How to Start a Veteran-Owned Business in Texas

I’m writing this like I’d explain it at work: step-by-step, Texas-specific, and with zero interest in letting you accidentally nuke your own benefits because you filed things in the wrong order.

Also: I’m a tax/accounting guy/worker, not your attorney. This is general info, not legal advice. If you’re doing anything high-stakes (contracts, investors, multiple owners, liability stuff), talk to a Texas business attorney.

Last updated: Dec 2025

First: what Texas means by “New Veteran-Owned Business” (and why you should care)

Texas has a specific “new veteran-owned business” track (SB 938) that can:

• waive certain Texas Secretary of State filing fees, and
• exempt you from Texas franchise tax
  for up to 5 years (or until you stop qualifying—whichever comes first).

That’s not “a discount.” That’s real money and less reporting pain.

The 60-second “Do I qualify?” test

If you answer YES to all of these, you’re in the right neighborhood:

1. 100% veteran-owned (one or more owners is fine, but total must equal 100%)
2. Each owner is an honorably discharged veteran (including Guard/Reserves per Texas guidance)
3. The entity will be formed in Texas on or after Jan 1, 2022
4. Each veteran owner has a Texas residential address
5. You will get the Veteran Verification Letter (VVL) before you form the entity

That last one is the “people mess this up” item.

The Texas process in plain English: VVL → Form 05-904 → File the entity

Texas basically wants you to do this in three steps, in this order:

Step 1) Get a Veteran Verification Letter (VVL) for each owner

The VVL is issued through the Texas Veterans Commission (TVC) and comes with a unique ID code.

What you’ll need (per the TVC qualification guide):

• Military service documentation (ex: DD-214 Member 4 / Service Copy 2 showing character of service; certain other forms may apply)
• No redactions (they don’t want “trust me bro” documents)
• If someone is on terminal leave, the VVL generally won’t be issued until after the discharge date.

Timeline reality check:

• You may hear back from a business consultant quickly, but verification can take up to ~14 business days depending on volume and document issues.

Pro move (that saves rejections):
TVC notes a business consultant can review documents before submission. Take the free review. That’s like getting a pre-audit before the audit.

Also important:

• The VVL can be used more than once
• It’s generally valid for 5 years (then you renew)

Step 2) Complete Comptroller Form 05-904 (Certification of New Veteran-Owned Business)

This is where you “prove” the ownership structure and match each owner to their VVL code.

You’ll list each owner’s:

• name
• VVL ID code
• ownership percentage
• signature

…and you keep going until ownership totals 100%.

if you’re 50/50 with another veteran, cool. If you’re 90/10 with a non-veteran, that’s not the Texas “new veteran-owned business” program.

Step 3) File your formation documents + attach the veteran packet

Now you form the actual entity (LLC/corp/etc.) with the Texas Secretary of State and include:

• VVL(s) (for each owner)
• Form 05-904
• Your formation filing (Certificate of Formation)

Fast option: SOSUpload

Texas basically tells you SOSUpload is faster. It is.

BUT SOSUpload has a big warning that people ignore:

What you upload becomes part of the public record as the official filing.
Don’t upload personal/confidential stuff, payment pages, or random instruction sheets.

If you include payment info or personal/confidential info, they can reject your submission.

File format reality:

• PDF only
• Keep each filing instrument as its own PDF

“Wait—what if my business isn’t formed with the Texas Secretary of State?”

Most businesses people think of (LLCs, corporations) go through SOS.

But if you’re dealing with an entity type that still triggers franchise tax registration and isn’t formed with SOS, Texas Comptroller guidance mentions sending:

• VVL(s)
• Form 05-904
• and potentially Form AP-224 (Texas Business Questionnaire)
  to the Comptroller.

This is a “don’t guess” situation—follow the Comptroller path that matches your entity type.

Texas franchise tax: what you get (and what you still have to do)

The good news

A qualifying new veteran-owned business is generally not subject to Texas franchise tax during the initial 5-year period.

It also generally isn’t required to file certain ownership/public information reports during that initial window (with some older-year quirks noted in the Comptroller guidance).

The part people ignore

Even if you’re exempt from paying the tax, you may still have reporting obligations depending on year and circumstances.

Also: if you stop qualifying (ownership changes, residency changes, etc.), you’re supposed to notify the Comptroller—and the franchise tax exemption can end. don’t treat this like a lifetime coupon. It’s a benefit with rules.

Texas naming landmines (yes, really)

Texas SOS guidance says if your business name reasonably implies it’s created by/for the benefit of war veterans or their families, certain words can require permission (think: “veteran,” “legion,” “disabled,” “war,” etc.).

So if your dream name is “Disabled Veteran Legion Services LLC” … slow down and check the rules before you print 500 business cards.

Also: if you’re acting like a veterans organization (or your name makes it look like you are) and you’re soliciting, there can be separate registration/bond requirements.

Quick side quest: the federal lane (optional)

Texas “new veteran-owned business” status is a Texas thing.

If you’re trying to pursue federal contracts, you may also care about SBA VetCert (federal certification). Different program, different rules.

And yes—federal contracting usually expects you to be properly registered in places like SAM.gov, meet size standards, etc.

If you’re going after VA/federal work, also know that big contractors often have subcontracting goals for veteran-owned and service-disabled veteran-owned small businesses. That’s part of why certification can matter.

Summary – Texas New Veteran-Owned Business Setup

• Confirm you qualify (100% veteran-owned; honorably discharged; Texas residential address; formed on/after 1/1/2022)
• Request VVL for each owner through TVC
• Complete Form 05-904 (owners + VVL codes + %s = 100%)
• Prepare formation filing (LLC/corp)
• Submit formation + VVL(s) + Form 05-904 (SOSUpload if you want speed)
• Don’t upload personal/confidential/payment junk (public record risk)
• Stay qualified for 5 years if you want the full franchise tax benefit
• Set up basic bookkeeping so tax season goes smoothly

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