How To Get A Business License In Texas
Texas is one of the best states to do business in America, because of its attractive tax environment and the great business ecosystem that the Lone Star State has been cultivating. Businesses operating in the state need a business license for every type of business operating in the state. This article will explain how to obtain a business license from the local to federal level.
What Kinds of Business Licenses Are There?
A business license permits the holder to conduct a specified business activity at the local, state or Federal level.
Local business licenses, or general licenses, are what you will typically get from the local government. There are cities who do not require a business license, but they may require your business to have a specific license for certain business types. For instance, businesses in areas traditionally thought of as immoral, such as alcohol, have to apply for a special license to operate in Dallas. Businesses also have to get an occupational tax certificate.
The most common types of businesses licenses are:
- An operating license
- A sales tax license which will allow you to sell your products and services
- A liquor license to permit you to distribute alcohol
- Speciality licenses for business in areas such as accounting, legal counseling, massage therapy and others.
If you operate in multiple business lines, then you will need to get multiple business licenses. Some businesses may also need further permits and licenses.
Some cities will require you to have a signage permit in order for you to put up external signage.
What Do You Need to Get a Business License?
The business licensing you need depends upon the kind of business that you need. The kinds of requirements that you have to meet vary with the city or county. So if you want a specific understanding of what you will need, you have to study the requirements in the city or county that you want to operate in.
You can start off by speaking to the Texas Economic Development & Tourism (EDT) division, to determine which business licenses and permits you will need.
You will need to get an employer identification number (EIN) from the Internal Revenue Service (IRS). The EIN is your business’ social security number.Without it, you can’t pay your federal taxes, open a bank account, or get a business license.
The city and county clerk’s office will have a lot of information about the specific licensing rules that you will have to meet.
Steps to Take to Get a Business License
Some business structures require a business license for you to operate. In Texas, you will not generally face any statewide licensing requirements, but you may need specific licenses or permits. You will, however, need a business license for every operating segment of your business.
- Register Your Business
You have to register your business with the Texas Secretary of State. You have to select from a variety of business structures, mostly, sole proprietorship, corporation, S corporation, partnership, and limited liability company (LLC). The LLC is permitted under state statute, and is very popular with entrepreneurs. You can learn more about LLCs here.
- Get an EIN
As stated above, you will need to get an EIN for your business.
- Apply for Your Business License
As we said, the most common business license is the general license. You typically won’t need a statewide general license. Rather, you will get general licenses from local governments. Now, a lot of cities and counties do not demand that businesses have a general business license.
At the state level, Texas requires businesses to apply for a sales use and tax permit. A tex permit is necessary for sales of property, leasing or renting of property, or selling taxable services.
You can apply for a business license online or through the mail. The state comptroller permits is the relevant authority for applying for a permit. There is no fee for applying for a general business license. You can apply for a business license with the Department of Licensing and Regulation.
There is only one statewide requirement for a permit or license, and that’s the sales tax or seller’s permit.
- Figure Out Which Other Licenses You Need
As we have said, local governments have their own requirements and you will need to speak with the local government authorities to see what licenses you need. This will, as we said, depend on the kind of services you are providing or products you are selling. For example, San Antonio requires sole proprietorships to apply for a peddler’s license for them to sell in public spaces or door-to-door.
- Apply for Other Statewide Licenses
If you want to sell or rent property or taxable services, you will need to get a sales and use tax permit. If you are operating a business in the state, you will have to get a seller’s permit. This is the only statewide permit or license that the state will ask of you, so that you can sell or lease property or taxable services.
- Apply for Federal Licenses and the Appropriate Tax Treatment
You will also have to apply for any licenses required by the federal government. Typically, your business will not need to get a business license from the federal government, but businesses regulated by the federal government do need to apply. A federal license and permit can be obtained with the relevant Texas department.
Businesses regulated at the federal level are agriculture, alcohol sales, aviation, commercial fisheries, maritime transportation, mining, nuclear energy, radio broadcasting, and transportation.
The Cost of Getting a Business License
There is no filing fee for getting a business license or sales tax permit. However, local governments do levy fees for getting their licenses and permits. Fees are typically between $15 and $30. Some business licenses may cost hundreds of dollars.
Just to show how costs depend on the local government and type of business, in Austin, if your business is in the amusement machine business you will need to pay a specialized license of$50 a machine.