Starting a business in Texas is exciting, but let’s face it—managing finances isn’t exactly the fun part. Still, it’s essential to get it right to keep your business on track. Did you know that 82% of small businesses fail due to cash flow problems? One financial mistake can set you back months—or even shut down your business.

To help you avoid common pitfalls, here’s a beginner-friendly guide to five financial mistakes you should steer clear of, with Texas-specific tips and 2025 tax compliance updates.

1. Mixing Personal and Business Finances

It might be tempting to swipe your personal card for a business lunch or use your business account for that new coffee machine at home (we’ve all been there). But in Texas, especially if you’re an LLC or corporation, this can blur the line between personal and business liabilities. You don’t want to end up in a situation where your personal assets are at risk.

How to Avoid It:

✔ Open a business bank account and register your business with the Texas Secretary of State.
✔ Use a business credit card for expenses like supplies or advertising.
✔ Track everything with accounting software so you’re ready when tax season rolls around.

2. Poor Budgeting and Hidden Costs

Are you keeping track of every dollar, or just hoping the numbers work out? You might feel like your business is running on vibes and ambition (and maybe a little coffee), but without a proper budget, you could run out of money fast. Many business owners forget about hidden costs like permits, insurance, or property taxes—things that can derail your plans if you’re not prepared.

How to Avoid It:

✔ Create a realistic budget that covers fixed costs (rent, salaries) and variable costs (marketing, utilities).
✔ Include a rainy-day fund for unexpected expenses like repairs or a surprise tax bill.
✔ Don’t forget about the Texas Franchise Tax if your revenue exceeds the $2,470,000 threshold.

📌 Tax Filing Reminder: Businesses under the revenue threshold still need to file their Public Information Report (PIR) or Ownership Information Report (OIR) as part of the Franchise Tax filing. This is done automatically when filing online.

3. Neglecting Tax Compliance

Taxes might not be fun, but ignoring them isn’t an option. In Texas, there’s no personal income tax (which is great), but businesses still have tax responsibilities, including franchise tax and sales tax. Missing deadlines leads to penalties, stress, and unnecessary expenses.

How to Avoid It:

✔ Stay on top of state and local tax obligations, like registering for a Sales Tax Permit if you sell taxable goods or services via the Texas Comptroller’s Office.
✔ File your Franchise Tax Report by May 15 every year. Learn more at the Texas Comptroller’s Franchise Tax Page.
✔ Automate tax filings with a service like Jupid Tax, so you never miss a deadline.

📌 Filing Online Is Best: Businesses do not need to print or manually submit forms—the required reports are automatically included when filing the Franchise Tax Report through Webfile.

4. Underestimating Startup Costs

Many new business owners focus so much on launching that they forget ongoing expenses. Sure, you’ve budgeted for rent, supplies, and maybe even marketing, but what about the less obvious costs?

Think about business insurance, software subscriptions, permits, and professional services—all of which can quickly add up. And let’s not forget unexpected expenses, like a broken laptop, last-minute legal fees, or that website hosting bill you completely forgot about.

How to Avoid It:

✔ Research all potential costs before launching, including licensing fees and permits.
✔ Set aside a financial cushion to cover unexpected costs—because they will happen.
✔ Look into Texas small business grants or financing options (https://gov.texas.gov/business/page/small-business).

5. Ignoring Cash Flow Management

It doesn’t matter how much revenue your business generates if the money isn’t available when you need it. Cash flow problems are one of the top reasons businesses fail, and Texas businesses are no exception. Many new owners assume that as long as they’re making sales, everything is fine—until payday rolls around, and they don’t have enough to cover payroll.

How to Avoid It:

✔ Check your cash flow reports regularly to see where your money is going.
✔ Invoice clients on time and follow up on late payments (because "I'll pay you soon" doesn’t pay your bills).
✔ Use forecasting tools to prepare for slow months and unexpected expenses.

📌 Know Your Sales Tax Rate: The Texas state sales tax is 6.25%, but local rates can increase it up to 8.25%. Check your rate here: (https://comptroller.texas.gov/taxes/sales/).

Texas-Specific Tax and Compliance Considerations for 2025

✔ Texas Franchise Tax – Every Texas business must file a franchise tax report annually, even if no tax is due. The deadline is May 15.
✔ Sales Tax – The statewide base rate is 6.25%, but some cities add up to 2% more (totaling 8.25%). Check your local rate.
✔ Local Permits & Licenses – Some Texas cities, like Austin and Houston, have additional regulations. Verify Texas city rules.

Final Thoughts

Starting a business in Texas is exciting, but avoiding financial mistakes is key to success. If tax compliance feels like too much, Jupid Tax is here to help.

At Jupid Tax, we’re building an AI-powered accountant to simplify LLC formation, bookkeeping, and tax compliance through natural conversations.

How It Works:

✔ Conversational AI – Gather business details through chat or voice, no complex forms are required.

✔ Task Automation – Handles filings, bookkeeping, and compliance tasks on your behalf.

✔ Ongoing Support – Stay organized with:

• Daily voice message updates

• Monthly check-ins with your AI accountant

Jupid Tax takes care of the details so you can focus on running your business.

📌 Visit Jupid Tax and take the stress out of tax season.

References

Texas Secretary of State: https://www.sos.state.tx.us

Texas Comptroller – Franchise Tax: https://comptroller.texas.gov/taxes/franchise/

Texas Comptroller – Sales Tax: https://comptroller.texas.gov/taxes/sales/

Texas Small Business Grants: https://gov.texas.gov/business/page/small-business