Form a Texas Corporation
Form a Texas corporation, the right way, with LawInc. We are Texas incorporation experts and will make sure your Texas corporation complies with all requirements set forth by the Texas Secretary of State. Click “Order Now” to start your Texas incorporation now.
Incorporating in Texas
Incorporating in Texas can be vital to businesses based of Texas. At LawInc, we prepare your Texas corporation Certificate of Incorporation, bylaws, stock certificates, stock ledger and more. We can even obtain your Texas corporation Tax ID number and file your S corporation election with the IRS.
Texas Incorporation Information
The following Texas incorporation information will likely be helpful when deciding to incorporate in Texas.
Texas Corporation Name
The first step in forming an Texas corporation is selecting the business name. Texas corporation names:
- The name must contain the word “corporation,” “company,” “incorporated,” “limited” or an abbreviation of one of these terms.
- Cannot be deceptively similar to, or similar to the name of any existing domestic or foreign filing entity, or any name reservation or registration filed with the Secretary of State.
An available Texas corporation name may be reserved for a 120-day period.
LawInc.com permits you to choose up to three names and will conduct a name search for your Texas LLC, prior to filing.
Texas Corporation Formation
Texas Filing Procedure: To incorporate in Texas, you must file a Texas Certificate of Formation with the Texas Secretary of State.
Texas Publication: Texas has no publication requirement.
Texas Fees: Texas corporation filing fee is $300.
Texas Corporate Directors: The Texas corporation board of directors shall consist of one or more individuals, with the number specified in or fixed in accordance with the Certificate of Formation or bylaws. A director must be a natural person. There are no residency requirements for directors.
Texas Incorporator: Minimum number of Texas incorporators is 1 and there is no requirement that the organizer be an Texas resident.
Texas Corporation Duration: Pursuant to section 3.003 of the BOC, a Texas for-profit corporation has perpetual existence, unless provided otherwise in the certificate of formation.
Texas Registered Agent: An Texas corporation must maintain a registered agent and office to receive service of process in Texas. The Texas registered agent should be available, at an Texas physical address, during normal business hours to accept important legal and tax documents on behalf of the Texas corporation. The registered agent can either be (1) a domestic entity or a foreign entity that is registered to do business in Texas or (2) an individual resident of the state. A Texas corporation may not act as its own agent. Effective January 1, 2010, a person designated as the registered agent of an entity must have consented, either in a written or electronic form, to serve as the registered agent of the Texas corporation. Although consent is required, a copy of the person’s written or electronic consent need not be submitted with the Certificate of Formation. If the registered agent or registered office address changes, it is important to file a statement with the Secretary of State. Failure to maintain a registered agent and registered office may result in the involuntary termination of the corporation. Furthermore, a penalty applies for failure to timely file a statement of change of registered office or registered agent with the Secretary of State. To be timely, the filing must be made by the corporation within 30 days of the change.
Texas Professional Corporation: Professionals that may form professional corporations (rather than professional associations) include: accountants; acupuncturists; athletic trainers; attorneys; chiropractors; nurses; optometrists; insurance agents; and physical, occupational, respiratory care, and massage therapists. Doctors must form professional associations.
Texas Limitations of Directors’ Liability: The Articles of Incorporation may contain a provision eliminating or limiting the liability of a director to the corporation or its shareholders for money damages for any action taken, or any
failure to take any action, as a director, except liability for: (i) The amount of a financial benefit received by a director to which he is not entitled; (ii) An intentional infliction of harm on the corporation or the shareholders; (iii) unlawful distributions; (iv) An intentional violation of criminal law. The report must indicate:
- The financial information of the corporation necessary to compute the corporation’s franchise tax;
- the name and address of each officer and director of the corporation;
- the name and address of the agent of the corporation; and
- Any other information required by the comptroller.
Texas Corporation Capitalization: In Texas, a corporation may not commence business until it has received for the issuance of its shares consideration of the value of one thousand dollars ($1,000). This requirement must be stated in the Texas Certificate of Incorporation.
Texas Corporation Post-Filing Requirements
Texas Annual Report: Texas corporations are not required to file annual reports with the Texas Secretary of State.
Texas Annual Franchise Tax Report: Texas corporations must file an annual Gross Receipts Franchise Tax Report with the State Comptroller Office. The initial report is due 89 days after the first anniversary of the charter date of a Texas corporation. The Report is due on May 15th, every year thereafter. Initial reports are due within 1 year and 90 days from the entity organizing in Texas, or registering to do business in Texas. After the Texas corporation is formed, the Comptroller of Public Accounts contacts the corporation at its registered office for information that will assist the Comptroller in setting up the franchise tax account for the corporation. For more information, visit: http://www.window.state.tx.us/taxinfo/taxpubs/tx96_114.html
Texas Franchise Tax Public Information Report: A public information report must be filed each year with the Texas Comptroller, which will then be forwarded to the Secretary of State, that includes:
- The name, title, and mailing address of each person who is an officer or director of the corporation on the date the report is filed and the expiration date of each person’s term as an officer or director, if any;
- The address of the corporation’s principal office and principal place of business;
- The name and address of the agent of the corporation;
- The name of each corporation in which the corporation filing the report owns a 10 percent or greater interest and the percentage owned by the corporation; and
- The name of each corporation that owns a 10 percent or greater interest in the corporation filing the report.
For more information, visit: http://www.window.state.tx.us/taxinfo/taxforms/05-102.pdf
Texas Corporate Minutes: Texas corporations are required to hold and document annual shareholder and director meetings.
Texas Corporation Taxes
Texas Corporation Taxes: The State of Texas, in addition to collecting no personal income taxes, collects no corporate income taxes. However, Texas recently instituted a gross receipts tax, as mentioned above. For Texas corporate tax rate information, visit: http://www.window.state.tx.us/taxinfo/franchise/
Texas C Corporation: All Texas corporations formed by default are “C” corporations. A Texas C corporation is a Texas corporation that has not made an election to be an “S” corporation. The term C corporation is specifically used because the entity is taxed under subsection C of the IRS code. Texas C corporations are taxed at two levels (“double taxation”). This means that the corporation itself pays its own tax when it makes money (the first tax). The owners or shareholders are then taxed again when they are paid a salary or dividend by the corporation (the second tax). Despite double taxation, Texas C corporations offer many planning and benefit opportunities.
Texas S Corporation: A Texas S corporation is a corporation that has made an election with the IRS to be treated for tax purposes as a “pass-through entity.” This means that corporate profits and losses are passed through to the shareholders (owners) who report them on their own personal tax returns and pay the tax at the individual level. The corporation pays no federal income tax at the corporate level. Texas S corporations are not subject to the double taxation C corporations encounter.
Federal Tax Identification Number/Employer Identification Number (EIN): The Federal Tax Identification Number, also known as the Employer Identification Number (EIN) is a number that is assigned to a business by the Internal Revenue Service. An EIN is like a Social Security Number for a business. It is a requisite for certain business functions such as opening bank accounts or hiring employees. All Texas corporations should obtain an EIN.
Texas Corporation Dissolution
State of Texas: In order to dissolve an Texas corporation, you must file a Certificate of Termination of Domestic Entity (Form 651) with the Texas Secretary of State. The Certificate must be accompanied by a certificate of account status indicating that all taxes have been paid and the entity is in good standing for purposes of termination. The fee for filing a Texas Certificate of Termination is $40.
IRS: Corporations are required to file IRS Form 966, Corporate Dissolution or Liquidation. A final tax return should be filed with the IRS. Form 966 should be filed along with the final tax return.