2020 saw an influx of businesses moving to Texas, and this has only continued in 2023. More than 100 companies have now relocated their headquarters to the Lone Star State because of its favorable climate. Its growing popularity is largely attributed to its low tax burden, business-friendly regulations, and relatively low unemployment rate.
In a time where inflation, supply chain issues, and workforce challenges are plaguing businesses, it seems that both companies and skilled workers are flocking to the various cities of Texas as a strategic move. Millions of companies are in the state, with 3.1 million categorized as small businesses.
Major Fortune 500 companies are setting the trend for planting new roots. Oracle moved its headquarters from Redwood City, California, to Austin, Texas in 2020 and saw other major players follow suit shortly.
Why are businesses moving to Texas?
Although businesses moving across states isn’t necessarily anything, the rise of many companies moving to Texas within a short span of time cannot be overlooked. It’s worth noting that the state is known for being the largest energy producer in the United States. The local economy is one of the most promising for businesses, even with the current hurdles brought on by post-pandemic adjustments and the political climate.
For small businesses, Texas offers lower rates with simple regulations. This means startups don’t have to worry about being taxed on individual or corporate income. As for bigger companies, the cost of operations is still more manageable. This is a stark contrast to the more expensive and far more restrictive regulations in place in states like California, where most of the big movers originated from.
Tesla moved from Palo Alto, California to Austin in 2021. Additionally, a $770 million factory expansion is set for their Gigafactory in the city. Hewlett Packard Enterprise also saw a 2022 move from San Jose, California to Houston. Even Apple, which was falsely reported as moving its HQ to Austin, is still expanding its campus in said city. This project is expected to cost around $240 million.
Those are just some of the biggest players to make the move, with others from different states taking the same route. The state is also seeing plenty of acquisitions as TransTech Energy takes over Metalforms Ltd.
So far, it seems like the move is paying off as Texas sees a GPD growth of 3% in just the first quarter of 2023. Even as business outlooks start to weaken, economic expansion and job forecasts are still looking to see growth. Metal fabrication is one of the largest industries in the state, with manufacturing being one of the biggest GDP growth drivers in the economy. Now, many Silicon Valley companies buckle down to make use of lower costs of living and more forgiving tax laws.
Starting a Business in Texas
Even as many established companies start afresh in the state, it still remains a very promising place to start a new business. Aside from seeing a higher demand for services, new businesses have very simple state regulations to comply with. Manufacturers, in particular, get lots of tax exemptions for sales. In general, new businesses can also expect property tax breaks, no franchise tax, and very low corporate tax rates.
Of course, there is still the need to get a registered agent to meet the Secretary of State’s regulations. That said, the easiest way to find a registered agent in Texas is to check commercial agent services that ensure each business gets a competent agent that actually operates in the state. This is a very accessible and quick process that makes things easier for new entrepreneurs.
While other areas of the country still face a workforce crisis, Texas saw 26 consecutive months of growth in total nonfarm employment by April 2023. With that, it’s also much easier to get skilled workers. The Texas Workforce Commission reports a record job count and boasts the largest labor force in the nation. With this, the workforce is expected to continue its consistent growth all the way through 2030. Finally, the robust economic outlook can also be attributed to the affordable housing options in the state. This is agreeable for both new business owners looking for a place of residence and seeking out employees who can realistically live in the area. The Bay Area Housing Finance Authority (BAHFA) just launched the Doorway Housing Portal, which is another promising step to connecting house seekers to affordable options.
