Texas Corporate Filings: Everything You Need to Know
Texas corporate filings include filing of initial documents, like a certificate of formation, as well as periodic documents, like annual reports.3 min read
Texas corporate filings include filing of initial documents, like name reservation request and certificate of formation, as well as periodic documents, like annual reports and tax returns.
Benefits of a Corporation
- A corporation offers you the benefits of limited liability.
- Creditors of a corporation cannot pursue the personal assets of its shareholders to settle the corporation's debts.
- Establishing a corporation protects you against the liability arising from the actions of your employees and partners.
- A corporation can help you save on taxes.
- Due to the simplicity of shares transferability, a corporation makes it easy to attract investors.
Incorporating in Texas
Because of the state's large population and natural resources, many entrepreneurs incorporate their business in Texas.
Like in any other state, incorporating in Texas involves a number of steps. Failure to follow any of them may cause lengthy delays, costing you time and money. Hence, it's advisable to hire professional incorporation services for incorporating your business in Texas.
How to Form a Corporation in Texas
1. Choose a Business Name
The name of your corporation must include at least one of the following words:
The name of your corporation must not be similar to any business already registered in Texas. You can check for the availability of your proposed name on Texas state website.
You can file a request to reserve your proposed name for 120 days. You can either submit the name reservation request online through Texas state website or send it by mail. You must pay a filing fee of $40.
2. File the Certificate of Formation
You must file a Certificate of Formation with the Texas Secretary of State. The certificate should include the following information:
- The name and address of your corporation
- The name and address of the registered service agent
- Type of business
- Authorized share capital
- Organizer's name and address
- The name and address of the directors
- The date on which the certificate comes into effect
Texas allows you to describe the purpose of your corporation in a generic language, thus offering a great amount of flexibility in operations.
You can file the certificate of formation online through the state government's website or send it by mail. The filing fee for this form is $300.
3. Appoint a Registered Agent
You must appoint a state registered agent authorized to receive the service of process on behalf of your corporation. The agent can be an individual residing in Texas or a corporation authorized to carry out business in Texas. In either case, the agent must have its business address in Texas.
4. Create a Corporate Records Book
Have a corporate records book to keep all the important documents, like the minutes of meetings and stock certificates. You should keep this book at the main office of your corporation.
5. Prepare Corporate Bylaws
Corporate bylaws serve as basic guidelines for governing your corporation. They are part of your internal documents; you need not file them with the state.
Although you are not legally required to prepare bylaws, it's always better to have them because:
- They establish the operating rules for your corporation.
- They strengthen your corporation's standing as a separate legal entity in the eyes of banks, creditors, and government agencies.
6. Appoint the Initial Directors
As an incorporator, you must appoint the initial members of the board of directors, who will serve their term until the holding of the first annual general meeting of shareholders. You must also prepare and sign the “Incorporator's Statement” containing the names and addresses of all the initial directors.
7. Hold the First Meeting of the Board of Directors
Conduct the first meeting of the board of directors to adopt bylaws, appoint officers, authorize issue of shares, and carry out other essential transactions.
8. Issue Stock Certificates
- Issue stock certificates to all shareholders.
- Enter the names and contact details of shareholders in the stock transfer ledger.
9. Comply With Other Regulatory Requirements
- Get an employer identification number, or EIN, from the IRS.
- If you want to elect the S corp. status, file Form 2553 with the IRS.
- Obtain local permits and licenses applicable to your location and industry.
- File annual report and franchise tax return.
If you need help with Texas corporate filings, 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.