If you are planning on forming an LLC or establishing another type of business in the near future, Texas should definitely be one of the states you consider. The state is well known for its business-friendly ways – which is why so many startups have set up shop there. And many of those startups eventually go on to become major players in their industries. With a favorable tax policy for businesses and a number of other advantages, Texas offers benefits that you may not find in other states.
5 Reasons to Start a Business in Texas
1. You will pay lower taxes
The tax environment in Texas is very favorable to businesses. There is no state income tax nor is there a corporate income tax. That means you get to keep more of the money your business earns throughout the year – something that comes in really handy when you are just getting your business off the ground. And when you do become successful, more of your profits will stay with you instead of going into the state’s coffers.
The low taxes in Texas also make it appealing to the people you are planning on hiring to help with your business, particularly those that will be earning a bigger salary. You may be able to attract a bigger talent pool simply because of your location due to the tax advantages it offers.
It is always a good idea to consider the long-term when thinking about where to start your business, and your tax burden is one of the biggest things you need to think about when you consider the future. While the difference in the taxes you will pay may not seem too significant when you are first establishing a business – since you are not going to be making that much money, to begin with – if you are successful the taxes you pay will go up accordingly. Texas makes it as simple as possible to project your taxes into the future because you do not have to worry about state taxes. Federal taxes will still take their standard bite out of your profits, but at least you will not have to worry about Texas trying to do the same.
2. The state has a low cost of living.
Texas is relatively affordable to live in for you and the employees you want to attract. Many of the basic costs in the state are lower, as the cost of fuel for your vehicles and the cost of real estate. Some estimates put the cost of real estate in Texas at 40 percent lower than in other business hubs. If your business uses a lot of fuel to operate, the lower fuel cost will add up to more profits for your company. If you need to purchase real estate to house your business, you can do so for a lot less than you would if you were in many other states.
The most basic needs tend to cost less in Texas, such as food, utilities, rent and health insurance. These lower costs are great for you and any partners you have, but they are equally as beneficial for any employees you hire.
3. There are plenty of things to do outside of the business.
You and your employees need a life outside of work for mental and physical health. Texas gives you plenty of things to do, whatever your personal tastes for recreation and entertainment happen to be. The state has multiple state parks for outdoor recreation, a seemingly unlimited number of lakes for water sports and fishing, and a 3,000-mile coastline for when you want some beach time. The only outdoor attraction the state is missing is snow-covered mountains for winter sports – but you can hop across the state line to New Mexico for those experiences.
Beyond outdoor recreation, Texas has a huge arts and dining scene, with numerous world-class restaurants and music hubs like Austin. When you want to have some downtime, Texas gives you all the options you could ask for. And if you want to go outside of Texas, you only need to visit one of the 380 airports scattered throughout the state to go anywhere in the U.S. or across the globe.
4. Innovation is encouraged.
For a long time, California’s Silicon Valley and New York were considered the hubs of innovation. If you wanted to do something new or exciting, you went to the coasts. But the high cost of doing business in those areas has caused many innovative companies to seek greener pastures. Texas took note and has done its best to create a haven for innovative businesses, which is why you see more and more companies establishing business centers in the state. Texas is home to numerous industries that you may not be aware of, including biotech, aviation, aerospace, energy, computer tech and information tech.
You can find innovative tech companies showing off their accomplishments at events like South by Southwest (SXSW). It is held in Austin each year and attracts tech giants, startups, artists and thought leaders from around the world to showcase their creations to massive crowds.
5. The climate for small business is top-notch.
While it can be great to hear those big businesses and international corporations choose to make their home in Texas, if you are planning on starting your own business you want to know that the state is welcoming to your needs, too. Fortunately, Texas is considered one of the friendliest states there is for small businesses.
The Thumbtack.com Small Business Friendliness Survey puts Texas at or near the top of the list every year. The site rates states on a variety of factors that are important for small businesses, including:
- Ease of starting a business
- Ease of hiring
- Employment, labor and hiring
- Tax code
- Training and networking programs
- Government websites
While there is never a way to guarantee that a business will be successful – since starting a business always carries risks – there are certain things a state can do to encourage success. Texas goes out of its way to make it easy to start your business, hire employees, adhere to state regulations, understand tax obligations, get licenses and more.
You can easily set up an LLC or other business entity in Texas – and you can likely do it for less money than you think. Once you have established your business in the state, you can take full advantage of all the benefits it offers for you, your employees and your new company.