is not required to be re-filed annually. Only if the address changes should the franchisor submit an updated filing, and no fees are associated with the update.
Texas’s infrastructure is another reason the state is appealing to business. The state is relatively central between the East and West Coasts and has access to a multitude of transportation modes. Texas is home to 6 of the United States’s busiest airports, has more freight rail than any other state—more than 10,500 miles—and hosts 19 seaports, including the Port of Houston, the nation’s front-running global port. Texas is a leader in worldwide trade.
HOW MUCH DOES IT COST TO START A BUSINESS IN TEXAS?
According to Forbes Magazine, the cost of starting a business in Texas begins at $25 for a Doing Business As filing if your business name is different than your legal name. Most businesses file for LLC, or Limited Liability Corporation, status, which costs $300 for the filing fee.
The next costs to consider are permitting and licensing as well as the costs of the physical location, inventory, staffing, website hosting, marketing, and daily operations. These will vary widely depending on the business model.
WHAT ARE THE 7 STEPS FOR STARTING A BUSINESS IN TEXAS?
CHOOSE BUSINESS TYPE
The next step for starting a business in Texas (or any state) is determining what kind of business you want to open. Are you intending to be the sole proprietor? That’s your business type. If you have a partner, a partnership may be the best option.
For most businesses, an LLC is the best option because it limits the liability and legally protects the individual owners from becoming personally liable for the business’s dealings.
FILE PAPERWORK
Once you’ve determined the type of business and thought of a name unique to your business entity, you can begin filing the proper paperwork with the Texas Secretary of State as mentioned above. Be sure to research all the necessary filings required for your industry.
DRAW UP BUSINESS PLAN
Are you interested in a restaurant, a bookstore, a coffee shop, or something more service-oriented? You need a detailed business plan before starting a business in Texas. A business plan lays out expected operations, profit margins, and planned demographic data that will help with financing the business.
SECURE FUNDING
If you’re not financing your business entirely yourself, you’ll need to secure funding before starting a business in Texas. Ways to do this include finding investors, partnering with a like-minded business partner who shares the risk, or qualifying for a business loan.
FIND LOCATION & BEGIN BUILD-OUT
Once the funds are in place, you can begin searching for your new business’s location and begin setting it up to operate. It’s often here where business owners starting a business in Texas see their imagination come to life. It can be a magical moment.
DEVELOP STAFF & SUPPLIER RELATIONSHIPS
Many first-time entrepreneurs operate businesses alone, but that can get exhausting quickly. Hiring a small staff can make opening a business go smoothly from the beginning, as can being selective with the vendors you create relationships with to supply your inventory and supplies. Prioritizing saving money over quality operations isn’t always the best investment when starting a business in Texas (or anywhere). A good investor sometimes speculates to accumulate.
GRAND OPENING
When your business is ready to bring in its first customers, it’s time to celebrate with a grand opening! Regardless of the type of business you’re opening, this is a happy day. May all your efforts bring people to your business ready to fill your register with money and your reviews with stars!
AN EASIER WAY TO START A BUSINESS IN TEXAS: OPEN A FRANCHISE WITH CAFÉ MEXICALI
Quite a lot of this can be a difficult experience for an entrepreneur going through the process alone.
That’s why franchising has been such a success, particularly with starting a business in Texas. In a franchise-friendly state like this, with a brand like Café Mexicali, where the founders have decades of restaurant experience and the know-how and expertise to run a thriving franchise, it’s easy to see how such an investment could open a bright future.
Café Mexicali has big, bold flavors our customers have been loyal to for decades, and we’re expanding into Texas! If you’d like to be one of the first to bring this incredible investment into the heart of Texas, call or email us to get started today!
