When you start a small business, there are a lot of important decisions that you need to make. But few are as consequential as deciding where you will incorporate the business. This will determine how you will be taxed and the type of legal protections you’ll have. While all states have their pros and cons, many businesses are choosing business incorporation in Texas. Let’s look at the benefits this approach will provide.
Generous Tax Environment
Many people like the generous tax breaks that the Texas government provides to local businesses. For example, you won’t need to pay any personal income tax or corporate income tax. This can help businesses save thousands of dollars per year. You can also choose how you want to be taxed, depending on whether you are a sole trader or if you have investors.
Of course, you’ll still need to pay some taxes. For example, you will need to pay a state sales tax of 6.25 percent. Thankfully, this tax is set at a fairly reasonable level, with other states charging up to 7.25 percent in sales taxes.
Lower Ongoing LLC Costs
There are a few costs you’ll encounter when setting up your LLC. For example, you’ll need to register your organization. The registration costs in Texas are similar to other states in the US. However, it’s the lack of ongoing costs that will save you money.
Most of the states will charge you an annual LLC fee. In states like California, these fees can be as high as $800 per year. However, Texas doesn’t require any annual fees. Over time, this can end up saving you thousands of dollars.
Texas Enterprise Fund (TEF)
By choosing a business incorporation Texas you’ll be able to get access to the business funding the state provides. The most notable example of this is the grants made available through the Texas Enterprise Fund (TEF). This will allow you to use public money to grow your business. Since it was set up in 2003, the fund has given away over $600 million.
However, before you can receive the money, you’ll need to meet some requirements. For example, you’ll need to be competing with a business outside of Texas and create significant job opportunities for Texans.
Less Paperwork
If you are running a business, you don’t want to be wasting time filling out forms. Registering your LLC in Texas will help cut down on the amount of paperwork you need to file each year. For example, you don’t need to submit the report of your annual meetings or compile long business reports.
Favourable Laws
Texas also creates a legislative environment that supports business growth. Most of the time, the government is fairly hands-off, this makes it easier to get the approvals your business to operate. They also tend to focus on creating simple laws, so it’s easy to know what’s expected of you. If you do end up in trouble, most of the laws tend to be weighted to support business owners.
Conclusion
Texas is serious about creating a supportive environment for business growth. These efforts have paid off in recent years, with Texas being home to most Fortune 500 countries in the US. Given these benefits, it might be time to consider leveraging the benefits of business incorporation Texas to grow your company.
