How to Start a Security Company in Texas: Licensing, Taxes, and Compliance

Launching a security firm in Texas may appear straightforward at first glance: form a company, hire guards, and bid for contracts. But the full process is far more nuanced. From state licensing to insurance, from field operations to avoiding early business collapse, the difference between success and failure often comes down to compliance, discipline, and planning. This guide, rooted in official sources (Texas DPS, Texas statutes, TOPS portal documentation) and real-world experience (including practitioner voices on Reddit), walks you step by step through building a defensible, scalable security company.

Table of Contents

1. Business Planning & Market Positioning
2. Entity Formation & Tax Setup
3. EIN, Banking & Capital Structure
4. Texas DPS Licensing via TOPS
5. Company Representative / Qualified Manager
6. Guard Licensing: Level II, Level III, PPO
7. Insurance, Bonding & Financial Protections
8. Fingerprinting, Background Checks & Disqualifiers
9. Operational Foundations & Compliance Systems
10. Scaling, Getting Contracts & Avoiding Common Failures
11. Lessons from Practitioners (Reddit & Real Life)
12. Case Study: Mayer Security Services
13. Conclusion & Next Steps

1. Business Planning & Market Positioning

Before diving into paperwork or licenses, you must clarify your niche. The security market is broad — residential, commercial, industrial, event, executive protection, armored transport, etc. Many startups make the mistake of offering “everything” and being unsure of their value proposition.

• Identify industries with recurring demand (construction sites, logistics yards, medical campuses, retail complexes).
• Evaluate client risk sensitivity: some clients care deeply about compliance, audits, documentation, and will pay a premium for reputable firms.
• Estimate startup costs: vehicles, uniforms, radios, training, insurance premiums, rent, payroll reserves.
• Build a 3-to-5-year financial model, including worst-case scenarios for attrition, claims, compliance failures, and economic downturns.

One Reddit user laid out bluntly what it takes:

“Things you need – (in Texas) 1. Office – for your license placard 2. Insurance – there is no special security insurance. Whoever started that rumor is a loser. 3. Money to pay personnel 4. License to operate.” [oai_citation:0‡Reddit](https://www.reddit.com/r/securityguards/comments/1fggtwb/ive_finally_done_all_the_market_research_to_start/?utm_source=chatgpt.com)

The bottom line: startups with weak margins, poor documentation, or no contingency for compliance tend to vanish within 12–24 months.

2. Entity Formation & Tax Setup

Your legal structure is the first real line of defense. Most security company owners form either an LLC or Corporation (S-corp or C-corp), depending on how they expect profits and equity to flow. A clean entity setup ensures that clients, insurers, and regulators can clearly see who owns and controls the operation.

Key steps:

• Register your entity with the Texas Secretary of State.
• Draft operating agreements or bylaws that cover equity splits, control rights, succession, removal of representatives, and dispute resolution.
• Obtain any required municipal business licenses (city or county), especially in jurisdictions that regulate private security locally as well.
• If you plan to bring on a “qualified manager” or partner who meets DPS requirements, structure ownership carefully so that liability and compliance obligations are clear.

3. EIN, Banking & Capital Structure

Once your entity is legally registered, you apply for an EIN (Employer Identification Number) through the IRS. This is needed for payroll, tax filings, banking, and vendor relationships.

Open a dedicated business bank account. Use it for all inflows and outflows — mixing personal and business funds is a red flag during audits or claims. Maintain detailed accounting from day one.

Decide how much capital you’ll inject — and whether you’ll operate lean or with buffer reserves for compliance or contract breakage. Be conservative.

4. Texas DPS Licensing via TOPS

In Texas, the Department of Public Safety’s Private Security Bureau (PSB) regulates all private security licensing. Their online portal, TOPS (Texas Online Private Security), is where companies and individual licenses are managed. [oai_citation:1‡Texas Department of Public Safety](https://www.dps.texas.gov/section/private-security/licensing-and-registration?utm_source=chatgpt.com)

Some relevant points from DPS:

• The DPS website offers a detailed “Licensing & Registration” section which includes a fee schedule, application types (new business, renewal, updates), and training requirements. [oai_citation:2‡Texas Department of Public Safety](https://www.dps.texas.gov/section/private-security/licensing-and-registration?utm_source=chatgpt.com)
• The DPS “Application Instructions & Examples” page lists checklists for business setup, insurance, scheduling the manager exam, stakeholder info, and more. [oai_citation:3‡Texas Department of Public Safety](https://www.dps.texas.gov/section/private-security/application-instructions-and-examples?utm_source=chatgpt.com)

The application checklist generally includes:

1. Corporate documents (articles, officer list, ownership structure)
2. Proof of liability insurance (PSP-05 form) submitted through TOPS
3. Designation of Company Representative / Manager
4. Fingerprint and background check info
5. Training certificates or proof of meeting the experience requirement
6. Payment of application fees

You can log into TOPS at any time to track your status and upload missing documents. [oai_citation:4‡TOPS Portal](https://tops.portal.texas.gov/?utm_source=chatgpt.com)

5. Company Representative / Qualified Manager Requirements

Texas used to mandate a “Qualified Manager,” but changes made effective September 1, 2019, introduced the role of **Company Representative** with updated rules. [oai_citation:5‡Texas Department of Public Safety](https://www.dps.texas.gov/rsd/psb/docs/statutesrules_2021_2022.pdf?utm_source=chatgpt.com)

The representative must meet DPS experience and exam requirements. Under the Texas Private Security Statutes & Rules (Chapter 1702, Occupations Code, and DPS rules), DPS reviews whether the experience is adequate. [oai_citation:6‡Texas Department of Public Safety](https://www.dps.texas.gov/rsd/psb/docs/statutesrules_2021_2022.pdf?utm_source=chatgpt.com)

Experience acceptable to DPS typically includes:

• Supervisory or managerial duties within a licensed security company
• Supervisory experience in law enforcement, corrections, military or criminal justice roles
• Academic credential in criminal justice (in some cases)

If you lack the required experience, a common structure is to partner with or hire a qualified representative, offering them equity or incentives while reserving your own role as investor, sponsor, or passive owner. Ensure your agreements clearly allocate compliance authority, removal rights, and performance metrics.

6. Guard Licensing: Level II, III, and Personal Protection Officer

Your company may employ unarmed guards (Level II or “non-commissioned”), armed guards (Level III or “commissioned”), or Personal Protection Officers (PPOs). DPS mandates different training and qualification standards for each.

Level II (Non-Commissioned / Unarmed)

Level II is the foundational license. Key points:

• Applicants must complete a DPS-approved training course (generally 6 hours) through a certified provider. [oai_citation:7‡Defencify Training Blog](https://blog.defencifytraining.com/texas-security-guard-guide?utm_source=chatgpt.com)
• Applicants must be employed (or in the process of being hired) by a licensed security company — you cannot apply independently. [oai_citation:8‡Defencify Training Blog](https://blog.defencifytraining.com/texas-security-guard-guide?utm_source=chatgpt.com)
• Applicants submit fingerprints and undergo a background check. [oai_citation:9‡Texas Department of Public Safety](https://www.dps.texas.gov/section/private-security/faq/individual-license-questions?utm_source=chatgpt.com)
• Once the application is submitted, it normally takes several weeks for DPS processing. During that time, many guards can begin working in “pending license” status under supervision (depending on client/contract allowances). [oai_citation:10‡Defencify Training Blog](https://blog.defencifytraining.com/texas-security-guard-guide?utm_source=chatgpt.com)

Level III (Commissioned / Armed)

Level III is for guards empowered to carry firearms or enforce more advanced security duties. Requirements typically include:

• Completion of Level II training first
• Extra hours of firearm training, use-of-force, defensive tactics, legal statutes governing weapons, and proficiency testing [oai_citation:11‡Defencify Training Blog](https://blog.defencifytraining.com/texas-security-guard-guide?utm_source=chatgpt.com)
• Passing a firearms qualification test (often within 90 days) for renewal or commissioning status. [oai_citation:12‡Texas Department of Public Safety](https://www.dps.texas.gov/section/private-security/faq/individual-license-questions?utm_source=chatgpt.com)
• Submitting proof of firearm proficiency, which must be current (typically within 90 days) for renewals. [oai_citation:13‡Texas Department of Public Safety](https://www.dps.texas.gov/section/private-security/faq/individual-license-questions?utm_source=chatgpt.com)

PPO (Personal Protection Officer)

For executive protection, bodyguard, or close-protection roles, Texas DPS sometimes requires a PPO license, combining Level II and III credentials plus additional training in protective tactics, risk assessment, discrete movement, and emergency response. [oai_citation:14‡Texas Department of Public Safety](https://www.dps.texas.gov/section/private-security/faq/individual-license-questions?utm_source=chatgpt.com)

Renewals & Expiration

Individual licenses (pocket cards) are valid for two years. Renewal begins 180 days before expiration. For commissioned officers, you’ll need to resubmit a firearm proficiency certificate within 90 days of renewal. [oai_citation:15‡Texas Department of Public Safety](https://www.dps.texas.gov/section/private-security/faq/individual-license-questions?utm_source=chatgpt.com)

7. Insurance, Bonding & Financial Protections

Insurance is non-negotiable in this business. DPS requires the license-applying business to hold liability coverage and submit a certificate (PSP-05) through TOPS. Without proof, your application will be rejected or delayed.

Standard minimums include (but may be subject to change — always reference DPS):

• $100,000 per occurrence (bodily injury + property damage)
• $50,000 per occurrence (personal injury)
• $200,000 aggregate minimum per policy term

In addition to insurance, many companies maintain:

• Errors & omissions (E&O) / professional liability
• Workers’ compensation or equivalent coverage (if applicable)
• Bonding (though in Texas DPS doesn’t always require a surety bond, other states do — some clients or contracts might demand bonds) [oai_citation:16‡Reddit](https://www.reddit.com/r/securityguards/comments/14xiqt3/tips_on_starting_a_private_security_business_and/?utm_source=chatgpt.com)

8. Fingerprinting, Background Checks & Disqualifiers

DPS requires fingerprint-based criminal history checks for all qualifying individuals (owners, company representative, officers). DPS operates through an approved vendor to electronically submit fingerprint data. [oai_citation:17‡Texas Department of Public Safety](https://www.dps.texas.gov/section/private-security/faq/individual-license-questions?utm_source=chatgpt.com)

Some disqualifiers DPS may consider include:

• Felony convictions or Class A/B misdemeanors (especially involving violence, theft, fraud, or weapons) [oai_citation:18‡Defencify Training Blog](https://blog.defencifytraining.com/texas-security-guard-guide?utm_source=chatgpt.com)
• Dishonorable military discharge
• Being on sexual offender registries
• Judicial determinations of incompetence

If DPS requests court documents or clarifications, failure to respond may result in rejection. [oai_citation:19‡Texas Department of Public Safety](https://www.dps.texas.gov/section/private-security/faq/individual-license-questions?utm_source=chatgpt.com)

9. Operational Foundations & Compliance Systems

Once licensed, your true challenge is building a resilient, audit-proof operation. Many firms crash not from lack of revenue, but from ignoring compliance over time.

Here are foundational systems you must install early:

• **Compliance binder** (digital or physical) containing insurance certificates, employee roster, license expiration dates, training logs, incident reports, policy manuals, etc.
• **Training program** covering use-of-force, de-escalation, report writing, equipment handling, site-specific rules, communications protocols.
• **Quality control & audits** — random site inspections, checklist reviews, supervisor reports, client feedback loops.
• **Incident reporting & investigations** — document all events, escalate to legal or leadership as needed, retain logs.
• **HR & payroll alignment** — ensure classifications (employee vs contractor), overtime calculations, benefits, and state/federal compliance.
• **Vehicle/equipment maintenance schedule** (if you have patrol cars or surveillance gear). Several Reddit practitioners flag this as a cost many miss. [oai_citation:20‡Reddit](https://www.reddit.com/r/securityguards/comments/1ddnzj4/started_a_private_security_company_questions/?utm_source=chatgpt.com)
• **Contract management** — do not undervalue well-written client contracts with indemnification, scope clarity, penalties, and renewal terms.

10. Scaling, Getting Contracts & Avoiding Common Failures

Many security startups plateau or cease operations within a few years. Common pitfalls include:

• Overexpansion without compliance maturity
• Underestimating back-office overhead (HR, insurance, audit management)
• Failing to standardize SOPs (site orders, reporting, training)
• Neglecting client relations and chasing low-margin contracts
• Cost creep through overtime, fuel, equipment repairs, and unplanned liabilities

Focus on high-quality clients who value compliance and outcomes. Use audits and case studies to show your differentiator. Don’t try to compete only on price — your edge should be reliability, documentation, and continuous improvement.

11. Lessons from Practitioners

Reddit threads from security operators and aspiring founders reveal real pain points and lessons. Here are a few quotes and takeaways:

“I’m licensed as an LLC both at state and federal … vehicles are covered under our equipment policy … make sure your attorney reviews your employee paperwork … arrangement for office space …” [oai_citation:21‡Reddit](https://www.reddit.com/r/securityguards/comments/1ddnzj4/started_a_private_security_company_questions/?utm_source=chatgpt.com)

“Part of my state’s licensing is getting a half-million surety bond … costs depend on credit history.” [oai_citation:22‡Reddit](https://www.reddit.com/r/securityguards/comments/14xiqt3/tips_on_starting_a_private_security_business_and/?utm_source=chatgpt.com)

“You can’t get a physical license until you get hired … you can start the application and upload your certification info … you just won’t get the card until hired.” [oai_citation:23‡Reddit](https://www.reddit.com/r/securityguards/comments/1cz1c7h/i_want_a_security_job_in_texas_but_dont_know/?utm_source=chatgpt.com)

12. Case Study: Mayer Security Services

Though still a young company (founded in 2019 under the former name Meyer Defense), Mayer Security Services has grown to protect over $1 billion in assets across Texas. Its success is built on three pillars:

• Veteran leadership and discipline — applying military-grade rigor to private security operations
• Relentless compliance and documentation — never shortcutting insurance, audits, licensing, or training
• Client-first orientation — positioning itself as a trusted partner, not a low-cost vendor

By standardizing operations, continuously investing in officer development, and carefully managing overhead, Mayer has scaled with integrity in a tough industry.

13. Conclusion & Next Steps

Starting a security company in Texas is achievable — but building one that lasts is the harder climb. Follow these steps:

1. Develop your niche, budget conservatively, and plan for compliance from day one.
2. Form your entity, get your EIN, open accounts, and structure equity clearly.
3. Register in DPS’s TOPS portal and file your application systematically.
4. Partner with or appoint a qualified Company Representative who meets DPS experience & exam standards.
5. License your guards (Level II, possibly Level III) through DPS-approved training and fingerprinting.
6. Obtain and maintain insurance, build your compliance systems, and institutionalize audits.
7. Scale cautiously — focus on contracts that value compliance, not purely price.
8. Continue documentation, reporting, and training to outperform competitors who cut corners.

For more information or help with contract design, compliance templates, or operational strategy, visit Mayer Security Services — we help entrepreneurs turn security ideas into lawful, scalable businesses.

External resources referenced: Texas DPS Private Security Bureau, Texas DPS TOPS, FBI Identity History Summary Checks.

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