If you’re a business owner, moving to Texas may involve more than packing up your belongings and finding a new place to call home. You’re probably also considering what relocating to the Lone Star State will mean for your business, finances, and tax responsibilities. Before you flip the switch to turn the open sign on, you’ll want to be sure that your business is legally in the clear to operate in Texas and that you’ve wrapped up any loose ends back in your old state.
The exact protocol for establishing your business in the state will depend on factors like your industry and how your business is organized, but we’ll cover the basics and point you towards some helpful resources for folks in your position. This doesn’t cover everything, so be sure to complete your research by talking to a tax professional or other advisors that can help you properly move your business to Texas.
7 Things to Consider When Relocating a Business to Texas
Here are some general things to keep in mind when moving your business to Texas.
1. Let your former state know that your business will no longer be operating in that state.
It’s a good idea to get in touch with relevant agencies in your old state to determine what you need to do before you leave. Depending on the state you’re coming from and your business structure, you may need to dissolve the existing business before you establish it in another state.
Not sure where to look? Typically, you can find this info with your state’s Department of Economic Development, Secretary of State, Department of Commerce, or a similar state agency.
2. Find a new home for your business.
Before you start filling out all the paperwork to move your office in the state, you’ll need an address to write down! Unless your business operates out of your home, this means finding the right commercial real estate.
Leasing commercial spaces should be pretty straightforward. But if you’re looking to buy, it’s time to consider your financing options. Working with a local commercial lender who understands the challenges of a business relocation can make the process a lot easier.
3. Change your address with local, state, and federal agencies.
Once you have a new business address, be sure to update your information with relevant agencies, including those in your old state. Even though you won’t be operating in the state, it’s still important to receive any correspondence.
You’ll also want to let the IRS know about your new address. Form 8822-B notifies the IRS if you’ve changed your business mailing address or business location.
4. Register your business with the Texas Secretary of State.
You don’t need a general business license to run a business in Texas. However, for your business to be recognized as a separate legal entity, it will need to be registered with the Texas Secretary of State. This can be done online through the Secretary of State’s portal.
The Secretary of State also has a fantastic FAQ for foreign or out-of-state entities moving to Texas.
5. Determine which, if any, permits or licenses you need to have to operate your business in Texas.
Though a general business license isn’t required, you may be required to hold a license or permit based on your line of work. Some common permits and/or licenses that you might need include:
- Professional license: Many professions in Texas require you to be licensed in the state before offering or performing services. Common professions that require licensing include real estate agents, therapists, tattoo studios, food services, cosmetologists, and many more.
- Certificate of Occupancy: Your Texas city or county may require a Certificate of Occupancy if you operate your business in a commercial building.
- City-specific business license: Many cities in the state require a city business license for businesses like amusement centers, those that sell alcohol, etc.
- Building and zoning permits: On the local level, signage, zoning, or building permits may be required.
- Sales tax permit: If your business is engaged in selling or leasing tangible property or taxable services, you will need to hold a Texas Sales Tax Permit.
- Resale certificate: If your business plans on buying merchandise to resale to your customers, you should obtain a Texas Sales and Use Tax Resale Certificate. This will exempt your business from paying sales tax on what you buy to resell.
Staying compliant with state and local requirements all starts by making sure that you have all the necessary city, county, and state-required licenses. This list is by no means all-inclusive; visit the Texas Business Permit Office website to learn more about the specific permits your business may require. They do not issue or administer any permits themselves, but they do help Texans navigate the licensing and regulatory environment.
6. Determine your tax responsibilities as a business operating in Texas.
Next, you’ll need to consider your tax responsibilities. Depending on the structure and size of your business, you may be liable for state franchise tax or employment taxes. You may also be liable for local business and property taxes based on where you’re located. For more information, visit the Texas Comptroller’s Office.
If you are still unsure about your tax responsibilities, a CPA or tax professional will be able to put you on the right track.
7. Transfer your business funds to an account at a local financial institution.
If you did your business banking at a local financial institution in your old state, consider opening a new business account at a local credit union or bank. Though much of banking can be done online nowadays, not having branches nearby can be a hassle. Additionally, banking with a local financial institution can come with some great perks, access to helpful resources, and beneficial business connections.
Texas Welcomes You!
Taking the time to get your business affairs in order before you move will save you a lot of headaches down the road. Be sure to check in with relevant state agencies— as well as the agencies in your old state— to learn more about relevant relocating procedures. After that, you can focus on finding a new home for your business and getting established locally. Business relocation can be a great opportunity; Texas is a great state to be a business owner, and we’re glad to have you!