Start a Business in Houston, TX: When it comes to starting a business, entrepreneurs must look for the place with the most potential. Whether a corporation, sole proprietorship, partnership, or LLC, having a business in Houston, TX, is a plus for any entrepreneur. In general, setting up any form of business in Texas, US, is the initial step to building an international brand.
Entrepreneurs across the globe are interested in starting and expanding their businesses in Houston, TX. With an urban population of 5724418 (estimate), the city has a lot to offer to all emerging entrepreneurs. The main reason for this is the economic environment and flexibility of the business structure in Texas. Like most places in the US, Houston, TX also offers business structures for all types of entrepreneurs; no matter what business you want to do, there’s a perfect solution for you. If you want to start limited liability company (LLC) or a corporation, or a sole proprietorship, Houston, TX has a proper business environment for all.
In this article, you will read about how to start a business in Houston and why you should choose Houston to start and run your business. We recommend you check below the important facts about Houston, TX; these might help you.
On this page, you’ll learn about the following:
Houston, TX Household Income Statistics
| Houston Median household income | 53600 USD |
| Houston households with dual income earners | 50.4 % |
| Houston households $150K+ Income | 13.8 % |
| Houston households $100K+ Income | 25.5 % |
| Houston households $100-150K Income | 11.7 % |
| Houston households $75-100K+ Income | 10.8 % |
| Houston households $50-75K+ Income | 16.9 % |
| Houston households $35-50K+ Income | 13.6 % |
| Houston households $25-35K+ Income | 10.6 % |
Houston, TX Education & Labor force Facts
| Houston residents with a bachelor’s degree (or equivalent) | 20.7 % |
| Houston residents with at least a 4-year degree | 34.3 % |
| Houston residents with a graduate degree | 13.6 % |
| Houston residents with a high school diploma but no more | 22.1 % |
| Houston residents with less than high school education | 20.3 % |
| Houston residents with some college but no more | 23.3 % |
| Houston residents with a Bachelor’s degree or higher (STEM fields) | 49 % |
| Houston households that own (rather than rent) their residence | 42.9 % |
| Houston residents 16 and older in the labor force | 66.8 % |
| Houston residents unemployed | 6.2 % |
Houston, TX Demographics
| Houston residents aged 0-9 | 14.3 % |
| Houston residents aged 10-19 | 12.8 % |
| Houston residents aged 20-29 | 16.9 % |
| Houston residents aged 30-39 | 16.4 % |
| Houston residents aged 40-49 | 12.6 % |
| Houston residents aged 50-59 | 11.2 % |
| Houston residents aged 60-69 | 8.8 % |
| Houston residents aged 70-79 | 4.5 % |
| Houston residents aged over 80 | 2.6 % |
| The average size of resident families in Houston, TX | 3.41 |
| Estimated population per square kilometer in Houston, TX | 1394 |
| Houston, TX urban population (estimate) | 5724418 |
| Houston, TX municipal population (estimate) | 2313238 |
Now that you know what makes Houston of Texas good for business, let’s get started with the exact steps on how to start a business in Houston.
How to Start a Business in Houston, TX
Starting a business in Houston, TX, needs planning, financial decisions, legal procedures, and a handful of other things. Be it a corporation, sole proprietorship, partnership, or LLC in Texas, you must go through the following steps. These steps are general steps. They are subject to change depending on the structure of your business.Generally, starting a Limited Liability Company is easy to form. Read our guide on how to start an LLC before you start your own business. Here are the steps to set up your business in Houston.
Step 0: Decide on What Business to Start
This is the first thing you work on, the type of business you want to start in Houston. Depending on that, you need to make your business plan. Apart from the legal documentation and process, you must include the following points in your business plan,
- Through market research on demand trend
- Complete Budget plan – funding your business. If you’re planning to start an LLC, then take a look at the cost of LLC
- What competitors are doing
- SWOT Analysis – check what your Strengths, Weaknesses, Opportunities, and Threats are
- Your targeted buyers
Once you have the entire plan with you, you can continue working on the legal structure of your business. LLCBuddy will guide you through the legal process of forming an LLC for your business. It’s very likely that you have already done this step 0, so that we won’t go deep into this step, let’s move to step 1.
Step 1: Choose Your Business Structure
The very first step after you decide on what type of business you want to start is to choose what type of business structure you want to form. You can form an LLC, a sole proprietorship, a corporation, or a partnership. Each type of structure has different rules and regulations. For example, if you want to start a Texas LLC, there are different types of tax and fee structures. An LLC formation is similar to forming a sole proprietorship. On the other hand, forming a corporation is much more complicated. The tax and fee structure is completely different in corporation formation.
Step 2: Name Your Business
The next step in forming a business is to give it an appropriate name. Having a business name is not so easy task. You cannot pick a random name for your company. One has to follow proper naming guidelines before they name their company. Besides, before you settle a name, you must check if the name you are looking for is available to use. You can visit the official government site of Texas to do the Texas LLC name search before you pick the available name. Below are some of the naming rules you need to follow,
- You cannot name your business that has words or phrases like Bank, University, Government, or anything that can confuse people with a government sector.
- If you are forming an LLC in Texas, then you must include words like “LLC,” “LC,” “LLC,” “Liability Company,” and “L.L.C.” If it is an LLP, then you must include “LLP” in your business name.
- The name should reflect the nature of your business. Any name that can confuse people should not be picked.
- You can check if the name of your company is available. Through the business name search process, you can search if the desired name is available for use or not.
- You can reserve your business name for a certain time before you form your business in Houston, TX by filing a name reservation application.
The above-mentioned points are basic naming rules that all businesses have to follow while naming their company. As mentioned above, these rules are subjected to change depending on the structure of the business.
Step 3: Get a Registered Agent
A Registered Agent is a person who receives all types of legal and official documents on behalf of the business. Whether a suit against your company or formation-related documents from the state, a Texas LLC Registered Agent is responsible for receiving these documents at his/her official address. In general, anyone who has the right to conduct business in Houston can be a registered agent. However, there are some requirements to becoming a registered agent.
- The person has to be 18+ years of age.
- Must be a citizen of the Texas
- Must have a physical street address in the Texas
- Must have legal rights to conduct business in the Texas
Anyone who fulfills the requirements can be a registered agent. Also, anyone from the company, your spouse, any relative, or yourself can be a registered agent. But, it is recommended that you hire a professional registered agent to look after your documentation. You can choose from the best LLC services that also offer registered agent for LLCs.
Step 4: Register Your Business
The next step is to register your business under the Secretary of State, Texas. The Articles of Organization (or certificate of incorporation) of your company should be submitted online, by mail, in person, or by fax to the Texas SOS. You need to pay the state filing fee either by Credit Card or by check to the SOS while registering your business in the Houston, TX. Your Texas LLC articles of organization should have the following details about your business
- Company/Business name, address
- Registered Agent Name, address
- Member-managed or manager-managed (in case of LLC)
- Type of business
Depending on the type of business structure, you may have to add some more information to the formation document.
Step 5: Write the Operating Agreement
An operating agreement is a document that has all the structural information of your business. In most states, it is not mandatory to create an operating agreement. However, it is highly recommended to have one as an internal document. This document records information such as,
- About Business
- Members and management
- Capital contribution
- Profit Distribution
- Change of membership
- Dissolution
In future, if any member wants to leave the company or you want to dissolve the business, then the Texas operating agreement has everything recorded, from clauses to contributions.
Step 6: Obtain EIN
EIN or Employer Identification Number is required to file taxes, open a business bank account, and if your business has employees. EIN can be obtained from IRS. It is a 9-digit number similar to Social Security Number. However, EIN is different from SSN. It is solely used for business purposes, especially for general tax filing. You have to fill out the form and submit it to the IRS website. It does not cost you anything to obtain EIN.
Step 7: Get Business Bank Accounts
Once you obtain the EIN for your business, you are free to open a business account in the US. Having a US business bank account can ease your business transactions in Houston, TX. It increases your business credibility and liquidity. It will also be helpful for business loans.
Step 8: Create Your Business Website
Business websites are as important as your business structure. It is necessary to have a catchy business website with all the information regarding your company. Along with the website, you need some more things. Things such as logos, business cards, business emails, domain names, and social media accounts are needed to promote your business. You can hire a professional business service to get all of these services under one roof.
Other Things to do After Starting Your Business
- Once your company is set in the Houston, Texas, you need to file your taxes and apply for licenses (if needed).
- Apart from the license and permits, you need to get insurance for your business. Such as General Liability Insurance, Professional Liability Insurance, and Workers’ Compensation Insurance are some of the insurances you need to get if you are about to start an LLC.
Important Houston Stats for Starting a Business
Before you start a business in Houston, it is required that you know some facts about the city. Following are some of the stats to consider before starting a business.
Education & Employment
Houston has a diverse population that comes from various educational backgrounds. There are students who haven’t finished their high-school education, whereas there are people who are more than just college graduates. Check the table (Education & Labor Force) for detailed data. From the data, it is clear that the city has enough educated and skilled people who can contribute to the labor force.
Demography
As we talk about the urban population density, the young population percentage in the city is approximately 16.9 (people in their 20s) and 16.4 (people in their 30s). This means that having any business that is new and tech-based might be profitable. The median age of the population in the city is 33.3. On the contrary, if anyone wants to start a business that is related to any old-age service, such as caregiver, primary old-age support, or something of a similar sort, then Houston has approximately 2.6 (people in their 80s and above) percent of old people. Check out the table (Demography) above for more information.
Real Estate
Another important factor to mention about Houston is the home value of owned properties. The average value of owned houses is 193668. Also, the percentage of people living in their own houses is 42.9. This reflects the real estate market of the city. For a metropolitan city, this is a considerable number.
Health
It is inevitable that living in a big city is different from living in a town or a comparatively smaller city. It directly affects lifestyle and health. It is obvious that having health insurance is important, no matter which city or region you are residing in. But there are people in Houston who still do not have health insurance. The rate of people not having health insurance is 23.2. This depicts the lifestyle and overall health demography of Houston. As you plan to start your business in this city, you must consider this stat as well.
Income & Lifestyle
The income pattern of the people in this city is given in the table (Income) above. In Houston, a part of the population has a dual family income that reflects a better standard of living. As in, people have more than one source of income. The table above shows the income percentage of various slabs.
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Reasons to Start a Business in Houston
Houston offers a bunch of business-friendly services for entrepreneurs. A proper business environment, skilled labor, tax advances, deductions, and much more are awaiting if you are interested in starting your business in Houston. Here are some of the reasons,
Stable Economic Growth
Houston or any other city in Texas has stable economic growth and an environment that helps any business to grow successfully. The economic structure of Texas shows not only balanced but also a sustainable condition of economic growth, which in turn triggers the businesses to flourish in the state.
Minimize Personal Liabilities of the Entrepreneur
If you’re considering starting an LLC in Houston, then it will be your best choice. An LLC protects your personal assets and minimizes your personal liabilities. This is one of the many reasons why having an LLC in Houston is a wise choice. Also, if you are opting for an LLC, the tax deductions will be more than having a corporation.
Federal and State Tax Relaxation
There is a series of federal taxes that an entrepreneur has to pay when operating a business in the US. Depending on the state your company is located in, the state taxes are being imposed. For an LLC, both of these taxes are much lower compared to other business structures. Along with tax impositions, some tax deductions (state-wise) lower the filing fees and other government charges. Check out the Texas LLC tax structure to know more about the tax structures for LLCs in the state.
Government Incentives for Entrepreneurs
Federal and state governments in the US ensure that entrepreneurs get a proper business environment in the state or city they are operating their business. The government provides a few incentives to the business holders in Texas or any other state. That means if you are operating any business in Houston, then Texas State will provide an incentive for creating jobs, contributing to the state’s GDP, and/or balancing the state’s tax structure.
Low Corporate and Other Business Taxes
Corporations and other business structures (except for an LLC) are liable to pay a corporate tax in Texas. Also, there is a Sales Tax that all businesses, including LLCs, have to pay. However, the rate of taxes is very low. Besides, as the businesses receive incentives, the tax burden gets lower.
Skilled Labour & Quality Manpower
In Houston, it is easy to hire employees for your business. They are not only skilled but also well-educated to help your business grow. As mentioned above, the 66.8 is the percentage of labour participation. Hence, it is clear that having a business in Houston will make a lot of difference to the existing labor force.
Demand for New Market and Industry
In Houston, Texas, there is an uprising demand for new industries and new markets. Entrepreneurs who are willing to start a business in any of the cities of any state are given enough opportunities to stay in business. Business licensing, tax deductions, incentives, and relaxation of business taxes are some of the benefits that encourage start-ups and budding entrepreneurs to start their own businesses in Houston.
If we follow the US Data, the median value of commute time for the residents to their work is approximately 27.6. If you are starting a business here, you must keep in mind that commutation can be a point to consider.
Intellectual Property Protection
The US government receives roughly more than 1 million applications for IPR every year. The federal government makes sure that there is no infringement of any patent or property rights. It does not matter which city in which state you are running your business. The rule of Intellectual Property Protection is the same for all. If you have a foreign business in the US, then you might get more benefits under the IPR act.
Other Benefits
Houston (aka ) is ranked at 1 in terms of importance. Apart from the above mentioned reasons, there are some other benefits that businesses enjoy in Houston. For example, technological advancement, a stable political environment, renewable resources, sustainable non-renewable resources, and some more benefits make things easier for entrepreneurs to start and run their businesses. According to US Data, the percentage of young people in Houston is 16.4. Hence, it would be great to start a business that is related to tech here as you might get a good number of clients.
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When Should You Start Business In Houston Texas
Whether you’re looking to start a new business in Houston or you’re expanding an existing one, there are a number of reasons to consider this Texas city. It’s got an enviable economy, a growing population, and a diverse mix of cultures. You’ll also find affordable real estate, an abundance of tacos, and a vibrant business scene. And, if you’re looking to expand your business in Houston, you’ll be surrounded by other entrepreneurs and business owners who are happy to provide advice.
For starters, Houston has an impressive number of Fortune 500 companies, each of which has enormous intellectual and economic resources. Additionally, the city boasts a thriving tech and energy industries. Combined, these sectors generate over $490 billion annually. This economic impact is expected to grow by 65% in the next 40 years.
The city is also home to two universities, including Rice University, which consistently ranks in the top tier of degree programs. The Texas Southern University, in particular, is also among the country’s best. In addition, Houston offers a wealth of resources for entrepreneurs, including free business advising and co-working spaces. The Texas Economic Development Corporation also aims to support entrepreneurship.
The state has a number of business-friendly tax policies that help small businesses grow. For example, the state offers a tax-free business tax rate for certain companies. This enables startups to invest more money in the growth of their business. In addition, the state does not levy personal income taxes, making it a great place to start a business.
Aside from the tax-friendly policies, the city also has a number of other advantages for startups. For instance, there is a robust startup ecosystem and a large, young and diverse population. In addition, the city is a cultural and social hub. During the first three quarters of 2018, more than 760 companies expanded in Houston, boosting the local economy and job market. In fact, experts estimate that if Houston were a separate nation, it would rank as the 30th-largest economy in the world.
To take full advantage of Houston’s startup scene, you’ll need to create an effective business plan, secure financing, and make smart spending decisions. You’ll also want to ensure that your business is legally compliant with state and federal regulations. In addition, you’ll need to find a reliable registered agent to handle legal matters.
The state’s Small Business Administration offers advice and grants. In addition, there are a number of nonprofit lenders available. Lastly, you’ll want to research the various types of licenses required for your specific business. For instance, if you’re planning to open a restaurant, you’ll need to obtain health permits, signage permits, and building permits.
Getting a business license is not always easy, but it is important. You’ll need an Employer Identification Number, or EIN, from the Internal Revenue Service. If you’re looking to hire employees, you’ll also need to register your business with the state. Additionally, you’ll need to comply with federal regulations, including Equal Employment Opportunity laws.
FAQ About Houston, TX
In Houston, TX, for an LLC, you may act as your own registered agent. You must be older than 18 and have the right to do business in Houston, TX in order to register as a registered agent there.
In Houston, TX, there are several options for working from home. Selling products online is among the most common. In Houston, TX, this is an excellent option to earn money from home. Selling your own goods is another way to get income from home in Houston, TX.
In Houston, TX, a sole proprietorship is a superior business structure than an LLC since it is less expensive to start. In Houston, TX, comparing LLC versus sole proprietorship, LLC can be a superior option.
Over a thousand small enterprises may be found in Houston, TX, which has a population of over a million people. A food truck company is among the most well-liked small enterprises in Houston, TX. There are also modest garage sales and home-based bakeries.
A seller’s permit is a license that the city or county has granted. The vendor is now able to sell in Houston. Anyone selling goods in a public setting must have a seller’s permit. In Houston, TX, the permit is good for a certain amount of time.
Houston, TX is most recognized for its thriving economy. This will be an excellent choice for you if you are interested in business and eager to launch your own enterprise in this city. You may simply start your own company in Houston, TX.
A Limited Liability Company (LLC) in Houston, TX is a kind of company structure akin to a sole proprietorship. But it’s not simply a solo proprietorship. An LLC is created by combining a partnership with a sole proprietorship. It uses pass-through taxes.
Houston is a great place to start a business. The cost of living is low, and the cost of starting a business is relatively low. The cost of starting a business varies depending on the type of business you want, but it typically costs $300 if you start an LLC.
In Houston, TX, LLCs need insurance. In general, having insurance for your LLC is good. Some insurances, like workers’ compensation, are a must if your LLC in Houston, TX has employees. You must check with the Texas SOS portal for more information.
Numerous enterprises have relocated to Houston, TX, in recent years. The primary cause is the city’s expanding economy. The industry and service sectors have recently made enormous contributions to the state economy. As a result, companies are keen to relocate to Houston.
Making money quickly in Houston, TX, or any other city, is challenging but not impossible. In Houston, TX, having a well-liked and in-demand company might speed up your financial progress. For instance, reputable possibilities include real estate, dining establishments, personal trainers, and construction companies.
In Houston, TX, you won’t have to worry about company income taxes if you establish an LLC. All you have to pay is a state income tax (if applied) and mainly federal income tax on your income from LLC.
For years, people have argued about which city is the best to live in. Houston is renowned for its thriving economy and multicultural population. Houston is renowned for having more reasonable living expenses. When determining which is less expensive, there are several things to take into account.
Obtaining a business license is necessary if you want to start a company in Houston, TX. Depending on the kind of enterprise you’re creating and its size, obtaining a business license in Houston, TX, might be expensive.
You’ll need to take a few steps if you want to establish your own LLC in Houston, TX. You must first register your company with the state of Texas. Additionally, a registered agent must be named. By submitting formation paperwork, you may do this.
For an LLC in Houston, TX, fees paid to the state are more than a sole proprietorship. Also, in Canada, the difference between a corporation and LLC is not very clear. So, an LLC in Houston, TX might be considered a corporation in Canada. LLCs are complicated to run.
Having Houston, TX small business insurance is a good idea. Whether it is required or not, insurance may shield your company from mishaps and uncomfortable situations. As a result, one should get small business insurance.
Depending on the kind of company structure you have in Houston, TX, the tax burden varies. A sales tax, franchise tax, and employment tax, for instance, may be due if you establish an LLC (if needed). Corporations, however, are subject to paying business income taxes.
In Houston, TX, financing for companies is not always simple to come by. Due to a lack of funding, many companies fail. However, banks and angel investors provide speedy financing to help entrepreneurs in Houston, TX.
The reason for Houston, TX to become so popular is the rich culture, population, and art of the city. Though it is a business city, however, the rich culture, people, and education make people come to Houston.
Whether relocating to Houston, TX, is a smart decision or not is a little debatable. You may choose based on the kind of company you are doing. Houston offers fantastic chances for aspiring business owners.
The wealthiest companies in Houston, TX, are the smaller ones, such as consultancies, real estate agents, and small construction companies. These Houston, TX small enterprises are the most well-liked and successful ones. You may use these suggestions if you’re thinking about starting a small company.
In Houston, TX, the cost of homes may decrease or increase. Given how quickly the real estate industry is expanding, it is a little difficult to say. As a result, Houston, TX’s odds of seeing price drops are lower.
In Houston, TX, there are several business ventures that may be launched with only $1000. You may launch an online sales company. internet retailers are another option. You could start a business that has to do with computers and technology and use a good name as your company name.
One of the top business locations is Houston, TX. Houston is a business-friendly city in Texas, so moving your firm there won’t be a problem.
In Houston, TX, $25,000 is the minimum living wage. In Houston, a reasonable income would be between $40,000 and $60,000. In this city, you may need to make more money if you want to live a luxurious lifestyle.
It is simple to form an LLC in Houston, TX, by visiting the website of the Texas Secretary of State. Prior to applying for your tax ID number and opening a bank account, you must first register your business name with the state.
Creating an LLC is a fantastic method to launch your own company. Your LLC must, however, be renewed annually. Ensure that you do it before the deadline if you’re in Houston, TX. In order to prevent any discrepancies, you must renew your LLC before the deadline.
If you’re wondering why LLCs are so common in Houston, TX, the reason is fairly simple. LLCs are affordable, simple to create, and provide several tax benefits. Small enterprises and startups in Houston, TX like forming an LLC.
In Houston, TX, you must use a registered agent when forming a new LLC. It might be a family member, spouse, boss, or even you. All of your legal and official papers are received on your behalf by a registered agent.
You may launch a business that offers tours of Houston, TX that take in all the greatest restaurants. You’ll have to start with a name and a logo and related license and documents to become a city tour guide.
Businesses in Houston, TX who are interested in insurance should speak with an agent to see how much it will cost. It’s crucial to choose which insurance policy is ideal for your company since there are several varieties available. Inquiring with the agent is a smart place to start.
If you have a small business in Houston, TX, you might need to take some policies. Employee code of conduct policy, health and safety policy, vacation and attendance policy, and others depending on how big your team is.
In Houston, TX, forming an LLC is not entirely free. Everyone must pay the State a minimum filing fee. The state filing fee is tax deductible in several states. Consequently, you may get a free LLC.
Towards Houston, TX, registering your business is the first step in earning money with an LLC. Online, via mail, or in person are all acceptable ways to register your business. You may start offering your goods and services for sale to generate revenue after your LLC has been registered.
In Conclusion
Starting a business in Houston is not only easy but also profitable. A large portion of the US and even people from other countries are registering their business in the US for intercontinental brand building. Besides, Texas has a sustainable economic atmosphere that is enough to encourage newbies to start and run their businesses in Houston, TX.