1. Registering a Business Name and Choosing a Business Type
2. Filing for Certificate of Formation
3. Texas Licenses and Permits
4. Worker's Compensation and Disability Insurance

To register a business in Texas, you need to complete several steps. Failure to do so can result in lengthy delays to finalize your filing. Many people decide to start their business in Texas because of its abundant land, large population, and natural resources. 

Registering a Business Name and Choosing a Business Type

Registering your business name in Texas is a relatively easy process. First, you need to determine that your business name is unique in Texas and then decide what type of business entity you are forming. Picking a name is a challenge in some instances if you run into business and legal problems down the line. Your name must be unique, easy to pronounce and understand, and last over time. 

You can start by doing an internet search for your intended name and see what you can find online. Verify there are no local conflicts in your state and city. Checking the United States Patent and Trademark Office (USPTO) website is also advised; otherwise, you may find out that your intended name infringes on someone's intellectual property. Then, you can check the Division of Corporations business name database. 

File all paperwork with the Texas Secretary of State. There are resources available on the Texas Secretary of State website that can help you determine what business type you are choosing. There are several basic options to choose from: 

  • Sole proprietorship
  • Partnership
  • Limited liability partnership (LLP)
  • Corporation 

Before you decide on a business type, it's important to understand the differences and which is right for your situation:

  • Doing Business As (DBA): Not necessarily a business entity, but just a different name that you will use for your company. If you file a DBA or Fictitious Business Name, it will be valid for five years, unless you opt to change your business name or information you originally supplied on the application. If this is the case, you will need to renew within the county. 
  • Corporation: A corporation is a separate business entity that has directors, shareholders, and officers and offers some limited liability protection for business owners. You'll have to file an annual report on May 15 with the Texas Comptroller of Public Accounts. 
  • Limited liability company (LLC): LLCs are a newer business organization entity type which combines benefits of both partnerships and corporations; it's important to note that Texas doesn't require LLCs to file an annual report, but you will have to file franchise tax reports each year. 

Filing for Certificate of Formation

To form a corporation in Texas, start by filing a Certificate of Formation. To complete this, you'll need to provide several bits of information: 

  • Name of business
  • Business purpose 
  • Two directors' names (minimum)

Current fees for the Certificate of Formation are $300 if you are a for-profit corporation, and a nonprofit corporation will pay $25. 

Texas Licenses and Permits

Businesses that have employees need to obtain an EIN, or Employer Identification Number. This is IRS-issued, sometimes called by its form name, Form SS-4. They also need to register for other tax-related licenses and permits in some cases:

  • Sellers' permits for sales tax
  • Unemployment insurance tax
  • Income tax withholding

Your employees will need to fill out W-4 exemption certificates on or before starting their job. You as the employer are then responsible for ensuring it's filed with the IRS. Employers submit tax and wage information to the IRS on an annual basis to show what is being withheld from employees. 

It's best to contact the Texas Online Tax Registration Application for more detailed information on registration procedures and potential employer tax obligations. 

There may also be other general business licenses you need, which is why it's critical to check the State of Texas website. Local cities and/or counties have specific regulations within their boundaries which can include a variety of permits: 

  • Building 
  • Occupational 
  • Health 
  • Alarm 
  • Zoning 
  • Signage

Worker's Compensation and Disability Insurance

Texas employers are not required to carry temporary disability insurance, but employees can benefit from this coverage if a non-work-related injury or illness occurs. Employers are not required to carry workers' compensation insurance either. Employers who don't provide coverage have to file with the Texas Department of Insurance, Division of Worker's Compensation, and advise of their non-coverage status and provide stats on work-related illness and on-the-job injuries. 

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