Everything You Need to Know About Texas Corporations:
Texas Incorporation Options
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How to Incorporate in Texas
To start a corporation in Texas, you’ll need to do three things: appoint a registered agent, choose a name for your business, and file Certificate of Formation with the Texas Secretary of State. You can file this document online, by mail, fax, or in person. The certificate costs $300 to file. Once filed with the state, this document formally creates your Texas corporation.
Per TX Bus Orgs § 5.201 (2019), every Texas corporation must appoint a registered agent. You don’t need to hire a registered agent, but if you do, make sure your registered agent will list their address on your certificate wherever possible to ensure maximum privacy.
If you’re starting a new business, you probably already know what you want to name your corporation. But you’ll need to know if your preferred name is available. To find out, visit https://direct.sos.state.tx.us/acct/acct-subscribe.asp and search until you find the perfect name for your corporation.
Once you know who your registered agent will be and what your corporation name is, you’re ready to file your Texas Certificate of Formation. Follow along with our filing instructions below:
Filing the Texas Certificate of Formation
Learn more about each Certificate of Formation requirement below. Note that the information you provide becomes part of the public record—permanently.
Better yet skip the form entirely and hire us to incorporate your Texas business. We provide a free business address to list whenever possible throughout the filing to better keep your personal address private. Prefer to start your business on a budget? Pay just $54 out the door with our VIP monthly payment option.
1. Entity Name and Type
Your name must include “Corporation,” “Company,” “Incorporated,” “Limited,” or an abbreviation for one of these words. Tip: Most corporations keep it short and sweet with “Corp” or “Inc.”
2. Registered Agent and Office
For your Texas registered agent, you can list an individual state resident (like someone in your Texas corporation) or a business that provides registered agent service (like Northwest). Tip: We recommend Northwest.
The registered office is the Texas street address where your registered agent will be available during business hours to accept legal notifications for your corporation. Tip: When you hire Northwest, our address will go here.
You’ll need to list the name and address of at least one director. The address can be a business address instead of a personal address. Tip: Hire Northwest as your registered agent and you can use our address here.
4. Authorized Shares
List the number of shares you’re creating and the par value for each, if any. Par value (also known as face value) is the price listed on stock certificates and is typically the lowest price at which a share is traded. If you have multiple classes or series of shares, you’ll need to attach a statement explaining the number, par value, right, and limitations for each share type.
5. Purpose and Supplemental Provisions
This form creates a corporation with the general purpose of conducting lawful business. If you are looking to create a nonprofit or professional corporation, you will need to file a different form. Article 5 also gives you an opportunity to add to an article on the form or to provide additional articles to contain optional provisions. (For example, if you want your corporation to only last for a limited duration, you have the opportunity to include a “self destruct” button in this section—otherwise your corporation will exist perpetually.) Tip: This supplemental provisions section is optional.
6. Texas Organizer
Your organizer signs your Certificate of Formation. You need at least one organizer, but it doesn’t have to be anyone in your corporation—just a person or business you authorize to submit your certificate. Tip: We’ll be your organizer when you hire Northwest to form your Texas corporation.
7. Effective Date
When do you want your business to start? You can choose to have it begin upon filing, or you can choose a specific date or event to begin (as long as it’s within 90 days of filing). Tip: Most corporations begin upon filing.
Why Have a Registered Agent Form Your Texas Corporation?
Professionals in Texas hire registered agent services like Northwest Registered Agent for incorporation—but why?
Standard filing companies don’t have employees or offices in every state. But as a national registered agent, it’s a requirement for us, which is a benefit for our clients. We own our own building in Austin, TX. We’re on a first name basis with the people who work in the office of the Texas Secretary of State. We know all the fastest filing methods, which translates to fast, professional service—without extra fees.
As your registered agent, we list our Austin registered office address on your corporation’s formation documents. Why? If you’re starting a business from your apartment in San Antonio, do you really want your apartment address as your business address? (Hint: the answer is no.) We’ll list our address, so you don’t have to list yours. Plus, we never sell your data. We don’t list your personal information on filings if we don’t have to. It’s all standard and part of our commitment to Privacy by Default®.
Free Mail Forwarding and Business Address
We already accept your legal mail—so why not take it a step further? In every state, we include limited digital mail forwarding for your regular mail too (10 pieces of regular mail a year; $15 a doc after that). Plus, you can list our address as your business address. That means you can have all business mail routed through our office. With both mail forwarding and a business address included, you get a level of security unmatched in the formation industry.
And now, try our in-house Northwest Phone Service for 60 days, free of charge with our incorporation service. Get a virtual phone number with your choice of area code, make and receive calls from any device, and more—for just $9 a month.
We know the in’s and out’s of each state—and we use this knowledge to help you when you need it most. Our team of Corporate Guides® has over 200 local business experts. You can call or email us for answers to all your questions about your corporation in Texas. Our Corporate Guides are dedicated solely to helping you with your business—not selling you services or meeting quotas.
What Do I Do After My Texas Corporation Is Formed?
After your Texas Certificate of Formation is approved, you still have a few more important steps to take, including getting an EIN, drafting bylaws, holding your first meeting, opening a bank account, and learning about state reporting and tax requirements.
Get an EIN
Your federal employer identification number (commonly known as an EIN or FEIN) is similar to a social security number for your business. The IRS assigns these numbers and uses them to easily identify individual corporations on tax filings, including federal corporate income tax returns.
Why does my Texas corporation need an EIN?
The IRS requires corporations to get an EIN for their federal tax filings, and the Texas Comptroller’s Office requires an EIN to register for a Sales Tax Permit. You may also be asked for your EIN when opening a bank account, securing a loan, or applying for local business permits and licenses.
How do I get an EIN for my corporation?
You can get an EIN directly from the IRS. The application is free, and most businesses can apply online. However, if you don’t have a social security number, you’ll need to submit a paper application form. Can’t bear to fill out yet another application? Hire Northwest to get your EIN for you. Just add on EIN service during checkout when you sign up for our incorporation service. Or choose our VIP service—an EIN is included.
Write Corporate Bylaws
Bylaws are the internal rules you set for your business. They put into writing how decisions will be made and who gets to make those decisions. All the major organizational processes and procedures for your corporation will go in your bylaws.
Do I need bylaws for my Texas corporation?
Yes. TX Bus Orgs § 21.057 (2019) notes that bylaws shall be adopted by the corporation’s board of directors.
You don’t have to submit bylaws to the state though. Corporate bylaws are internal documents you keep with your other corporate records, such as meeting minutes and resolutions.
What should bylaws include?
Corporate bylaws cover basic policies and procedures for issues such as company finances and management. Bylaws should cover a range of topics, answering key questions like those below:
Meetings: When and where will meetings for shareholders and directors be held? How many attendees are required to transact business? What are the procedures for voting or proxy voting? How do you call a special meeting? What actions can be taken without a meeting?
Stock: How are stock certificates issued and transferred? How is voting affected by issues such as corporate stock owners or fractional shares?
Directors and officers: How many directors must there be? Which officer positions are required? What powers do they have? How do you fill a vacancy or remove a director or officer?
Finances: What are the procedures for retaining profits, issuing dividends, and paying bills? Who can withdraw money from the corporate bank account or sign checks?
Records: Where is the corporate book to be kept? What information will be maintained? How are requests for review or access honored? Can records or copies be kept or distributed digitally?
Amendments and emergencies: Who can amend bylaws and how? Can emergency bylaws be adopted in the case of disaster?
Texas bylaws can make other provisions as well, assuming additions are in accordance with state law. For example, TX Bus Orgs § 21.359 (2019) states that Texas bylaws can require that a director of the corporation can only be elected if the director receives the majority vote of shareholders of a specified portion of shares entitled to vote, the majority vote of the shareholders represented in person or by proxy at a meeting which a quorum is present, or the majority vote of shareholders entitled to vote at a meeting at which a quorum is present.
How do I write bylaws?
Creating bylaws can be overwhelming—where do you start? Northwest can help. We give you free corporate bylaws when you hire us to form your Texas corporation. We know what kinds of topics and questions corporations need to address, and we’ve spent years refining and improving our forms. We offer many other free corporate forms as well, including templates for resolutions and meeting minutes.
Hold an Organizational Meeting
An organizational meeting is the first official meeting of the corporation after the business is legally formed with the state. At this meeting, bylaws are adopted, officers are appointed, and any other initial business is conducted. The first meeting minutes should also be recorded and added to your corporate record book.
Are there any special rules for Texas organizational meetings?
You’re required to give a minimum of three days notice of the time and place of the meeting to every director or person named in your Certificate of Formation.
Open a Corporate Bank Account
Businesses that mix personal and business finances together risk losing their liability protections, so your corporation will need its own bank account. In addition, a corporate bank account is essential for easily accepting payments, paying bills and holding funds.
How do I open a bank account for my Texas corporation?
To open a corporate bank account in Texas, you’ll need to bring the following with you to the bank:
A copy of the Texas corporation’s Certificate of Formation
The corporation’s bylaws
The corporation’s EIN
If your bylaws don’t specifically assign the power to open a bank account, you may also want to bring a corporate resolution to open a bank account. The resolution would state that the person going to the bank is authorized by the business to open the account in the name of the corporation. At Northwest, we provide free corporate bank resolutions, along with many other free corporate forms, to help you get started fast.
File Texas Reports & Taxes
In Texas, corporations file an annual Franchise Tax and Public Information Report each year. However, Texas doesn’t have a corporate net income tax or a personal net income tax.
What is the Texas Franchise Tax and Public Information Report?
The Texas Franchise Tax and Public Information Report is a tax for the privilege of doing business in the state of Texas. If you do business in Texas, odds are you have to file. Nearly every entity type—LLCs, LLPs, S corps, regular corporations, and more—is subject to this tax.
Even if you don’t owe any tax, you’ll need to file. The Franchise Tax filing includes a Public Information Report, which is mandatory for corporations. The Public Information Report is essentially an annual report, updating the state on your contact and ownership information.
How much is the Texas Franchise Tax and Public Information Report?
There’s no set annual fee to have a Texas corporation, but you will have to file a Public Information Report and Texas Franchise Tax each year and pay any tax owed.
Your tax base is your corporation’s taxable margin (which can be calculated a few different ways: 70% of total revenue, total revenue minus cost of goods sold, total revenue minus compensation or total revenue minus $1 million). Whew.
If calculating your taxable margin wasn’t difficult enough, different businesses pay different rates. The standard rate is 0.75%, but qualifying wholesalers and retailer pay a 0.37% rate. There’s also an “EZ Computation” rate of 0.331% for businesses with less than $20 million in total revenue. Frankly, it’s a complicated tax and most businesses need the help of a CPA or other financial specialist.
When is the Texas Franchise Tax and Public Information Report due?
Your report and tax filing are due by May 15th. File late? Be prepared to pay up. There’s a $50 late fee plus 5-10% of tax owed.
These filings can be easy to forget—which is why we send our clients automatic reminders for your Texas Franchise Tax and Public Information Report filings. Or better yet, let us file for you. With our business renewal service, we send you the completed Public Information Report for you to add your tax information, then submit the report for you for $100 plus the state fee and any tax owed.
What should I know about Texas corporate taxes?
Texas is one of the few states that doesn’t have a corporate net income tax. There’s no personal net income tax either, so the biggest tax consideration is the Texas Franchise Tax described above.
The state sales tax is 6.25%. Local sales taxes are typically added on as well. For example, the five biggest cities in Texas (Houston, San Antonio, Dallas, Austin, and Fort Worth) all have a total sales tax rate of 8.25%.
Do corporations have to register with the Texas Comptroller’s Office?
More than likely. Most businesses are required to register with the Texas Comptroller’s Office for a Sales Tax Permit. You can register via eSystems or by filing an application for a sales tax permit. You’ll need your EIN before you can register.
Texas Corporation FAQs
How can I submit the Texas Certificate of Formation?
You can file Texas certificate online, by mail, fax, or in person. Mailed filings must be submitted in duplicate to the following address:
P.O. Box 13697
Austin, TX 78711-3697
Documents delivered in person or sent by courier or Federal Express should be sent to:
James Earl Rudder Office Building
Austin, TX 78701
Faxed filings can be sent to (512) 463-5709.
How much does it cost to start a Texas corporation?
The state charges a $300 filing fee to submit a Certificate of Formation. If you pay with a credit card, there’s also a 2.7% convenience fee.
Hire us for a one-time fee of $535, including the state filing fees, a year of registered agent service and more. Or, pay just $54 out the door with our VIP monthly payment option.
How long does it take to start a Texas corporation?
For the fastest filing time (2 business days), file online or in person. If you file by mail, it could take 5-7 business days to receive your stamped copy back in the mail.
If you hire Northwest to start your corporation, we file online and typically have your Texas corporation formed within 2 days.
Does a Texas corporation need a business license?
There’s no general, statewide business license required in Texas, but the licenses and permits you need will depend on what you do and where you’re doing business.
Most Texas businesses need a Texas Sales Tax Permit, which is required to sell tangible goods or services in the state. Different cities and counties have their own specific licensing requirements as well. El Paso, for example, issues a variety of licenses for businesses such as laundries, flea markets, spas, and tattoo studios.
For some license applications you may need an EIN or a certified copy of your Certificate of Formation. At Northwest, we can streamline the process and get these for you—simply add on these items during checkout.
What is a foreign Texas corporation?
A corporation formed outside of Texas—but which conducts business in the state—is considered a foreign Texas corporation. For example, if you incorporated in Arkansas but decide to open a storefront in Texas, you would be a foreign Texas corporation. This also means you would need to register with the state by filing an Application for Registration with the Texas Secretary of State. Foreign corporations are required to file the Texas Annual Report and a state franchise tax as well.
Can Northwest help me form a nonprofit corporation?
Absolutely! We’re happy to start a nonprofit corporation for you. Note that incorporating a Texas nonprofit requires a different form. The filing fee is lower as well. Texas nonprofits still pay federal and state taxes (unless they apply and are granted tax exempt status by the IRS and the Texas Comptroller’s Office). Depending on your nonprofit’s tax exempt status, you will either have to submit an annual public information report or a periodic report to the Texas Secretary of State.
What if I need Texas mail forwarding?
Business owners can require mail forwarding for a lot of reasons: You may be operating your business from home and prefer to keep your personal information private. You may not want personal documents, like bank statements, delivered to an office where anyone can read them. You may travel a lot. Whatever your reason, Northwest includes limited mail forwarding with our registered agent and formation services. Are your mail forwarding needs a little more robust? We also offer unlimited mail forwarding with a unique suite number as part of our premium Texas Mail Forwarding Service.
How can I get a Texas phone number for my corporation?
It’s a conundrum: you need a local number to display on your website and give to customers, but you don’t want to make your personal number quite so…public. We get it. And we’ve got you covered with Northwest Phone Service. We can provide you with a virtual phone number in any state—plus unlimited call forwarding and tons of easy-to-use features. You can try Phone Service free for 60 days when you hire us to form your corporation, and maintaining service is just $9 monthly after that. No contract required.
How to Order Texas Incorporation Service
Our Texas incorporation service is designed to be fast and easy—signing up takes just a couple minutes. Here’s how it works:
We offer flexibility with two different options for payment. You can pay everything up front, which includes a full year of registered agent service. Or, pay just $54 out the door with our VIP monthly payment option. With our VIP option, we also include an EIN. Just choose one of the buttons below, answer a few easy questions about your business and submit your payment.
Next, we’ll prepare and submit your Texas Certificate of Formation to the Secretary of State. In the meantime, you’ll have immediate access to your online account, where you can find useful state forms, pre-populated with your business information.
Once the Texas Secretary of State has approved your filing, we notify you that your Texas corporation has been legally formed. You can now move on to next steps, like holding your organizational meeting and opening a bank account.