Advantages of Incorporating a Business in Texas
Why should you register a new business in Texas? There are plenty of benefits for business owners but apart from that, this is a state that provides just the right business environment. Texas economy is literally driven by small and medium sized businesses (SME’s) thanks to the progressive business laws that pave the way for innovation to thrive.
Most companies in Texas, LLC or Corporations also leverage the advantages that the state has to offer right from limited liability to privacy, including the favorable tax climate.
Advantages that drive New Business Formations
There are several advantages that you can enjoy when we help you register a new business in Texas. Some of them include:
Advantage#1: Favorable Tax Climate
This is one of the top advantages that you can enjoy only when you register a new company in Texas. Compared to some of the other states, business tax in Texas is lower. There is ‘no” personal income tax and this provides the much required competitive advantage. Non-existent personal income tax means:
- You don’t have to pay any tax on the money you make through your startup company in Texas.
- This opens the door for businesses to recruit top talent without having to worry about losing profit.
The good news for small businesses is that the existing low business tax rate can shrink lower depending on the type of business. If the revenue of your startup company in Texas does not exceed a specified threshold then you will be able to enjoy zero business tax.
Favorable tax climate is one of the prime reasons why Texas has been the home to telecom giants.
Advantage#2: Texas Enterprise Fund (TEF)
The Texas Enterprise Fund (TEF) is the real advantage that can strengthen the roots of businesses especially in terms of providing cash grant. If you are currently pondering over the decision of registering a new company in Texas or not then this is the game changer.
Texas Enterprise Fund (TEF) is basically a financial incentive tool where a cash grant is provided for those projects that promise significant job creation as well as capital investment. TEF was implemented in 2004, and since then cash grants exceeding $600 million have been awarded across different industries.
Some of the other programs that can be beneficial for businesses include Texas Enterprise Zone Program, the Skills Development and Self-Sufficiency Fund, all of which are managed by the Texas Workforce Commission, and other local incentives as well as tax abatements.
Are there any Disadvantages of Incorporating in Texas?
If you want to register a new business in Texas, it is one of the best decisions you can make. There are several advantages and only a few disadvantages. If you choose to incorporate your business vis-à-vis form a sole proprietorship then the filing fee is quite steep at $300. Along with this, the process of incorporating your startup company in Texas will require more time as compared to other forms of businesses. Since, Corporations in Texas are monitored by the state, local, and federal agencies, there is more paperwork to be done and it has to be ensured that all documents are in compliance with state regulations.
The only thing that really matters when it comes to incorporating your business in Texas is that the advantages outweigh the disadvantages. Texas is a state that promotes long-term business growth by ensuring you don’t lose your profit in taxes!