Running a small business in Texas, the Lone Star State, requires knowledge of associated tax laws. Staying updated on Texas tax laws for small businesses is crucial for the financial health of your company, as well as legal compliance.

Understanding Small Business Law in Texas

When starting a small business in Texas, one of the first decisions you’ll need to make is choosing the most appropriate legal structure for your company. Common options for entity formation include sole proprietorship, partnership, LLC (limited liability company), and corporation. Each has its own legal and tax implications, so consulting with a small business lawyer is key for choosing the best fit for you.

You may need specific business licenses and permits to operate legally in the State of Texas; so it is essential to obtain what’s necessary to avoid legal issues. This is something your lawyer can research for you. Further, your lawyer can help you grasp the complicated federal employment laws and state-specific regulations Texas follows, so you have an understanding of what is covered–things like wage and hour regulations, workers’ compensation, and employee rights. Your lawyer can also draft the legally sound small business contracts and agreements you need to protect your interests and prevent disputes between you and other parties with whom you do business.

Texas Tax Laws for Small Businesses

In Texas, business taxes are much lower than those in most other states. Small businesses in the Lone Star State actually often see little or no liability for state business taxes. Taxable Texas businesses are subject to a franchise tax, rather than a corporate tax, which is based on gross receipts. That said, some entities qualify for an exemption. (Your small business attorney can help you determine if your company qualifies.) Texas offers some franchise tax credits, too. Besides the franchise tax, there are some other taxes Texas businesses must pay, such as the sales and use tax, unemployment insurance tax, and even property taxes in some specific areas.

New Tax Laws for Small Businesses in Texas in 2023

It is essential for small business owners to stay informed about changes in tax laws, as these changes can significantly impact their finances. It is important to know what to expect regarding tax obligations each year. There are a lot of changes to the federal tax code in 2023 that will affect small businesses, including modified credit for pension plan startup costs, net operating rules, excess business-loss limitation rules, and many others. Your small business attorney will be able to make the legal maneuvers necessary for your company to seamlessly transition as required by law.

Navigating small business law and tax laws in Texas can be a complex task, but it is vital. Consulting with an experienced small business attorney who can help you stay informed about current tax laws and any changes on the horizon is your best decision–having a small business attorney can help shield your company from legal issues. Reeves Law, PLLC, located in Austin, Texas, handles a variety of legal cases, including business law cases. The experienced professionals at Reeves Law can answer your business tax-related questions. Contact Reeves Law for a free consultation today.