Quick Start Quide: moving to Texas
A complete guide to moving and starting a business in the Lone Star State
By Diana Mulder, Real Estate professional
Moving is always a big deal and you can put an endless amount of effort in it, and you can always come up with more questions. In the end of the day, it’s a matter of motivation, do your due diligence and then take the big leap and just do it!
Looking back and knowing what I know now, being here for about 12 years, and seeing many people come and sometimes go again I would like to help you get started and wrote up this QuickStart guide:
Rules and regulation, organizational structures, banking, and taxation… they are all very specific and you can drown trying to figure it all out yourself, and it’s distracting you from what you really want to do here, right?
Your company and location
Let’s start at the beginning:
- What kind of company do you have, or do you want to set up?
- Is it just a local presence? Where you need to be close to potential clients to go meet them?
- Do you need a nice representative space where people will visit you?
- Do you need storage or a yard for production?
- Are you targeting consumers directly?
- Will you keep it small, or do you want to expand soon?
- Will people be flying frequently, or will people fly in to visit you frequently? Domestic or internationally?
Business and networking in Texas in general are done in a pretty social way: meeting for breakfast, coffee, lunch, dinner at restaurants or meeting up for other activities is common. So, if that’s the way you’ll be working, you may consider getting a working space near restaurants.
There’s no real zoning, i.e. separate areas for housing, industry, etc. However, there are some rules certain businesses must follow. For example, if you’re holding inventory containing liquor, you cannot be too close to a school or church.
On one hand, no zoning can make life easier, on the other hand, there’s not really supervision on how areas develop.
Texas is huge and the Houston Metropolitan area is large. You can spend a lot of time driving to commuting, visiting customers, bringing kids to school, go to places of your interest. And yes, although many roads are being added and improved, the roads can be congested. The public transportation system is limited, and bike lanes and sidewalks are almost non-existent, low maintained or dangerous in many areas, so using a bike or walking is not very common in large parts of the Houston area.
Employees and families
Besides identifying criteria for your business, you also want to take the circumstances of the people who will be working there into account. What kind of people are they and what are their needs? Are they young and no kids? Or do they have families with kids for who good schools are important? What kind of lifestyle do they prefer?
In general, there are 3 types of schools here: public schools (free), private schools, and international schools; and 3 levels: elementary – middle – high school. For regular public schools, you need to be zoned to that school. There are also public charter schools where you don’t have to be zoned to. Families typically are very specific about the schools they want their children to attend. Different areas, and different school ratings can have a huge impact on housing prices, impacting both home ownership as well as rental rates.
When you have the luxury of planning ahead, both private situations, and work-related needs can be combined. Talking with local people can be helpful, however so many people –so many different opinions.
Depending on what you’ve decided above, you want to make a budget, both for the company and for the people who are going to move to Texas.
Large expenses are location, salaries and secondary benefits, insurances (a.o. including workers’ compensation, depending on the type of work; health insurance) and of course start-up costs and company specific expenses.
Will you offer compensation to have people visit their home country every now and then?
Relocation: visas, moving, housing, do you want an expat agreement or local contract?
Living expenses: housing and cars including insurances, groceries, possibly schools
In general living expenses are higher than what we’re used to:
In Texas, we don’t pay state income tax, only federal income tax. Therefore, in Texas, the property taxes are high, which need to be paid by you as a homeowner or indirectly by you as a tenant (when you lease a home). Utilities can easily be more expensive than you’re used to as well.
Starting your business
If you’re considering moving to Texas and starting a business, try to keep it simple.
To get a company set up, you can use an attorney who can also advise you on which type of company would be best in your situation. If you’re budget is small, you can do a lot yourself too, including setting up a company. Just go to the Texas Secretary of State website.
Accounting doesn’t have to be too complicated either. Smaller companies can use cash accounting and you can do a lot yourself. If you don’t feel comfortable, you can use a CPA (certified public accountant). Taxes? Same thing. You can use f.e. Intuit for bookkeeping and tax returns. They have different programs for different purposes and needs and can tie into each other pretty well and they’ll guide you through the program if you want to do it yourself. A CPA can also help you with tax returns. You can contact the NBSO Texas to be connected to a trusted CPA.
How about setting up payroll and taking care of proper insurances? You can use a PEO (professional employer organization), they know the laws, do payroll and HR for many smaller and larger companies, and therefore have good buying power with Health Insurance Providers. Health insurance can be as expensive as you want. Health Care expenses can be high, and the system is tricky, so you do want to take care of that properly.
The NBSO website contains a lot of useful FAQ topics and lists Dutch companies of which quite a few can help with specific needs and, in general, many of them are readily available to share their experience. The Dutch community here is not super tight, however it’s quite a large group of people, with a lot of experience, who understand the difference between The Netherlands and Texas. My experience is that the people in Texas are easy to approach and talkative, so feel free to ask questions.
A few quick tips:
- As soon as you arrive, arrange for an SSN (the US version of the Burgerservicenummer). You’ll need it a lot to get things done.
- As soon as you arrive, work on getting your driver’s license. Yes, you have to start all over, however, it’s much easier than in The Netherlands. You’ll need your driver’s license as your ID and you’ll be using it a lot.
- Build up a credit score as soon as possible. The easiest and most common ways are buying a car with a car loan or getting a secured credit card, which over time will turn into a regular credit card. Make sure you use it to build up credit and pay it off automatically each month. If you don’t set it up correctly and you’ll only pay the minimum amount, it will cost you a lot of interest.
Renting or buying and credit scores
Let’s talk about real estate a little more. Many people from all over the country and all over the world, are moving to Texas and are investing in Texas. High real estate prices, higher taxes, rules, and regulations in other states are triggering people and companies to move to Texas. The population is growing and there’s a lot of room to grow. Urban areas are expanding. New infrastructure, subdivisions, new shops, restaurants, medical centers are being developed to accommodate the population growth in Texas. Real estate was and still is relatively affordable, although prices are increasing because of continuous inflow of people and therefor demand. However, there’s something for everyone. You can buy a townhome for about $100,000 or a mansion of $30 Million. The same is true for leasing commercial spaces or homes, so determining what you want to spend is key.
The construction of the buildings here are in general very different from what we’re used to in The Netherlands. Most buildings are built on slab (no piling) and the construction is kept light, to minimize the stress on the foundation. The soil conditions in the Houston area differ per area, however foundation issues are not uncommon due to settling. The climate is extreme, from super warm, to hurricanes, major rain events, draught, and a sporadic extreme freeze. Every street and every home in the Houston area can flood, even though they may seem to be out of the flood zone. Being aware and knowing what to do in certain circumstances and protecting yourself and your property is important.
Many people and businesses that come here, first start leasing as it requires less capital and it’s easier to exit. The issue with not having a credit history in the US can be a disadvantage, however many landlords recognize the situation and are willing to work out a solution. After getting to know the area, and gaining local experience, you may want to alter a few things when you’re taking the next step, whether it’s expanding or changing location, and that may be a good time to buy a property. If you need to invest heavily in your business location it may make sense to buy immediately.
Cash is King. With cash you can buy almost anything. If you need financing, many types of lenders are available. Depending on how they perceive your risk profile interest rates can be reasonable or steep.
When you start up a business, initially your company is depending on your own credit score. Over time this link can be disconnected and the company can be on it’s own. From the moment you seriously start building up credit it can take 6-12 months to build up a fair credit score. Together with a decent proof of income and ideally 2years of tax returns, you will qualify for the better interest rates. Anything less will limit the number of lenders interested and increase the rates and closing costs. Whether you want to borrow money to buy commercial real estate or to buy a home, the security they are looking for is similar and they are not hesitant to cost to borrow money. Some more internationally oriented lenders may be able to provide you loans more easily, even as a foreign investor.
In general, buying gives you more freedom to do with the property what you want. When you rent, a landlord can ask so much more information from you, that you don’t have to provide when you’re purchasing. These can be reasons to go ahead and buy as soon as you have the opportunity. In the end of the day, it can also help you build up capital.
All in all, there’s a lot of room for entrepreneurs in Texas. The business climate is good. The quality of life is good if you have money. You’re definitely not the only one considering starting a business and moving to Texas for a company or just to build up a new life. I’ve helped relocating many people both to and some from Houston, for a company or on their own. As a real estate professional, it’ a large part of my activities to help people as good as possible in general, not just finding a place to live and work. It’s inherent to the way real estate brokerage works. Each seller/landlord has its own agent, and each buyer/tenant has its own agent. So, for example as a buyer/tenant agent, I typically start with an initial meeting with you (e.g., through Zoom) to get to know you and listen to your wants and needs and based on that we’ll discuss the options and start the search process and prepare you to qualify and go look at properties with you. In that process, many topics pop up automatically and will be discussed.
I’ve tried to give a quick overview of essential information to consider when starting up a business and a life in Texas. Feel free to contact me or other Dutch locals to explore your options further.
And for the moment you are here, I’d like to say: Go out there and try to integrate and learn about the way of life here. You’ll be able to navigate through everything more quickly and get to enjoy everything Texas has to offer.
Author: Diana Mulder, Real Estate Professional