How to Start a Corporation in Texas
To start a Texas corporation, you must file a Certificate of Formation with the Secretary of State and pay a $300 filing fee. While this filing creates your business, it’s really just the first step to launching your Texas corporation. The complete steps to incorporating in the Lone Star State are as follows:
- File a Texas Certificate of Formation for a For-Profit Corporation
- Pay the Texas Secretary of State $300
- Wait 1 to 2 days and you’ll receive a zip file from the Texas Secretary of State confirming your corporation has been created
- Get a federal tax ID (EIN) for the corporation
- Create Texas corporate bylaws
- Take these documents to the bank and get a Texas corporate bank account
- Get a Texas Sales Tax Permit from the Texas Comptroller’s office if you’re selling any taxable goods or services
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Texas Certificate of Formation free download. When you're done filling out the form, submit it to your state.
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1 Day Texas Corporation For $535 Total
How to File a Texas Corporation Certificate of FormationTo form a Texas corporation, you file the Certificate of Formation in the following steps:
What is the Cost of 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 Northwest to form your Texas corporation, and your total out-the-door cost is $535. This includes state fees, a full year of registered agent service, and loads of forms and tools to help get your business off to a strong start.
How Much Does a Corporation in Texas Cost Each Year?
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.Get Started
What is the Texas Franchise Tax?
The Texas Franchise Tax is a tax for the privilege of doing business in the state. 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 retailers pay a 0.375% 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.
Who is subject to this tax? 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. 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.Get Started
What are the Taxes for a Texas Corporation?
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 instance, the five biggest Texas cities (Houston, San Antonio, Dallas, Austin, and Fort Worth) all have a total sales tax rate of 8.25%. El Paso and Arlington are a bit lower at 7.25% and 8% respectively.
Is a Registered Agent Required for a Texas Corporation?
Yes, your corporation must have a Texas registered agent. You’ll have to list the name of your agent and their registered office in your public Certificate of Formation. Your agent will also need to be regularly available at their registered office during business hours.
You could try to save a few bucks by appointing yourself or someone in your corporation—although the job can be pretty frustrating. No one wants to have their personal information listed online. Starting a business shouldn’t have to mean making all your personal information free for the taking. And it’s hard to be stuck in the office, giving up your freedom to come and go when you need to. Need to drive across the state to meet a client? Or pick up supplies? You should be able to do these things without having to worry about missing a process server.
This is why many corporations choose to hire are registered agent service like Northwest. We list our address in your Certificate of Formation (instead of yours). We accept, scan and send notices the same day. We’re ready and waiting in the office so you can spend your time doing what you really want to do: running your business.Get Started
Texas Corporation Versus Texas LLC:
State taxes and fees for Texas corporations and LLCs are pretty much the same. They both pay $300 to form, and they’re both subject to the Texas Franchise Tax.
With costs being similar, your entity choice really boils down to how you want to run your business. Corporations are common for large businesses (or those that hope to scale quickly). Why? They’re familiar—most people have a general idea of what stocks are and what directors do. Stock can make it easier to raise capital or attract different kinds of investors. Corporations also have a long legal history. Business law is complicated, especially the larger your business grows. Because corporations have decades of court rulings for precedents, corporations can make legal decisions more confidently. LLCs are more popular for small businesses or new business owners that value simplicity. Considering an LLC? Here’s information on starting an LLC in Texas.
Do I Need a Tax ID Number (EIN) for a Texas Corporation?
Yes, your corporation is required to get a federal tax ID (also called an EIN or FEIN). You’ll use this ID when you file federal taxes. You’ll likely need your EIN for other business paperwork too, such as opening a corporate bank account or applying for a Texas Sales Tax Permit.
How do you get an EIN? You can fill out the IRS’s application for no fee. Or, skip the extra paperwork and hire Northwest. You don’t even need an extra form—just tick the box that says “EIN service” during checkout when you sign up for our Texas incorporation service.
Does a Texas Corporation Need a Business License?
The state doesn’t require a general business license. Instead, the licenses and permits you need will depend on what you do and where you’re doing business.
For instance, most businesses will 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.
Texas Corporation Certificate of Formation Requirements
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.”
List either a business (but not your own) or an individual Texas resident (such as yourself). Tip: As you might expect, we recommend Northwest Registered Agent, LLC.
This Texas street address is where your registered agent will be available to accept legal notices for your corporation. Like all the information in your Certificate, this address will become part of the permanent public record of your corporation. Tip: When you hire Northwest, our Texas office address goes 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.
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, rights and limitations for each share type.
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.
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.