When entrepreneurs think about launching a business in the United States, certain states consistently rise to the top of the list.
Factors like cost of living, tax environment, labor market, and growth potential all weigh heavily. After breaking down the data and trends across the country, Texas emerges as one of the best places to start a business today.
Let’s dive into why Texas stands out — and what you need to get started if you’re thinking of planting your entrepreneurial flag there.
Why Texas Is the Best State to Start a Business
1. Business-Friendly Tax Environment
Texas is one of only a few states with no personal income tax and no corporate income tax. Instead, businesses pay a relatively low franchise tax based on margin — not profits.
This tax structure means business owners can keep more of their earnings to reinvest in growth, pay employees, or weather tough times.
2. Low Cost of Living and Operations
Compared to coastal hubs like California and New York, Texas cities offer lower:
- Office rental rates
- Home prices and rents
- Utility costs
- Wage pressures
Lower overhead allows startups and small businesses to extend their runway and hire quality talent without paying astronomical salaries.
3. Growing Population and Workforce
Texas consistently ranks among the fastest-growing states. Cities like Austin, Dallas, Houston, and San Antonio have seen a surge of new residents, many of whom are highly educated professionals.
More people means:
- A larger customer base
- A deeper hiring pool
- A growing economy
Notably, Austin has become a major tech hub, while Dallas-Fort Worth and Houston offer opportunities across sectors like energy, healthcare, logistics, real estate, and professional services.
4. Supportive Business Climate
Texas prides itself on being a state where “business is welcome.”
Some of the resources available to entrepreneurs include:
- Texas Economic Development Corporation (TxEDC)
- Small Business Development Centers (SBDCs)
- Startup incubators like Capital Factory (Austin) and The DEC Network (Dallas)
Whether you need mentorship, funding, grants, or just help navigating regulations, Texas offers a deep support system for new business owners.
5. Strategic Central Location
Located centrally in the U.S., Texas offers easy access to both coasts and Latin America, making it ideal for shipping, logistics, and national sales strategies.
Major airports like DFW and George Bush Intercontinental (IAH) provide excellent domestic and international connectivity.
Top Cities in Texas for Business
While the whole state is business-friendly, some cities stand out:
- Austin: Tech startups, creative industries, and innovation.
- Dallas-Fort Worth: Corporate headquarters, finance, transportation, and logistics.
- Houston: Energy, healthcare, aerospace, and manufacturing.
- San Antonio: Cybersecurity, military contracts, healthcare, and tourism.
What You Need to Get Started in Texas
Starting a business in Texas is relatively straightforward. We at FormWise can help.
Here’s what you’ll need:
1. Business Idea and Plan
Before anything, you’ll want a clear business idea and a detailed business plan that covers:
- Target market
- Revenue model
- Marketing strategy
- Financial projections
2. Choose a Business Structure
Common options include:
- Sole Proprietorship
- Partnership
- Limited Liability Company (LLC)
- Corporation (C-corp or S-corp)
LLCs are particularly popular in Texas because they’re flexible, easy to form, and protect personal assets.
3. Register Your Business
- Choose and register a unique business name.
- File your structure with the Texas Secretary of State (online at SOSDirect).
- Get an Employer Identification Number (EIN) from the IRS.
4. Apply for Licenses and Permits
Depending on your industry, you may need local, state, or federal licenses. The Texas Department of Licensing and Regulation (TDLR) website is a good starting point.
5. Open a Business Bank Account
Keep your personal and business finances separate. Set up a dedicated business checking account and credit card.
6. Secure Insurance
Some common types of insurance for small businesses include:
- General liability insurance
- Workers’ compensation insurance
- Commercial property insurance
Many industries require specific types of insurance, so check Texas guidelines based on your sector.
7. Find a Location (If Needed)
Whether you need office space, a storefront, or a warehouse, Texas offers plenty of affordable options. Research zoning laws and lease agreements carefully.
8. Set Up Accounting and Compliance
- Choose accounting software (like QuickBooks or Xero).
- Stay on top of your Texas franchise tax obligations (even if you owe $0).
- Understand your federal tax responsibilities.
Final Thoughts: Is Texas Right for You?
Texas offers a unique mix of affordability, opportunity, and growth potential. While it isn’t perfect for every type of business — for example, creative agencies or luxury brands may still prefer Los Angeles or New York — for entrepreneurs seeking growth, resilience, and a supportive business environment, Texas is a top contender.
If you’re serious about launching your dream, Texas might just be the right place to make it a reality.
