Texans, ready to start a construction company and need some assistance? Here are expert startup instructions complete with State, City, and construction industry resource links. Come along to learn how to make money from building in the Lone Star State of Texas.
State of Texas Business Outlook
The great state of Texas is truly a great place to start your business. Because Texas boasts a booming economy and a business-friendly climate—with no corporate income tax and no personal income tax—plus has highly skilled workers, strong infrastructure, and predictable regulations.
The construction industry is growing at a robust rate of 6% annually, a faster rate than other major sectors such as real estate and healthcare, according to IBIS World studies
Major industries include petroleum and natural gas, farming, steel, banking, construction, and tourism. Texans enjoy a higher than the national average median income of $61,874 and are 29 million strong. Major metropolitan regions such as Houston, San Antonio, Corpus Christi, Dallas, Fort Worth, and Austin are all prime locations for entrepreneurs.
Explore Business Ideas
All great businesses start with good ideas.
Discover Good Business Ideas
One of the best ways to get brilliant business ideas is to review my lists of business ideas categorized for your situation such as small-town business ideas or home-based – many of which are related to the building trades.
Another way to find your next business idea is to experiment with my fun tool – Business Idea Generator. Click the button and some concepts for product, service or side hustle businesses will be generated.
Research Your Marketplace
All successful businesses MUST fulfill a need for paying customers to thrive.
Find out if your new business idea will solve problems that customers are willing to pay for by thoroughly researching the marketplace.
Begin by asking the following questions to study the market, competition, location, and target customers’ needs and wants.
Learn if the Market Needs & Wants Your New Product or Service
- What problem, need or desire is being solved by your product?
- Who are the people, or companies, that have this problem? Why do they have the problem? What are they trying to achieve?
- How are they answering this problem now, without your new startup? What products and services are they using?
- What are other companies offering for this need – similar or dissimilar products to your business ideas?
- Where does your new firm fit into the marketplace?
- What is your point of difference, competitive edge, over established companies? Why should people buy your product instead of what they are using now?
Test Your Business Idea
Now that you have researched your idea it is till to test its viability to be certain of its profitability before investing your time and money to launch your company.
As a serial entrepreneur, I have done lots of business idea testing. Some ideas passed many failed. But I am sure glad I tested thoroughly first before losing money and perhaps more importantly entrepreneur confidence. Below are a few of the ways I test products. Get the full list of my 10 best ways to field test your business ideas here.
- Visit Trade Shows with Your New Products
- Ask Others About for Constructive Feedback
- Run A Short Testing Ad Campaign
- Stage a Focus Group Session
Develop Your Business Plan
No doubt you’ve heard the old saying of one of my favorite guys Winston Churchill, “if you don’t plan – you are planning to fail”.
Nowhere is this truer than when starting a business.
You, like most entrepreneurs, are excited and want to start right away without taking any time for business planning – THIS is a major mistake.
Spare yourself the substantial loss of money, time, and much heartache by taking the time to write a business plan.
The importance of writing the plan is not wholly the finished document but the discoveries of missing elements in your business concept you find as you prepare your business plan.
During the process of writing your business plan, you will uncover aspects of your business strategy that will not work. Better that you discover these weaknesses on paper – now – then adjust your business model accordingly- than to encounter these problems in the field costing time, money, and possibility your company survival.
Many first-time entrepreneurs think that the business plan must be some sort of huge financial novel that is given to the bank in the application for a business loan. While that is one type of business plan.
The more important type of business plan is one that the entrepreneur writes for themselves. This plan documents the business summary, target markets, marketing strategies.
Think of it as a map for your entrepreneurial journey. You would not set out on a long hike across unknown territory without a field guide and a detailed map.
So don’t dive into a new business and spend money, time and emotional energy without a map.
My helpful resources to help you write your business plan
Plan Your Financials
This is the final stage where you will calculate important financial projections to determine if your business idea is profitable, the amount of capital you will need for startup costs and ongoing working capital funding.
Determine Your Pricing Structure
Begin your financial planning by determining your best pricing. Pricing your product and service is a bit of an art science. There are multiple ways to determine your best price, cost plus and market demand & supply.
There are different methods to calculate your prices for your new startup business based on multiple factors such as market demand, competitive prices, and costs expenses.
These are the most often used pricing strategies for small business with recommendations for which methods fit different types of businesses.
This method is when you price your product higher than your competitors. This technique is often used at product launch to create a high-value perception in your customer’s minds.
Market Penetration Pricing
This concept is to gain buyers by offering the lowest prices on goods and services to enter a crowded marketplace. It is common for entrepreneurs to use this technique initially. If not planned and executed carefully this is the most dangerous type of pricing strategy for your bottom line and business survival.
By utilizing the power of people’s emotions to buy is the key to success with this pricing strategy. Many consumers consider the price of a particular item a major purchasing factor. Use this to your advantage by reducing your price a little and changing your buyer’s minds a lot. You have all seen the $199 specials, which are only $1 less than two hundred but seem to be a better bargain.
Read my full article about how to best price your products and services here.
Calculate Your Startup Costs
Two Types of Startup Costs – Setup and Operational
First, you need to know that there are two distinct types of costs, those you will incur as you set up your company (Set up Costs or Startup Costs) and those that will continue to be expensed as you operate (Operational Costs, Expenses and Working Capital).
Set Up Costs
One time investment to open your store or launch your website includes such items as legal business formation, building renovations, and manufacturing equipment.
These are easier to calculate. You will research each item and simply add up the list for your total set up costs.
Ongoing expenses to continue business operations including rent, supplies, employee salaries – and most importantly working capital. These costs are more difficult to calculate because they have many more variables. As your sales increase so will your labor and material and inventory needs.
Read my article about how to correctly calculate your startup and operational costs here.
Forecast Sales & Expenses
The next step is to forecast your sales and expenses and generate a business budget.
I have a that I say that is funny but also true. I tell all new entrepreneurs to take their financial projections and cut their sales in half and double their expenses.
Then, if the numbers show that they will make money they should go forward to launch their business. Certainly, simplistic, but it illustrates that most entrepreneurs overestimate their sales and underestimate their expenses to their own detriment.
Here is the right way to create a business budget.
Define Working Capital Requirements
From one entrepreneur to another, you need to get wise about working capital, today, if you plan to keep your business doors open. Because the #1 reason for business failure is lack of working capital. Don’t become a business failure statistic.
Working capital refers to the funds that help you meet the daily expenses and needs of running your business, such as payroll or paying for software, tools and supplies.
From a business management perspective here’s all that you need to know about working capital in my article about what it is, the amount you need, how to manage it like a pro, and if you are short on working capital how to either get financing and how to reduce your working capital needs without a loan.
Fund Your Business
Now that you have a great business idea, you will need money to get started in your new venture. While there are some businesses that you can start with almost no money some are even free.
Most startups require some form of a business loan or capital investment. Now that you have written your business plan (see my how to advice in prior section), forecasted sales, expenses and working capital you know the amount of money you need to launch. Here’s how to fund your business
Startup Funding Resource List
Here are some good ways to fund your startup launch. Get my full list of 17 Proven Sources For Startup Capital
- Personal savings
- Loans and Credit Cards
- Partner Investors
- Bank Loans – SBA
- Small business grants – Here is my list of available small business grants with application links.
- Product Licensing – Read my best tips on how to sell your business idea to a manufacturing company.
TIP: If you need to finance your small business consider top recommendation for small business startup loans – Kabbage.com. Read my review of Kabbage loans with verified customer reviews and experience
CAUTION: Surely you have heard of many businesses they got started using your credit cards as a primary form of financing. While this can be done, we recommend that you read this article and heed our warnings about financing your business startup on your credit cards.
Open Business Bank Account
In order to accept customer payments, cash, checks or credit cards, your business will require a separate bank account from your personal or family bank accounts.
Please do not make the beginner entrepreneur to run your business through your personal account. You will be making it harder on yourself since it will be tougher to manage transactions, reconcile checking accounts and prepare your tax returns.
All small business experts and the Internal Revenue Service recommend the separation of business and personal bank accounts. By opening a business account, you make this possible. Read my article about how to open your new business bank account here
Additionally, having a business bank account is an important credibility factor to make your business idea a legit company and not just a dream. Also, for corporations, LLC’s and so forth, a separate and individual bank account will be necessary.
Depending on the bank and type of account required, several business days may be needed to get things set up, so don’t wait until the last minute to get things set up.
Set Up Accounting Systems
Whether you’re starting a sole proprietorship or an LLC, having the proper accounting setup is essential. It is far better to have your bookkeeping established right from the start rather than find out down the road that you’ve done things wrong and now owe money to the IRS.
I learned this the hard way in one of my early ventures. Start bookkeeping with your second dollar – the first dollar you put in a frame over the door or on your desk 😊
Depending on the particular business formation type you have chosen, there may be reporting requirements for the accounting, especially payroll and taxes, that require regular and ongoing attention. Consult the IRS for your tax payment and reporting schedule.
I recommend the easy to use, but flexible enough for growing companies, software Freshbooks. From sending email invoices, accepting credit cards, and tracking expenses it simple, effective, and affordable. Check out the discount sale here.
Pick Business Location
Choosing the right location for your firm is one of the most important decisions you will make at the onset of your business launch.
Take your time and do your homework of research and planning, before committing to a lease on retail, restaurant, or office space. Study the demographics of the area and surrounding towns, your competition nearby, and much more. Here are the questions you need to ask before signing a lease:
7 Questions to Determine if Location is Good for your Business
- Image – Does this spot project the brand image you desire?
- Competition – Are neighboring businesses competition or complementary?
- Labor – Will you be able to find employees easily, or is it too far to commute?
- Growth – Is there room for future expansions?
- Vendors – Are vendors able to deliver here efficiently and at a reasonable cost?
- Security – What is the crime rate?
- Zoning – Is this location zoned for your type of business activity?
My related resources:
Name Your Business & Create Your Brand
How to Name Your Business so Customers Remember Your Brand
It can be difficult to think up a catchy name for your new company. I am here to help you with my best tips for coming up with company names that are memorable:
First Make a List of Keywords
The words and phrases that your prospective customers type into internet search engines to find companies like yours. Add other towns, states, and countries to your search to find similar firms, outside of your marketing area for inspiration.
Don’t use another firm’s exact name, just use those names to brainstorm your own unique brand name.
- Use market level words such as industry names (ie catering, plumbing) and see what comes up
- Try your competitive advantage term (ie faster, cheaper, cooler) to find interesting concepts
- Your value proposition, innovation, or special feature is a good source to build memorable names (example – Evernote – Remember Everything)
- Outside of Your Industry – Step back and look for an interesting combination of words from outside the industry.
Naming Tips: How to Come Up with a Catchy Business Name
Then Play with Words for a Great Business Name
Take that list of words and you created using my tips above and then play around until you find that perfect new startup name. Read about the 24 best ways to play with words to come up with your own catchy business name in my article here
Also check out my article about how to combine two names – business partners – into one super company name here
Or consider trying out a business name generator from my list of the top FREE company name generators here
Plus Review List of Business Names for Inspiration
To help inspire you I have written lists of catchy business names for lots of types of companies such as below. Check out these unique name ideas that are not taken and available!
Check out my list of construction company name ideas
Decide Your Business Legal Structure
Your business is considered an entity or an organization in the eyes of the law and government, this means that you need to have a structure such as Sole Proprietor DBA, Corporation, LLC a limited liability company in which you run your business from.
Learn more in my guide: How to Start Your Small Business Legally – Important Legal Requirements
You will want to determine the best legal structure for your new startup business such as sole proprietorship, partnerships, corporations, or trusts.
Some businesses should incorporate, most notably those seeking venture capital and manufacturers, and some should not such as small one-person companies, often referred to as solopreneurs and those with low capital do not deal in products or services that could be dangerous to your customers.
Texas Startup Business Regulations
In Texas, sole proprietorships and partnerships need to register with the county clerk’s office. Here is a helpful list of Texas county clerk offices complete with links to applications and contact information. If you decide to incorporate, register with the Secretary of State’s Office (SOS).
Which is Right Business Type for Your Company?
When you’ve got the name and business type you want to start, determining the best form of business structure is the next essential step.
There are many types and variations to business structure. Depending on which kind of business you intend to run, how the day-to-day operations will be carried out, and various other factors, a particular business structure may be of more value to you than another.
Out of the USA’s possible business structure types, here are the most common five types for profit-oriented organizations. If you are interested in setting up a non-profit, or not-for-profit, check out my expert tips here.
Business Formation Legal Entity Types
- Sole Proprietor
- S Corporation
- Limited Liability Company (LLC)
A sole proprietorship is the business formation most adopted by individuals. It is also the form of business that carries the most liability for the owner—a single owner, personally responsible for the sole proprietorship.
Texas Requirements: File an Assumed Business Name
If you plan to do business using a name (such as a company or brand name) that is different from your personal name (your legal name), the state of Texas requires you to submit an application to register your assumed business name with the county clerk of your business headquarters.
To file your assumed business name, complete the form for Assumed Name Certificate available from the county clerk’s office and mail it to the county clerk at the address listed in the application. The filing fee is approximately $10 but may vary. Below is a link to a list of all the Texas county clerk offices.
Here is a helpful list of Texas county clerk offices complete with links to applications and contact information.
Like the sole proprietor, this business formation simply puts a partnered proprietorship rather than a sole proprietor. The liability is typically evenly dispersed amongst owners.
Business partnership resources:
A corporation is a quite different creature from a sole proprietorship. In the United States, a corporation is a sort of virtual entity. A corporation takes on rights and abilities like a person – that’s why it uses the word “corp” as in the corporal body. The difference is that it features the ability to exist perpetually, quickly transfer interests, and provide limited liability for the corporation’s shareholders (owners).
An S Corporation differs from a regular corporation in that it chooses to pass credits, deductions, income, and losses through to the shareholders. These shareholders would add these to their income tax. It enables the business to simply pass along the numbers to the owners (shareholders) and act as intermediaries.
Read my advice about whether a corporation would be a good legal business entity for you linked below:
Business incorporation resources
Limited Liability Company (LLC)
A popular form of business structure is the limited liability company referred to as an LLC. Each state has its regulations regarding the LLC, to clarify how it differs from the other previously mentioned business formation types, let’s start by defining the LLC.
An LLC can be thought of as a hybrid structure. It is sort of a mix between a corporation and a partnership. One might think of it as a partnership that insulates the owner’s liability to some limited degree, but similar to the corporation’s structure.
Although an LLC may appear to have some extraordinary benefits, several regulations must be followed for this type of organization in Texas.
Texas LLC Formation Form Download
Go ahead and download the form to complete to set up your LLC in Texas here.
Read my advice about whether an LLC would be a good legal business entity for you here
Protect Your Business Intellectual Property Assets
If your new businesses develops new inventions, manufacturing processes or products you will want to protect your intellectual property with patents, trademarks, and copyrights issued by the US patent and trademark office.
Learn more in my article – What is Intellectual Property and Why it’s Important to Your Business
Texas Trademark Info
Learn more about the particulars of how to get a trademark in Texas here
It is also a good idea to safeguard your business brand name with a trademark application.
Business Licenses & Permits
In addition to setting up your legal business structure LLC, INC, or DBA (as detailed above) you may (depending upon your type of business) be required to obtain a special business license or permits.
Texas State Contractor Licensing
General contractors are not required to obtain a license to practice in Texas, as per the Texas Secretary of State Licensing Regulations here. This means that handyman, home improvement contractors, and home builders do not need a Texas state license. BUT, some Texas regions a general contractor may be subject to local (county or city) licensing requirements such as these:
If you are building or renovating in Austin, Texas, you must register as a general contractor and get a project building permit through the City of Austin Development Service Department.
In Dallas, you must apply for a contractor registration based on the building license type you need for a specific construction project.
You will need to get building permits for each job. Use the Houston Permitting Center project planner to tell you which help you figure out which permit you will need.
General contractors in San Antonio need a variety of licenses depending upon the type of work such as home improvement contractor, residential building contractor (for large construction work). Apply through the City of San Antonio’s Developmental Service Department
Specialty Building Trade Licenses in Texas (partial list – full list here in General Contracting section)
Contractor Licenses and Permits:
Air Conditioning and Refrigeration Contractors Licenses – Texas Department of Licensing and Regulation;
| 512-463- 6599 or 800-803-9202 (in Texas); https://www.tdlr.texas.gov/acr/acr.htm; secure.webform email:
Air Permits – Texas Commission on Environmental Quality | 512-239-1250;
https://www.tceq.texas.gov/permitting/air or email firstname.lastname@example.org
Air Permits by Rule – Texas Commission on Environmental Quality | 512-239- 1250;
https://www.tceq.texas.gov/permitting/air/permitbyrule/pbr_index.html or email email@example.com
Backflow Prevention Assembly Tester Licensing – Texas Commission on Environmental Quality | 512-239-6133; https://www.tceq.texas.gov/licensing/licenses/bpatlic
Driveway Access Permits – Texas Department of Transportation | 512-463-8588; http://www.txdot.gov/inside-txdot/forms-publications/consultants-contractors/forms/row.html
Electrical Contractor Licenses – Texas Department of Licensing and Regulation | 512-463-6599 or
800-803-9202 (in Texas); https://www.tdlr.texas.gov/electricians/elec.htm;
Historical Structure Permits (Antiquities Permits) – Texas Historical Commission | 512-463-6100;
Landscape Irrigator Licensing – Texas Commission on Environmental Quality | 512-239-6719; https://www.tceq.texas.gov/licensing/licenses/lilic
Plumbing Licenses – Texas State Board of Plumbing Examiners | 512-936-5200; http://tsbpe.texas.gov/
Register Your Business – Government IRS
Taxes – Sales & Income
The two primary taxes most new businesses must deal with are sales tax, and the dreaded income tax we all know, and wish did not exist.
For businesses operating in US states, two necessary taxes need to be potentially charged to your clients.
- Sales Tax – This sales tax applies to certain kinds of tangible products as well as services.
- Use Tax – Use tax applies to products or services purchased out of state for use in the state.
Sales taxes are charged on most tangible products. As well, sales taxes are levied on most services.
Texas State Sales Tax Law
Texas imposes a 6.25 percent state sales and use tax on all retail sales, leases, and rentals of most goods, as well as taxable services. Local taxing jurisdictions (cities, counties, special purpose districts, and transit authorities) can also impose up to 2 percent sales and use tax for a maximum combined rate of 8.25 percent.
Sales taxes levied within certain cities and counties may vary from those found in the rest of the state of Texas.
Get detailed information about taxes by city and county Texas Comptroller site.
Income Taxes and Your New Business
There is no escaping two things in life: death and taxes. And so, here is the handy resource to help you figure out your new business taxes.
Do yourself a favor and heed the advice above regarding the two people one ought to consult before starting a business – a lawyer and an accountant.
When it comes to sole proprietorships, the taxes are relatively straightforward. With all other forms of business structure, simplicity is muddied with multiple forms and regulations.
It is easiest to budget into the business expenses to have the use and direction of a professional accountant to keep your business on track for success.
Insurance & Other Regulations: Federal IRS, State, and City
Legally, you are required to have certain federal and state licenses and permits depending upon the type of business you are founding.
All businesses must be registered with the IRS (Internal Revenue Service) in America when they file their business structure type, either DBA (sole proprietorship), incorporation or LLC for their tax status and filing purposes. Beyond that governmental requirement, you may need additional licenses as listed below.
PS: If you are not a US citizen check out my special guide on how to start an American business as a foreigner here
Federal licenses are required for those businesses that sell alcohol, dealing firearms or require federal permits listed here on the SBA website also those firms in agriculture, aviation, fish and wildlife, mining, maritime, nuclear energy, television, and radio broadcasting, and transportation. Get more info here about licenses and permits needed to open your business.
Insurance Requirements for Texas Building Contractors
Know that Texas doesn’t require workers’ comp insurance. But, you could be responsible for expenses if you don’t have coverage and one of your employees or contractors gets injured on the job.
Texas does require contractors to have liability insurance of $300,000 per occurrence. Details here
Also, you are required to have commercial auto insurance if you have a business-owned vehicle in Texas.
Open Bank Account
Having a business bank account is a vital tool to run your business. It physically separates your business expenses from your personal accounts.
Please do not make the mistake that many beginning entrepreneurs do and run your business through your personal account.
You will be making it much harder since it will be more difficult to manage transactions, reconcile checking accounts and prepare your tax returns when your funds are comingled – personal and business.
Top business experts and the Internal Revenue Service recommend the separation of business and personal bank accounts. By opening a business account, you make this possible.
Additionally, having a business bank account is an important credibility factor to make your business idea a legit company and not just a dream.
Get my best tips on how to open your business bank account and the documents you will need here
Choose Your Team – Find & Hire Employees
Unless the business is completely automated, personnel (employees, freelance or subcontractors) will likely be required. After all, it’s good old fashioned hard work that built American business. And it will continue to be the labor of people that make businesses succeed.
In the case of hiring staff, there will be certain legal considerations that must be taken into account.
- Staff hierarchy – Are management in place? Who runs the various business operations?
- Deductions & taxes – Accounts with the IRS setup? Software or accounting in place for payroll?
- Health care and benefits – Are your staff protected?
- Working conditions – Does the working environment comply with all state regulations?
Find Supplier Vendors & Negotiate Prices
Next you will need to source materials and inventory to sell in your company. Here are my best tips on how to find affordable wholesale sources
Marketing & Advertising
Branding your business involves more than just naming the company. It also involves having a logo, often a particular font, and even a slogan for your business. Also, company colors should be chosen. This package is called your branding package, and it’s essential.
Get Your Perfect Logo Design
Can you think of a major business without a logo? Bet you can’t!
That’s because major brands are built on the foundation of strong logos, the single most important visual element of branding.
So, you know that you need a standout logo for your company. But how to create one?
Learn how I created my newest brand logo in this comprehensive 99designs step by step tutorial complete with over an over the shoulder video series.
Advertising comes in many forms, from billboards to a website to a storefront sign. In the good old days, there was a focus on flyers, and today it’s social media. Regardless of the method, getting your business name out is essential to growing your client base.
Defining a solid strategy for advertising and setting an advertising budget is a significant step for any business.
When new stores launch, they often have a grand opening event involving media. The same is true for restaurants and many other businesses. This must all be considered at the beginning, especially if a significant startup even cost is involved.
Construction Industry Resources
Online Contractor Forums
Here you can connect with other contractors to ask questions, get advice and learn about helpful resources
State of Texas Business Resources
- Texas.gov: eGovernment website for the State of Texas, a secure site to conduct business online.
- Start a Business in Texas: Information on the process of starting a new business in Texas, including business structure, business tax responsibilities, and business licenses and permits.
- The Governor’s Office Small Business Handbook (PDF): A start-up guide for small businesses provided by the Texas Economic Development Division within the Governor’s Office.
- Texas State Department of Licensing and Regulation
- Arlington Chamber of Commerce Center for Business Development
- Austin Small Business Development Program
- Dallas Office of Economic Development
- Lubbock Chamber of Commerce Business Resource Center
- Rockport-Fulton Chamber of Commerce Small Business Resources
- City of San Antonio Economic Development Department
Texas SBDC Small Business Development Centers
SBDCs are America’s nationwide network of Small Business Development Centers. A partner program of the SBA (US Small Business Administration), SBDCs is hosted by universities, colleges, state economic development agencies, and private sector organizations. Its mission is to help start and grow small businesses.
Listed below are the regional centers of SBDC. Find out if there is an SBDC closer to you here – search by zip code.
University of Houston
2302 Fannin, Suite 200
Houston, TX 77002 – View Map
Web Site: https://www.sbdcnetwork.uh.edu
North Texas SBDC
Bill J. Priest Institute
1402 Corinth Street, Suite 2111
Dallas, TX 75215 – View Map
Web Site: http://www.ntsbdc.org
South-West Texas Border SBDC Network
UTSA Downtown, 501 West Cesar E. Chavez Blvd., DB 4.370
San Antonio, TX 78207 – View Map
Web Site: http://www.txsbdc.org
University of Houston – Bauer College
1455 West Loop South
Houston, TX 77027 – View Map
Web Site: http://www.sbdc.uh.edu