Residents of the Lone Star state are quick to point out that everything is bigger and bolder in Texas. If that sounds like casual boasting it’s time to think again. Over the last several years the Texas economy has rocketed to new heights (up 3.2% to come in at 10th place for the nation) while the state’s GDP has set a personal best of $1.7 trillion for 2019 (2nd only to California and surpassing those of Russia and Canada).
Not too shabby for the second largest state in the Union. But the statistics only tell part of the story. It’s people that drive any economy, and Texas is home to some of the most ambitious and successful entrepreneurs in the country. Moreover, the government of Texas has made it a priority to enact legislation that both encourages and supports small business owners and their ambitions. This combination of can-do attitude and business-friendly legislation has helped the Lone Star state earn top marks in WalletHub’s annual report of Best & Worst States to Start a Business.
Top 5 Reasons Texas is the #1 Choice for Entrepreneurs
Of course, there’s more to becoming one of the top states for small business start-ups than just an encouraging state legislature. You also need a diverse and talented populace to provide employees and patrons, as well as a honeycomb of bustling metropolitan communities that can support a variety of business models. More than anything else, however, you need that uniquely Texan attitude that welcomes new ideas and rewards the self-determination that drives the innovation of American entrepreneurs.
So let’s take a closer look at 5 of the top reasons entrepreneurs are flocking to Texas to launch their small business enterprises.
Growing Metropolitan Areas = Increased Economic Activity
Whether you’re running a small business or a large corporation one of the most important considerations is location. If any business venture is to succeed it needs a bustling and vibrant community that can support it with both financial and human capital. Texas can boast of a number of fast-growing metropolitan areas that can support new start-ups as well as existing businesses.
Dallas-Fort Worth, Austin, Houston and San Antonio are some of the fastest growing cities in the nation. Over the last decade Houston has seen its population increase by between 100,000 and 150,000 new residents, making it one of the fastest growing cities in the US. Hot on Houston’s heels you’ll find both San Antonio and Austin, two of Texas’ fastest growing metropolitan areas, which have added between 90,000 and 120,000 new residents to their populations.
But it’s not only the major metropolitan areas that are seeing steady growth in Texas. Suburbs and outlying districts have also experienced upticks in population helping to spur local business growth throughout the state.
The overall result of the influx of new residents to Texas is a revitalized economy throughout the state, and small businesses are benefitting from a definite increase in commerce. Entrepreneurs looking to launch new start-ups are finding the long-term growth expectations throughout the Lone Star state will provide ample opportunities for building a growing and thriving business enterprise.
Diverse and Abundant Talent Reserves
It takes a team of talented individuals to lead a start-up to success. After all, the backbone of any business, regardless of industry, is its employees. Well-trained and educated team members are better able to build a highly productive and more innovative company.
One of the primary reasons entrepreneurs are being drawn to Texas as an ideal location for their latest business project is the availability of highly trained talent. In a state that can boast an excess of 140 four-year universities and more than 90 technical colleges there is clearly no shortage of potential hires for businesses in either the private or public sectors. Business colleges, technical and vocational schools, and liberal arts universities provide a constant wellspring of new talent eager to enter the workforce.
This abundance of highly educated local talent is just one of the reasons Texas has been marked out as one of the best states for boomer and millennial business owners to take their start-ups to fully maturity and long-term success.
Attractive Tax Benefits for Small Business Owners
Nearly every smart business decision is guided by financial considerations and that includes looking for the most favorable tax situation. One of the many reasons new businesses are thriving in the Lone Star state is the business-friendly tax benefits. With one of the lowest tax burdens of any state in the union Texas has managed to create an economic climate that not only welcomes small business owners but also actually rewards them for their hard work and ingenuity.
Currently, Texas has no corporate income tax so business owners will keep a larger piece of the pie come tax time. That tax break makes it much easier for the owners of smaller enterprises to take their profits and put them back into the business allowing for greater and more cohesive growth. Texas entrepreneurs also benefit from a lack of property taxes and state and local income taxes.
Of course, Texas still has a budget to maintain so to offset the absence of property and corporate taxes the state collects the bulk of its revenues from sales and franchise taxes. Texas has a 6.5% state sales tax with is augmented in some local cities and townships by a further 2% sales tax. Consequently the individual tax burden for the state as a whole is roughly 7.6% making it the fifth most expensive state in the union as regards sales tax.
Still, even with the higher than average sales tax burden the state as a whole remains very attractive to business owners of all sizes working in a variety of industries across the state.
Pro-Business State and Local Regulations
Small business owners across the state have found that Texas’ relaxed regulatory environment allows for more growth and innovation, making it easier for them to take their fledgling enterprises to the next level. Texas’ pro-business attitude has played a big role in shaping both state and local licensing and regulatory laws. Starting a business in the Lone Star state is easier, quicker, and less expensive than nearly any comparable other state in the country, Licensing fees are nominal (typically between $25 and $200 depending on industry) and turn around times on state applications for LLC and DBA requirements are remarkably quick when compared with other states.
State and local laws are uniformly straightforward, allowing independent entrepreneurs to successfully get their start-ups off the ground without resorting to expense legal support and outside consultants. This not only saves time it saves money, which for a small business owner can mean the difference between successfully launching a new enterprise and struggling to get a business plan off the drawing board.
Supportive Business Communities and Organizations
Finally, one of the more intangible benefits of starting a business in Texas is the supportive and diverse business community that can be found throughout the state. Independently managed entrepreneurial organizations and state supported business associations are available to help business owners realize their ambitions. These organizations provide inspiration, advice and material support for wide range of independent businesses across the Lone Star state.
Small business owners just starting out on their road to success can find support and advice from the Texas Small Business Develop Center as well as guidance and counseling from the various Texas SCORE chapters located in Austin, Fort Worth and other metropolitan areas of the state. Businesses with larger corporate footprints can receive advice and support from the Texas Economic Development Corporation where they can also make important connection leading to valuable corporate contracts with the state.
These and other professional associations are available to entrepreneurs in all areas of the business world. When it comes to supporting local businesses few state can beat Texas for support and encouragement.
Texas Continues to Welcome Entrepreneurs
Every year Thumbtack conducts its United States Small Business Friendliness Survey which looks at a number of key metrics including ease of hiring, tax codes, and regulations in order to rate states according to their overall friendliness towards new and existing business enterprises. For the last several years Texas has earned a hard-won ‘A’ rating for the states amenable attitude towards and support for small businesses of every stripe. That rating is borne out by the rising tide of entrepreneurs who are choosing the Lone Star state as their ideal place to set up new and innovative enterprises.
While there can never be a guarantee of success for any enterprise, conditions on the ground do help determine a businesses long-term chances of success. Texas, with its business-friendly tax codes and state regulations offers ambitious entrepreneurs a leg up over other areas of the country. Whatever the industry and regardless of the size of the project Texas provides ample opportunities for small business owners with big Texas-Sized dreams.