Texas doesn’t issue a general business license, which can surprise new business owners. Instead, licensing involves applying for various registrations specific to your business structure, your chosen industry, and the location your business will operate from. Some licenses are mandatory while others apply only if you’re working in a regulated profession or selling taxable goods or services.

Below, we’ll explore the permits and licenses needed to operate a business in Texas, which order to apply for them, and renewal rules.

Key takeaways

• Texas has no general state business license. Requirements will depend on your business structure, industry, and location.

• Businesses typically need a sales and use tax permit, plus any required local permits or licenses.

• Renewal timelines and penalties for failing to renew on time vary by license. Occupational licenses from the Texas Department of Licensing and Regulation (TDLR) carry the biggest penalties for lapsing.

What is a business license in Texas?

Texas doesn’t issue a single business license. Instead, you’ll likely need a mix of local and state permits to legally start a business in Texas.

What types of business licenses and permits does Texas require?

Texas splits licensing into four separate categories. Here’s what each one entails:

• Business formation and registration: If you’re forming a limited liability company (LLC) or corporation, you’ll register with the Texas secretary of state. If you’re a sole proprietor or part of a general partnership, you won’t need to complete this step unless you’ll be operating under a name that isn’t your own, in which case you’ll need to file an assumed name certificate with the county clerk’s office.

• Sales tax permit: If your business plans to sell taxable goods or services in Texas, you will need a sales and use tax permit from the Texas comptroller. This applies even to online businesses with no fixed address in the state. As long as your business is delivering goods or services to Texas customers, you’ll need a sales tax permit.

• Professional and occupational licenses: If your business employs cosmetologists, real estate agents, healthcare providers, or other regulated professions, then you will need a license from the Texas Department of Licensing and Regulation (TDLR) or the board that oversees your industry, such as the Texas Medical Board or the Texas Real Estate Commission.

• Local permits: Cities and counties don’t issue general business licenses, but you might need a certificate of occupancy before you open a physical location. They might also require a health permit, signage permit, or fire inspection, depending on your industry and address.

How do you get a business license in Texas?

Being properly licensed in Texas means securing various registrations and permits. Here’s the order that many new businesses follow in filing their applications:

• Choose and register the business structure: Sole proprietors and general partnerships don’t need to file anything with the state unless they’re using a business name other than their own name. LLCs and corporations file formation documents with the Texas secretary of state through SOSDirect, the state’s online filing portal.

• File an assumed name certificate when using a “doing business as” (DBA) name: Sole proprietors and partnerships file this certificate with the clerk of the county where the business will be operating from when using a “doing business as” (DBA) name. LLCs and corporations file theirs with the secretary of state instead.

• Get an employer identification number (EIN): This is free through the Internal Revenue Service (IRS), and the application takes just a few minutes online. You’ll need an EIN to open a business bank account, hire employees, or file most state tax registrations.

• Apply for a sales and use tax permit through the Texas Comptroller of Public Accounts: This is necessary if you sell taxable goods or services. The application is free and available through the comptroller’s eSystems portal.

• Apply for industry-specific licenses: If your profession requires a license, you can obtain it through the TDLR or the relevant licensing board.

• Check local requirements with your city and county: This matters most if you’re leasing or building a physical space since a certificate of occupancy is often required before you can open.

How much does a business license cost in Texas?

Because Texas licensing is fragmented across several agencies, the fees vary as well. Here’s what to expect at each level:

The state-level filing fees are fixed and published by the secretary of state. They hold steady regardless of where in Texas you’re incorporating. However, local fees vary. A certificate of occupancy in a small Texas town might cost $75; in Austin or Houston, inspection and permit fees for a commercial kitchen or retail build-out can cost hundreds of dollars, or more, depending on square footage and what the space was previously used for.

Consider confirming current fees directly with the issuing agency before you budget. City fee schedules in particular change often.

How do renewals work for a Texas business license?

The sales and use tax permit doesn’t expire and doesn’t require renewal, although the comptroller can revoke it if you don’t file. Assumed name certificates are valid for 10 years and need to be renewed. TDLR licenses usually have to be renewed every one to two years, depending on your industry. The TDLR sends renewal notices by mail or email to the address on file, but you might want to mark your calendar in case you miss it.

If you let a TDLR license lapse, you’re typically barred from practicing that profession in Texas until your business is reinstated. Reinstatement can mean late fees, paperwork, or, in some cases, retaking an exam, so a missed renewal notice can end up costing more than the renewal itself.

Local certificates of occupancy generally don’t expire unless the use of the space or the ownership changes, although some cities require periodic fire or health inspections for specific permit types, such as restaurants.

What are common issues when opening a business in Texas?

A few things can surprise new Texas business owners. For example, although Texas doesn’t have a general business license requirement, that doesn’t mean other licenses aren’t required. Selling taxable products online without a sales and use tax permit or working as a contractor without a TDLR license can lead to back taxes with interest. A business can even lose the ability to enforce contracts in Texas courts.

Failing to follow home-based business rules is another common mistake. Texas doesn’t regulate these businesses at the state level, but individual towns and cities do. Several Dallas–Fort Worth suburbs require a home occupation permit before you can legally run a business from a residential address, even if customers never visit there.

Franchise tax obligations are another common cause of confusion. Texas has no state income tax, but LLCs and corporations still owe a franchise tax to the comptroller once a business’s revenue exceeds the $2.65 million threshold. It’s filed through the same comptroller portal as your sales tax permit, and falling behind on it can complicate renewals of other registrations later.

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FAQs about Texas business licenses