Certificate of Authority Texas: Everything You Need to Know
Certificate of authority Texas contains written permission from the Texas Secretary of State for a foreign business entity to "transact business" in the state.3 min read
2. Texas Annual Reports
A certificate of authority Texas (otherwise known as a certificate of registration) is a document that contains written permission from the Texas Secretary of State for a foreign business entity to "transact business" in the state. Texas defines a foreign business entity as any business established in a state other than Texas. In general, authorization to conduct business in a state must come from the office of the Secretary of State. As such, Texas law requires foreign entities to register with the Secretary of State in order to do business within state borders.
In addition, companies that are incorporated in another state will usually apply for a certificate of authority from Texas. Not every single business must apply for registration, but those that intend to do regular business within Texas borders must register with the state or deal with steep penalties. Licensing agencies, banks, and vendors will typically request a Texas certificate of authority from the business.
Although Texas law does not explicitly define "transacting business," section 9.251 of the BOC does list 15 activities that do not constitute "transacting business." The Texas Secretary of State is unable to provide a legal opinion regarding whether an out-of-state business is legally "transacting business" within the state.
How to Apply for a Certificate of Authority
Depending on the type of business you'd like to register, you must register with the appropriate state or county. Texas state fees and application processing times depend on the type of business. For-profit corporations, nonprofit corporations, and professional corporations all have different forms. Fees are as follows:
- $750 for normal or online processing (for-profit and professional corporations)
- $25 for normal or online processing (nonprofit)
- $25 additional for expedited processing
You'll need to submit an Application for Certificate of Authority. If you have required certificate or certified copies from your home state, include those as well. You can prepare and submit your application yourself or hire someone else to do it for you. If you choose to have someone else do it, proof of filing will be sent to you, along with a file-stamped copy of the form.
In order for your registration to be approved, you'll also need to designate a registered agent, who will receive service of process and government notices on behalf of your company.
Out-of-state registration applications must be sent to one of the following two addresses:
Texas Secretary of State
PO Box 13697
Austin, TX 78711-3697
Austin, Texas 78701
Phone: (512) 463-5555
Fax: (512) 463-5709
Texas Annual Reports
In Texas, corporations are subject to a state franchise tax. This includes nonprofit corporations unless an exemption from state franchise tax has been issued. If you have a professional corporation, it's important to review Section 301.012 of the BOC.
Texas agencies that regulate control over the professionals to which the joint practice provisions apply still regulate authority over the respective licenses.
If a foreign company is subject to the Texas state franchise tax, it must file an annual franchise tax report with the Texas Comptroller of Public Accounts. The Comptroller's Office will get in touch with your registered agent if you are required to report anything.
In Texas, for-profit corporations may be required to submit an initial report within one year and 90 days from the initial registration that allows them to conduct business in Texas.
The Secretary of State may require a nonprofit corporation to file a report not more than once every four years, under Section 22.357 of the BOC. If applicable, the office will notify your nonprofit corporation at its registered office regarding the report's due date.
Severe penalties will apply to those who've failed to register their business with the state. For each calendar day, whole or partial, additional registration fees may apply if you've failed to register. You may also not be able to maintain an action, suit, or court proceedings if your business is unregistered. You will not legally be able to conduct business within Texas borders.
Foreign (out-of-state) entities are recommended to consult their attorney or legal counsel to determine if they need to register with the state of Texas in order to conduct business there. If you need assistance with a certificate of authority, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.