Starting a new business in Texas in 2026 is an exciting step—but before you open your doors, a solid legal foundation is essential. From choosing the right structure to securing licenses and drafting contracts, staying compliant from day one can save you from costly disputes and penalties later. This checklist walks you through the key legal steps every new Texas entrepreneur should cover.
Choose the Right Business Structure
Your first major decision is selecting a legal structure. The most common options include:
- Sole Proprietorship
- General Partnership
- Limited Liability Company (LLC)
- Corporation (C-Corp or S-Corp)
Each structure affects taxation, liability, and reporting requirements. For example, an LLC offers personal liability protection while maintaining operational flexibility. Corporations may be better suited for businesses seeking outside investors.
Once you decide, register your entity with the Texas Secretary of State if required (LLCs and corporations must file formation documents).
Obtain an EIN and Understand Tax Obligations
Most businesses need an Employer Identification Number (EIN) from the Internal Revenue Service, even if you don’t plan to hire employees right away. The EIN is required for federal tax filings, opening business bank accounts, and processing payroll.
In addition to federal taxes, you must determine whether you owe Texas franchise tax. Businesses may need to register with the Texas Comptroller of Public Accounts to handle sales tax permits or other state tax responsibilities.
Understanding your tax classification early—especially if electing S-Corp status—can prevent compliance issues down the road.
Secure Required Licenses and Permits
Texas does not require a general statewide business license, but many industries are regulated. Depending on your field, you may need:
- Professional or occupational licenses
- Health permits
- Zoning clearances
- Sales tax permits
- Local city or county authorizations
Check both state and local regulations. For example, food service businesses must meet health department standards, while contractors may require trade-specific licensing.
Draft Foundational Governing Documents
Internal governance documents define how your business operates. These may include:
- Operating Agreements (for LLCs)
- Corporate Bylaws (for corporations)
- Partnership Agreements
- Buy-Sell Agreements
Even though Texas does not always require these documents to be filed with the state, they are critical. They clarify ownership percentages, voting rights, profit distribution, and dispute resolution processes. These are part of your core small business legal documents and should be tailored carefully to your company’s structure and goals.
Create Strong Contracts and Policies
Contracts protect your business relationships and reduce legal risk. Essential agreements may include:
- Client or customer contracts
- Vendor agreements
- Independent contractor agreements
- Employment offer letters
- Non-disclosure agreements (NDAs)
If you hire employees, you must also comply with federal and state labor laws. The U.S. Department of Labor oversees wage, overtime, and workplace standards under the Fair Labor Standards Act. Texas employers must also follow state-specific rules on workers’ compensation and unemployment insurance.
Clear, professionally drafted small business legal documents can significantly reduce the risk of disputes or misclassification claims.
Open a Business Bank Account and Separate Finances
Separating personal and business finances is not just good practice—it’s legally important. For LLCs and corporations, failing to maintain financial separation can jeopardize liability protection.
To open a business bank account, you will typically need:
- Formation documents
- EIN confirmation
- Ownership documentation
- Operating Agreement or Bylaws
Maintaining accurate records also supports tax compliance and future audits.
Protect Intellectual Property
If your business relies on branding, technology, or original content, consider:
- Trademark registration for your business name or logo
- Copyright protection for creative works
- Confidentiality agreements for proprietary information
Taking early action prevents competitors from capitalizing on your brand or innovations.
Review Insurance Coverage
Legal compliance also includes risk management. Common types of coverage include:
- General liability insurance
- Professional liability insurance
- Workers’ compensation (if applicable)
- Commercial property insurance
Proper coverage can protect you from lawsuits, accidents, and unexpected losses.
Final Thoughts
Launching a business in Texas in 2026 offers tremendous opportunity, but compliance should never be an afterthought. From registering your entity and understanding tax obligations to drafting essential small business legal documents, each step strengthens your company’s long-term stability.
When in doubt, consult a qualified business attorney or CPA familiar with Texas regulations. A proactive legal strategy today can prevent expensive complications tomorrow—and position your new venture for sustainable growth.
