Starting a Business in Houston

Where Do I Register My Houston Business?

Texas businesses that operate in Houston are required to register either with the Secretary of State or a county clerk’s office. Where you register will depend on whether you’re starting an incorporated business (like an LLC or corporation) or an unincorporated business (like a sole proprietorship or general partnership).

What’s the difference between an incorporated and unincorporated business?

• Incorporated businesses have advantages when it comes to limited liability protections. For example, in an LLC or corporation, owners are considered to be separate from the business. The business has its own name and its own assets. So, if the business is sued or goes bankrupt, the owners’ assets are generally protected. While these are significant advantages, registering an incorporated business has higher start-up costs, such as the $300 formation fee for LLCs and corporations.
• Unincorporated businesses do not have limited liability protections or even business name protections. In a sole proprietorship or general partnership, there is no separation between the owner(s) and the business—they are essentially one and the same. However, unincorporated businesses are cheaper to form and have require less paperwork than incorporated businesses.

How Do I Register with the SoS or County Clerk?

Registering with the Texas Secretary of State

To form an incorporated business, you’ll need to file a Certificate of Formation with the Texas Secretary of State. Luckily, if you register your business with the State of Texas, it’s registered to do business in Houston and anywhere else in Texas. You have no need to file any sort of general city or county registration to operate.

Online filings can be completed at the state’s SOSDirect website. Or, you can hire us to file your Texas LLC or Texas corporation for you. We’ll serve as your registered agent, include a business address for use on public filings, give you access to an online forms library and much more.

Registering with a County Clerk’s Office

Unincorporated businesses such sole proprietorships (one owner) and general partnerships (multiple owners) and register with their county clerk, typically by filing an Assumed Name (DBA) form.

The terms “assumed name” and “DBA” may be used interchangeably or together, but either way it’s just the name the business owner(s) have assumed for operating their business. Because there is no separation between sole proprietorships/general partnerships, your company’s legal name is simply the owner or owners’ names. To operate under any other name, an assumed name or DBA is required.

In most states, this would mean that if Sophie Smith launches her sole proprietorship as Sophie Smith, Business Coach, she probably wouldn’t be required to file an assumed name like she would if she were to operate under Clutch City Business Coaching. However, many Texas counties, such as Harris County, require any unincorporated business to file for an assumed name in order to meet the county clerk registration requirement.

Note that Assumed Name forms must be notarized in Harris, Montgomery and Fort Bend counties. Notary services aren’t uniformly available at local offices and may incur additional fees if they are.

Additionally, the Texas Secretary of State requires that assumed names be registered in the county where the business premise is maintained. If there is no business premise, then the appropriate assumed name certificate should be filed in all the counties the business is operating under the assumed name.

Is a Houston DBA Necessary?

For unincorporated businesses in Houston, a DBA or Assumed Name filing is typically required to meet the local registration requirements.

Incorporated businesses may choose to add DBAs if they wish to operate under an additional name not listed on state filings like articles of organization or articles of incorporation. Some companies use DBAs to distinguish between product lines or better market to a target demographic.

As an incorporated company, DBA name filings are filed directly with the state—not at the county level.

Do I Need a Houston Business License?

Not a general business license. The Houston metro’s got it all – from diverse vibes to economic perks. The only thing it doesn’t have is a general city of Houston business license requirement. Okay, honestly that’s an statewide Texas thing, but it’s still nice that here, you don’t have to register your business with the state, and the county/city like you might elsewhere.

There are, however, industries that must obtain specific permits, licenses, or certificates. If you’re not sure if your business has specific permitting requirements, the Houston Permitting Center is a great place to start. This website covers common local permits, including various building, food and beverage permits (including alcohol licenses), and specific trade permits, like those for antique dealers or metal recyclers.

Industry licensing is more commonly done at the state level, and the state offers a more comprehensive guide to Texas Business Licensing and Permits as well.

How Do I Get a Texas Sales Tax Permit?

All Houston businesses that are selling tangible goods, leasing personal property, or selling a taxable service in Texas, and operating in Texas, must obtain a Texas Sales Tax Permit by filing a Sales Tax Permit Application with the Texas Comptroller.

To file, you’ll need an NAICS code for your business and a tax ID.

• An NAICS code is just a 6-digit number that corresponds to your company’s primary business activity. You can search through codes on the NAICS website.
• The tax ID you need will depend on your business type. If your business has a sole owner, you’ll need a social security number. Corporations need social security numbers for each officer or director. Partnerships need either a social security number or EIN from each partner.

Additionally, corporations will need their file number, which can be found with Texas Comptroller Business Search.

There is no cost to sign up for a Texas Sales Tax Permit, but do not over look this step. Operating without a sales tax permit is a crime punishable by a fine of up to $500 for each day a business operates without a permit.

What is a Houston Property Tax Rendition?

Your Property Tax Rendition is a list of your company’s taxable personal property that you file each year. While the requirement comes from the Texas Comptroller, the renditions are filed with the local county.

Houston businesses must file a tax rendition in the county they are in that lists business personal property assets (including, inventory, raw materials, improvements, machinery and equipment, furniture, fixtures, computer equipment, and vehicles used for business purposes). The filing period is open from January 1st to April 15th.

Businesses with a total value of property assets of less than $500 are not required to file the rendition. Property assets must be located in the taxing jurisdiction for more than a temporary period.

Contact your local county appraisal district for additional information.

Do I Need an EIN?

Most likely. Incorporated, or unincorporated, tiny sole proprietorship to massive corporations, your business will need an EIN (sometimes called a Tax ID) from the IRS to complete certain basic business functions like employ staff. Corporations, multi-member LLCs and partnerships will need an EIN for yearly tax filings. And many banks require a company EIN to open a business bank account.

After you have registered your Dallas Fort Worth business with the state or your county, you can apply for an EIN directly from the IRS at no cost.