Key Takeaways

  • A certificate of authority is required for out-of-state (foreign) entities to legally do business in Texas.
  • Not all activities constitute “transacting business” in Texas, and exemptions exist.
  • The application process requires specific forms, filing fees, and a registered agent.
  • Businesses must maintain good standing by submitting Texas franchise tax reports.
  • Foreign entities can face penalties, including loss of legal standing, for failing to register.
  • Businesses must update the Texas Secretary of State if their registered agent or business information changes.
  • Withdrawal of a certificate of authority is necessary if the entity stops doing business in Texas.

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 13697Austin, TX 78711-36971019 Brazos Austin, Texas 78701Phone: (512) 463-5555Fax: (512) 463-5709

Information Required on the Application

When completing the Application for Registration (Form 304), you’ll need to provide the following:

  • Legal name of the entity (and assumed name if your original name is unavailable in Texas)
  • Jurisdiction where the entity was formed
  • Registered office and agent in Texas
  • Statement of purpose
  • Federal Employer Identification Number (if available)
  • Names and addresses of governing persons (e.g., directors or managers)

Including a certificate of existence (or good standing) from your home state, dated within 90 days, is typically required.

What Qualifies as “Doing Business” in Texas?

Foreign entities must obtain a certificate of authority Texas if they are “transacting business” in the state. While Texas law does not define this term exhaustively, it does offer guidance. Activities that typically qualify include:

  • Maintaining a physical office or warehouse
  • Having employees or sales representatives operating in Texas
  • Entering into contracts governed by Texas law
  • Performing services or selling goods in the state

Conversely, certain actions are specifically excluded from this definition under Section 9.251 of the Texas Business Organizations Code, such as:

  • Holding meetings of company members or managers
  • Maintaining bank accounts
  • Selling through independent contractors
  • Defending or settling lawsuits

If you're unsure whether your activity requires registration, it’s advisable to consult legal counsel.

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.

Changing Your Registered Agent

Businesses must promptly update the Texas Secretary of State if they change their registered agent or agent’s address. You can file Form 401 to update this information. Keeping this information current is critical, as your registered agent receives all legal and official correspondence. Failure to maintain a valid registered agent can result in administrative penalties or involuntary revocation of your certificate of authority.

How to Withdraw a Certificate of Authority in Texas

If your business no longer operates in Texas, you should formally withdraw your certificate of authority to avoid ongoing tax and filing obligations. To do this:

  1. File Form 608 (Certificate of Withdrawal of Registration) with the Secretary of State.
  2. Ensure all final Texas franchise taxes are paid.
  3. Include proof of tax clearance or certification from the Texas Comptroller.

Failure to withdraw properly may lead to continued tax liability and compliance notices from the state.

Maintaining Good Standing

To keep your Texas certificate of authority active, your entity must remain in good standing. This means:

  • Filing required annual franchise tax reports with the Texas Comptroller
  • Paying all applicable taxes and fees
  • Ensuring your registered agent’s information is current
  • Responding to communications from the Texas Secretary of State

Failure to comply with these obligations can result in forfeiture of your authority to do business in the state.

Frequently Asked Questions

1. Do I need a certificate of authority to hire remote employees in Texas? Yes, employing individuals in Texas often constitutes “transacting business,” which requires registration with the Secretary of State.

2. How long does it take to get a certificate of authority in Texas? Standard processing typically takes 5–7 business days. Expedited processing is available for an additional $25 fee.

3. Can I operate under my existing business name in Texas? Only if the name is available. If your entity’s legal name is already taken in Texas, you’ll need to register an assumed name (DBA).

4. What happens if I do business in Texas without a certificate of authority? You may face fines, penalties, and the inability to enforce contracts in Texas courts.

5. Is a certificate of authority the same as a business license? No. A certificate of authority allows foreign entities to operate in Texas. Business licenses are separate and may still be required by local jurisdictions or regulatory bodies.

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.