If you’re exploring how to start a business in Texas, you’ll need to know that most businesses need at least one license or permit, depending on what they do and where they operate.
Knowing how to apply for a Texas business license or permit is an important consideration. No matter what type of business you operate, whether it’s an LLC in Texas or a sole proprietorship, you’ll need to understand the processes, payments required and details of each license. If you’re just getting started, it’s also helpful to learn how to start an LLC in Texas so you establish the right foundation before applying for licenses.
What are business licenses and permits?
The state of Texas provides a helpful online guide to licenses, permits, authorizations, certifications and registrations necessary to run a business.
The comprehensive guide covers more than 300 types of businesses and details the procedures needed. The guide also links to other online resources necessary to complete the processes required to obtain licenses and permits.
Business licenses
The State of Texas does not require a general business license. Instead, entities such as LLCs register with the Secretary of State, and sole proprietors or partnerships that do business under another name register an assumed name with the county clerk.
By obtaining a certificate of formation from the Secretary of State’s office or an assumed name certificate from the county clerk’s office, a business will satisfy a requirement for a general business license that other states may mandate.
Despite the lack of a statewide mandate, many municipalities require a license or permit to operate within the city or county limits.
Permits
The Office of the Governor runs a Business Permit Office. The office’s goal is to make it easier to operate a business within the state.
The office helps businesses navigate the permitting, licensing and regulatory requirements within the state. The office itself does not issue or administer any licenses or permits.
In addition to the permit guide, the office can also help you resolve problems or delays with a permit application or review.
The office also offers a License and Permit tracker to assist businesses. The tracker is a grid that includes details for each license or permit, including:
- Issuing agency
- Contact information
- Date application was submitted
- Amount paid and how paid
- Date issuance expected
- Notes
- Date issued
- Renewal date, if needed
How to register for licenses/permits
To register as an LLC in the state of Texas, you’ll need to file a Certificate of Formation (Form 205) with the Secretary of State, online through SOSPortal or by mail. From there, requirements for local licenses and permits will vary based on the municipality where you will operate.
What happens if I fail to obtain a license?
Failure to obtain a license can be costly. Depending on the license, you may be subject to penalties at the local level. In some cases, a municipality may order you to stop operating until the necessary permits are obtained.
Local business licenses
In Texas, as in many states, there are local requirements to operate a business. These permits and licenses often relate to local health and occupancy guidelines. Fees vary by city and county. See what Texas business licenses typically cost. Either way, it’s important to obtain these approvals before operating.
Check with local clerks
If you are unsure where to start, a good practice is to contact the city or town clerk’s office. They can usually help you determine what is required and point you toward the appropriate office.
Check with the county you’re in
In addition to the city or town where you operate, you should also check with the county to understand if there are specific guidelines. For example, businesses in Harris County that own taxable business property, such as equipment or inventory, must file a rendition with the Harris Central Appraisal District by April 15 each year.
State business licenses
While there is no official Texas business license, you may still need a permit to sell within the state.
Seller’s permit
If you sell or lease taxable items or sell taxable services in Texas, you need a sales and use tax permit. This requirement applies to any individual, partnership, corporation or legal entity doing business in Texas in any of the following situations:
- You sell tangible personal property in the state
- You lease or rent tangible personal property in the state
- You sell taxable services in the state
Remote sellers need a permit once their revenue from Texas reaches $500,000 in the past 12 months. The state has a detailed website on the matter.
The state sales tax rate is 6.25%, and local jurisdictions can add up to 2%, for a combined maximum of 8.25%.
How to obtain a seller’s permit
You can get a sales and use tax permit from the Texas Comptroller. There’s no fee for the permit, though the Comptroller may require a security bond. Apply online through the Texas Online Sales Tax Registration Application or by mail with Form AP-201. The application asks for information such as:
- Business entity type and legal name
- Federal Employer Identification Number (FEIN)
- Texas Secretary of State file number
- Details of each owner, general partner, officer or managing member
- Mailing address and business locations
- Your North American Industry Classification System (NAICS) code
- Expected sales
Fees & renewal
There’s no charge for the permit, but you may have to post a security bond. Texas sales tax permits don’t need to be renewed, but a permit is only valid while you’re actively selling, and the Comptroller can cancel an inactive permit.
Other common state licenses
Many occupations and industries need a state license, for example from the Texas Department of Licensing and Regulation. Check the Texas Business Licenses and Permits Guide for your business type, and your city and county for local requirements. Tailor Brands can also help you find and file the licenses your business needs.
Federal business licenses
Businesses in certain sectors will be required to obtain federal business licenses.
Are there mandatory federal licenses?
Depending on the type of business you operate, you may need a federal license or permit.
Common federal business licenses
You can obtain the necessary federal licenses from the appropriate federal agency. Here are some of the most common.
- Agriculture. The Animal and Plant Health Inspection Service of the U.S. Department of Agriculture issues permits for the import, release and transit of regulated animal and plant items
- Alcohol. The Alcohol and Tobacco Tax and Trade Bureau issues various permits online
- Aviation. The Federal Aviation Administration issues licenses and certificates for aircraft, operators (medical clearances), air carriers and airports
- Transportation. The U.S. Department of Transportation issues permits for various transportation issues. Others, such as truck and cargo weight, are handled at the state level
Conclusion
Filing for licenses and permits in Texas takes some careful planning. While there is no statewide business license, you will need a sales and use tax permit if you sell taxable items or services. You will also need to check with local municipalities and the federal government for any required licenses and permits at those levels. Most of these requirements are specialized and depend on the type of business you operate.