Business Lawyers Blog
Incorporating a business in Texas involves filing incorporation paperwork with the Texas Secretary of State through a fill-in-the-blank certificate of formation that can be completed with or without the help of a lawyer. The Texas Secretary of State recommends that a decision regarding the business structure is one a person should make in consultation with a Texas corporate lawyer and accountant.
An individual person, other corporations, limited liability companies (LLCs), partnerships, and foreign entities can all incorporate businesses in Texas. Incorporating a business will protect the personal assets of a company’s shareholders from business obligations and debts. This article provides an overview of the steps involved in forming a Texas corporation.
Selecting a Corporate Name
The first thing any new corporation needs is a name. A new corporation must select a distinguishable business name that is not too similar to the name of another business already registered with the Texas Secretary of State.
A representative of the company may either email the Texas Secretary of State at corpinfo@sos.state.tx.us or call (512) 463-5555 to determine if a corporation name is available. A corporate identifier such as “incorporated,” “company,” “limited,” “corporation,” or a corresponding abbreviation such as “Corp.,” “Inc.,” “Co.,” or “Ltd.” has to be in the name of the corporation.
Designating the Board of Directors
A new company must choose people to serve on the board of directors. These individuals can be of any age and do not have to reside in Texas. Corporations in Texas must have at least one person acting as the director of a company, and unless company bylaws indicate otherwise, directors of a Texas corporation do not have to be shareholders of the company.
The Certificate of Formation
A representative of the new business can download and print a blank certificate of formation from the Texas Secretary of State website, or pick up a blank certificate of formation from the Texas Secretary of State’s office at:
James E. Rudder Building
1019 Brazos Street
Austin, TX 78701
Representatives of the company can also call (512) 463-5586 to get a blank certificate of formation sent by mail.
Preparation of the certificate of formation begins by stating the name and principal address of the corporation.
Texas requires corporations to state the names and addresses of the corporation’s directors in the certificate of formation. A certificate of formation also needs to include the number of directors participating in the corporation, and the number of shares the corporation has the authority to issue.
The certificate must include a statement of the purpose of forming the corporation and include the names and addresses of the corporation’s organizers and registered agent. The registered agent must be an adult. A registered agent cannot use a post office box address and must agree to accept the company’s legal documents during regular business hours. The organizers and the registered agent must sign the certificate of formation.
Then the company needs to file the certificate of formation. The Texas Secretary of State will accept certificates of formation by fax, online, by mail, or in person. Representatives of corporations can personally deliver completed certificates of formation to the Texas Secretary of State’s office, or can fax a completed certificate of formation to (512) 475-2815. Certificates of formation can be filed online by using the Texas Secretary of State’s SOS Direct access system. Texas corporations can mail a completed certificate of formation to:
P.O. Box 12887
Austin, TX 78711-2887
Texas corporations must pay $300 to file a certificate of formation with the state.
Issue Stock Certificates
When directors of the new corporation decide on the company’s price per share, potential investors can then purchase shares of the corporation. Initial shareholders of Texas corporations can provide cash, services, and property in exchange for shares of the company’s stock, but Texas requires corporations to accumulate a minimum of $1,000 in capital before beginning operation.
Obtain an Employer Identification Number (EIN) and Pay Taxes
A corporation must obtain a federal employer identification number (EIN) by completing an application on the Internal Revenue Service (IRS) website. There will not be any filing fee.
Texas also imposes franchise taxes on corporations, but only ones earning more than $1 million. All Texas corporations still need to register with the Texas Comptroller of Public Accounts and file an annual return by May 15 of each year even when no taxes are due, and can register either online, by mail, or in person at a Comptroller field office.
Call Us Today to Speak with a Texas Corporate Lawyer
Are you trying to figure out how to incorporate your company in Texas? You will want to work with a Texas corporate lawyer so you can know that you are taking all the right steps to accomplish your goal.
Structure Law Group, LLP has helped many businesses in Texas incorporate successfully and knows what must be done in these cases. Please call (512) 881-7500 or contact us online to get a consultation with our Texas corporate lawyer today.