Texas Tax Guide for Small Businesses
Starting and growing a business in the Greater Houston Area is an exciting venture, but the “Texas Tax Miracle” comes with its own set of rules. While we famously have no state income tax, business owners must still navigate specific state and federal requirements.
Choosing the right structure and staying compliant with local filings is the foundation of long-term profitability.
1. Choosing the Right Entity
The way you register your business—whether as an LLC, S-Corp, or Sole Proprietorship—impacts your self-employment tax and liability.
- LLCs: Popular for flexibility and protection.
- S-Corps: Can offer significant savings on self-employment taxes for high-earning Houston professionals.
2. The Texas Franchise Tax
Even though there is no state income tax, most entities in Texas are subject to the Franchise Tax. Understanding the “No Tax Due” threshold is vital for smaller startups to avoid unnecessary penalties.
3. Sales Tax and Permitting
If you sell taxable goods or services in Harris County, you must collect and remit sales tax. The current rate in Houston is 8.25%. Failing to secure a Sales Tax Permit early can lead to costly back-taxes later.
4. Local Property Taxes
For businesses with physical locations or significant equipment, Texas property taxes (Ad Valorem) are a major line item. At Shanks CPA, we help you account for these costs in your annual budget.
Your Local Business Partner
Every Houston business is unique. Whether you are a solo consultant or a growing medical practice, we provide the localized expertise you need to scale.
Contact Shanks CPA for a business consultation, or call (346) 546-9328 to discuss your 2026 growth plan.