Our Step By Step Guide

How to Form a corporation In Texas

Forming a corporation provides liability protection for any type of business, and should be among the first steps you take as a new business owner. Starting a corporation can help you protect your personal assets while adding legitimacy to your company. Follow our step by step guide or let us handle the paperwork on your behalf, ensuring your business is filed quickly and accurately.

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Why start your business in Texas?

Several major corporations, including Southwest Airlines, AT&T, and Exxon Mobil, call Texas home for their thriving global organizations. Texas has been ranked for two years running as the best state to start a business. According to WalletHub, the company that conducted this study on state-to-state business friendliness, Texas has the fifth highest amount of spending on business initiatives. Thanks to government-backed funding programs and an educated pool of workers, small businesses in Texas grow at an 11% rate. This growth rate is especially incredible if you compare it to 2018’s numbers. The U.S. Small Business Administration (SBA) revealed that there are 2.6 million small businesses in the state of Texas in 2018.

Ready to start a corporation in The Lone Star State? Let's walk you through the steps to get started.

Two Ways to Register Your Business

MyCorporation® can help you file all of the necessary documents to form your corporation in Texas.

File and submit the formation paperwork yourself

Our free guide provides you with all of the information you'll need to form your corporation in Texas. Bookmark this page as a reference so you can return easily as you complete each step of the process.

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See other business types

Are you looking for another entity type? We offer several other guides for the state of Texas.

What kind of entity should you form for your business? While each entity formation offers its own benefits, forming a Corporation (also referred to as a general for-profit corporation or C Corporation), is a common entity chosen by new businesses.

One of the reasons for the entity's popularity is that a corporation provides a business with a great deal of structure. A corporation can deduct certain benefits, like employee health insurance and dental plans, which can add up to substantial tax savings per year. Additionally, corporations allow the issuance of stock, which helps attract investors and venture capitalists that may want to invest in your business.

Corporations may also enter legal contracts, borrow money or take out loans, hire employees, and create initial public offerings (IPOs) to take their businesses public.

The Benefits of a Corporation

  • Limit your legal and fiscal responsibility.
    Incorporating your business separates you from your business as a separate legal entity, preventing you from being fully responsible for any debts accrued by your business.
  • Build Credibility
    Adding a corporate indicator like "INC." at the end of your business name immediately indicates credibility to potential investors, customers, or business partners.
  • Potential tax advantages
    Forming a corporation may provide a tax advantage for some businesses, allowing additional deductions for operating expenses, advertising, employee compensation, and more.

Compare the main entity types below

Entity Type
Liability
Taxation
Maintenance
Limited Liability Company Combines limited liability protection with a pass-through tax structure. IRS rules allow LLCs to choose between being taxed as partnership or corporation. The easiest entity to maintain with the least amount of formal annual requirements.
Corporation Owners / shareholders have limited personal liability for business related debts. Separate taxable entity, corporate profits among owners and corporation. Meetings are required to maintain corporate status. Stock may be sold to raise capital.
Non-Profit Corporation A corporation formed for a charitable, educational, religious, literary, or scientic purpose. Contributions to charitable corporation are tax-deductible. Can get tax exempt status with the IRS. Annual reports, minutes, meetings are required to maintain nonprofit / tax exempt status.
Tip: Try our free entity choice tool. Answer a few simple multiple choice questions about your business, and our tool can recommend the entity type that best fits the needs of your business.

The next step will be to decide on a name for your business. Choose a name that is memorable and unique, easy to understand and pronounce, and accurately represents your business. You'll want to search your name choices on the web to quickly find out if they are already taken. It's also best to jot down one or two alternatives, in case the name you settle on is not available for registration in Texas.

There are a few rules that Texas Corporations must follow in order to register a name.

  • The name you choose must be unique and not "confusingly similar" to the name of any other Texas business. This is to prevent fraud or misrepresentation and is a common rule in all 50 states. You can find out whether a name is available in Texas by searching the Texas Secretary of State taxable entity search through the Texas Comptroller of Public Accounts for possible conflicts. Be sure to check variations or alternate spellings as well, otherwise your filing may be rejected. In a pinch, you can use MyCorporation's business name search service, where we will conduct a more thorough search on your behalf and report back our findings. Plus, MyCorporation includes a business name search for free when we complete your LLC filings on your behalf!
  • Please note that you do not need to publish a notice before incorporating a business. The requirement that a business need to publish its intent to incorporate in a local newspaper for four consecutive weeks was repealed in 2003 by the Texas Secretary of State.

You can learn more about business name filing FAQs through SOSDirect Online Searching and Filing provided by the Texas Secretary of State.

Tip: A business name check is included with every one of our business formation packages. We check with the state to determine the availability of your business name automatically. You can also conduct a nationwide business name search here.

Most states require that you designate a registered agent for your business, and Texas is no exception. Registered agents are required for domestic and foreign filing entities in Texas by the Texas Business Organizations Code (BOC). A registered agent acts as the state's means to communicate with a business and is responsible for receiving legal and official documents related to the business.

A registered agent can be anyone you wish, with one small caveat. The registered agent must have a physical address in Texas. In other words, a P.O. Box is not allowed as a registered agent address. This means a member of the corporation can act as the registered agent if desired, or a third-party registered agent service like MyCorporation can be used.

Why designate a third party to act as my registered agent?

It should be noted that registered agent information is made publicly available. This can cause privacy concerns for business owners who do not wish to list their personal contact information on the internet for everyone to see. It is also common for the registered agent to become a target of spam or robocalls since this private information is relatively easy to obtain. Another issue that may arise is that in the case of a lawsuit, these documents would be hand delivered directly to the registered agent, and in the case that you used your business location for this purpose, this could occur in front of your customers. This is why many business owners opt for a third-party registered agent service such as MyCorporation to act as a registered agent on behalf of their business.

Another issue that may arise is that in the case of a lawsuit, these documents would be hand delivered directly to the registered agent. In the case that you used your business location for this purpose, this could occur in front of your customers. This is why many business owners opt for a third-party registered agent service such as MyCorporation to act as a registered agent on behalf of their business.

Tip: Our Deluxe and Premium formation packages include a full year of registered agent services for your business. We also offer standalone registered agent services which you can add to your business later.

The state of Texas requires you to file Articles of Incorporation to order to form a Corporation. Articles of Incorporation may be filed online or by mail. They include basic information about the Texas Corporation including the company name, business address, mailing address, registered agent name and address, the Corporation's purpose, effective date of the Corporation, and signature of at least one individual acting as an authorized representative. For more information about fees, please review Form 806 Fee Schedule for Texas filing fees.

What information should be included in the Articles of Incorporation?

As noted above, information required in the Articles of Incorporation covers basic information as it pertains to the Texas Corporation.

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Corporate bylaws are a detailed set of rules agreed upon and adopted by the board of directors after a corporation is formed, that specify the internal management structure of the corporation. They are typically drafted by the corporation's founder or directors. Corporate bylaws are not submitted to the state.

The state of Texas does not require a corporation to create bylaws upon approval of the Certificate of Incorporation, but it is strongly recommended. Bylaws allow a business to maintain consistency in the way it operates, and communicate organizational rules to help avoid conflicts and disputes. They cover how directors are elected, meetings are organized, and officer roster and summary of duties. In addition to management, bylaws specify details about ownership rights, annual meetings, and the addition or removal of officers and directors.

If you are not sure how to create corporate bylaws, you can purchase MyCorporation's customized Minutes and Bylaws Package. This kit provides you with the internal documents required to fulfill your corporate formalities and properly operate your business after incorporating.

The board of directors of a corporation are normally elected by the shareholders. However, for a new business, the incorporator (the person who signed the Certificate of incorporation) will often designate the initial directors if there are no initial directors named in the certificate of incorporation. This is done by creating the "Statement of Incorporator" which will list the names and addresses of the initial directors of the business. The statement of incorporator is then signed by all of the incorporators, which passes all elements of control over to the initial directors. This is filed not with the state, but in a corporate minute book of the incorporation. It is kept as part of the corporate record.

The first meeting of the board of directors is an important time in the life cycle of a corporation. During this meeting, the initial directors of the business will adopt the corporate bylaws, set the fiscal year, and appoint corporate officers. It is also common to authorize the issuance of shares of stock to the founders of your company, usually in exchange for assets.

This meeting, and all future meetings of the board of directors, must be recorded in corporate minutes. Minutes are documents that detail what was discussed and any decisions the business makes during meetings. They are stored with the corporate records.

Corporate minutes are required for all Texas corporations by law. Falling behind on keeping and maintain minutes can jeopardize the corporation's liability protection and overall tax advantages. It is important to maintain updated corporate minutes and keep copies of all the signed and approved minutes or actions by unanimous consent from any special or annual meetings of the corporation's shareholders and directors.

Stock is a representation of ownership in your corporation. When your shareholders purchase stock, they are buying a small piece of your business. Although it's not legally required, it is common that most corporations will issue paper stock certificates to their shareholders.

In a private company (not publicly traded on the stock market), you can set the value to each stock however you see fit in your corporate bylaws. For example, one share could be worth $10 or $10,000, either would be completely acceptable.

Tip: MyCorporation can help you issue stock certificates for your business, allowing you to raise money by way of outside investment.

In Texas, most small businesses require a combination of business licenses and permits at the federal and agency levels. The SBA outlines the process for how to apply for licenses and permits in the state of Texas. Additionally, consider checking in with the Texas Department of Licensing and Regulation. This website provides a thorough look into types of licenses businesses may need to obtain and file with the county or state.

You can learn more about the specific licenses applicable to your business by checking with the city offices where you will conduct business, or by using MyCorporation's business license compliance package. Our skilled professionals will do the work for you. We identify all of the licenses required by your business and provide you with the information you need in order to file.

An EIN (also referred to as a Federal Tax ID) is a nine-digit number that is issued by the IRS and used to uniquely identify your business for tax purposes. Think of it as a Social Security Number (SSN) for your business, except an EIN is less sensitive. It is important to wait until the LLC has been approved by the state before applying for an EIN. For that reason, filing for an EIN is one of the last things to do when you are setting up a business.

  • Open business checking, savings, or investment accounts
  • File taxes for the business
  • Complete payroll for employees if applicable
  • Obtain lines of credit and credit cards, as well as "build credit" for your business
  • Apply for applicable business licenses when required.

You will only need a few pieces of information to file including your mailing address and legal business name. You can apply online with the IRS by downloading IRS Form SS-4, or work alongside a third party organization like MyCorporation to complete an EIN application.

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Frequently asked questions

In Texas, a Professional Corporation (PC) is formed in order to provide professional services within a single profession. Generally, this may include the following professions:

  • Accounting
  • Acupuncture
  • Architecture
  • Chiropractic
  • Clinical social work
  • Dentistry
  • Law
  • Marriage, family, and child counseling
  • Medicine
  • Speech-language pathology and audiology
  • Nursing
  • Optometry
  • Osteopathy
  • Pharmacy
  • Physical therapy
  • Physician assistants
  • Podiatry
  • Psychology
  • Shorthand court reporters

A professional corporation provides the same benefits of a standard Corporation, with the additional formation requirement of proving the business has an effective certificate of registration issued by the governmental agency regulating their profession. Professional corporations are also governed by the agency responsible for overseeing the profession they engage in, and may have rules or limitations on the choice of name or ownership requirements.

According to the Texas Secretary of State, Corporation filing documents are processed in the order received when filed online and by mail. Typically, a Corporation is processed within 4-6 weeks. Check in with the Texas Secretary of State for further details on processing and expedited processing dates.

In order to keep your corporation in good standing, there are certain reoccurring requirements that must be met.

  • All corporations must file an Annual Statement with the Department of State each year.
  • Profitable Texas corporations must submit and pay required annual tax returns, and pay out estimated corporation taxes.
  • Corporations must hold an annual meeting of the directors logged with corporate minutes.
  • Corporations must hold an annual meeting of the shareholders.

In order to form a corporation in Florida, you will be required to pay various fees for services. The breakdown of the required fees is as follows:

  • Certificate of Formation - $300
  • Reservation of Entity Name - $40
  • Articles/Certificate of Amendment - $150

In total, expect to set aside at least $490 to form a Corporation in Texas.

According to the Texas Business Organizations Code, foreign entities must file an application for registration for foreign or out-of-State entities with the Texas Secretary of State. This includes LLC entity formations if the business transacts business in Texas. Entities that do not register may face severe penalties including late filing fees.