One of the main drivers of the Texan economy is the small business sector. The 3 million small businesses comprise 45.1% of employees, the equivalent of close to 5 million people, according to data from the U.S. Small Business Administration.
Several factors facilitate the potential for growth in the state with micro-entrepreneurs in several industries. The sectors with the most prominent small businesses include Professional, Scientific, and Technical Services and Hospitality and Leisure. One of the most critical is the time it takes to register an LLC in Texas – 3 business days compared to seven to 10 business days in other states. Electronic filings with online incorporation services are often available on the same day.
LLC formation is one of the preferred legal structures for small business owners. The advantages include personal asset protection, pass-through taxation, and protection for the registered business name.
The potential for growth for small businesses in Texas is due to some significant factors, according to Incorporation Rocket, the experts in business formation services and Texas resources.
Economic and Business Advantages For Small Business Success in Texas
Overall, Texas is known for doing things big, and the state has won the title “Best State to Start a Business in the U.S.” for several years in a row. Here is why so many businesses in the thriving state continue to find success:
Young Growing Workforce
Texas is undergoing a population boom. Figures from the last census show that its population of 29 million is at an all-time high. Projected population numbers for 2040 are 45 million. The state also contains five of the fifteen fastest-growing cities in the U.S. The median age of Texans is 35.1 years, lower than the American average, meaning a continuing strong workforce.
Interestingly, 8 out of 10 people born in the state stay there, and it has attracted an influx of businesses and workers from other states.
There is no personal income tax or corporate income tax in the state, meaning higher profits and growth for businesses. Also, from the 2020 to 2021 tax year, small businesses with a turnover of less than $1,180,000 pay zero tax. In Texas, business tax is called franchise tax. The tax that small firms pay in the wholesale and retail sectors is just 0.375% of their total revenue. Small businesses in other sectors pay just 0.75% in taxes on their total income.
Fewer Restrictions. More Innovations
A diversified economy is one of the reasons the state continues to grow economically and, with it, the opportunities for small businesses. Innovative industries and big brands are making Texas their home, and alongside them, several smaller companies are creating a niche with their ground-breaking startups.
Affordable All-Round Costs
One of the major draw cards for industries that have sought to make Texas their home is what also makes the state ideal for small businesses to thrive. These include the lower cost of land and properties, cheaper energy, and more affordable living costs (meaning a better quality of life for employees and their families).
Ease of Doing Business
It is not only easy for business leaders to get in and out of the state and its more than 380 airports, but it is also easy to export goods globally and transport them to the rest of the U.S. It has received the title of first exporting state for the past 19 years, and this is thanks to the state’s excellent infrastructure and its central location.
Small and larger businesses in the state have added civil liability protections. There are few land restrictions which means it is easier to develop the required infrastructure to run a business smoothly.
Relocations of conglomerates to the state have also increased capital investments and amplified business investments in urban areas and rural areas. The state also offers financing and economic development that encourage existing and new businesses.
Small businesses are major contributors to the Texan economy, ensuring a thriving economy and booming cities. The state has concentrated on attracting businesses and enhancing their success, including supporting small minority businesses, affordable filing fees, and ease of filing for an LLC.
Finally, according to Texan law, every new Texas LLC must appoint a registered agent to ensure that someone is available to collect documents during regular business hours on behalf of the business. The advantages of a registered agent include the owner’s privacy, and they can also ensure a small business remains compliant.