Texas Corporations: How to Form and Maintain Your Texas Corporation

Should you form your corporation in Texas? We’ve collected the relevant information that will help you make this decision.

Pros

• Large and wealthy population base

• Business-friendly environment

• Qualified workforce

• Home to two of the top 20 metro areas in the US

• Among top 10 "Best States for Business" (Forbes 2016)

Cons

• Complex franchise tax structure

• Competitive market

Cost of doing business

• $300 filing fee / $0 annual statement

• About 4.5% franchise tax

Privacy

• Director names in annual report

Forming Your Corporation in Texas

The Name Your official name will need to end with one of the following signifiers (or a relevant abbreviation): “incorporated”, “Company”,  “limited” or “corporation.” In addition, it is required that the name of your business is not intentionally misleading to consumers, for any reason. Your company’s new name must also be completely unique, and not deceptively similar to any other organizations name or trademarks. There are also restrictions on using several terms that are common to the education, banking, or military industries. Do a FREE name search now.

Ownership You will need to form an official board of directors when incorporating.

• Required number of directors

  Texas corporations must have at least one director listed in their incorporation documents.

• Age restrictions

  Directors of corporations located in Texas can be of any age.

• Residence restrictions

  There are no residency restrictions imposed on the directors of C corporations in Texas. However, S corporations are only allowed to have directors located in the United States.

• What information needs to be included in the Certificate of Formation?

  Texas does require the names and addresses of directors to be disclosed in incorporation documents. 

Requirements for the Articles of Incorporation

The articles of incorporation is a document that must be filed to form your corporation. It must include:

Stock Information Texas requires the number of initial shares outstanding, and their par value, to be disclosed during the incorporation process. The number of outstanding shares does not affect initial state filing fees.

Officer Information The State of Texas does not require officer information to be disclosed during the filing process.

Registered Agent Information All Texas corporations must have a registered agent on file and submit their name and physical Texas address (which cannot be a P.O. Box). This agent will be required to be accessible during standard business hours and acts as the state’s point of contact with the company. Learn more about registered agents in Texas. 

Additional Texas Filing Requirements

Professional Practice Professional service companies are permitted to form as PCs, or professional corporations, in Texas.

Initial Report Deadlines All corporations in Texas must file an initial report within six months of incorporating. Learn more about Initial Reports.

Corporate Record-Keeping Requirements

Corporations are required to keep formal documentation regarding several of their operations including:

• A complete and comprehensive set of financial documents.

• Records that detail the owners (along with names and addresses), transfers, and class of all outstanding stock shares.

• Meeting minutes for all shareholder and director meetings.

Texas Corporation Taxation and Fee Requirements

There are several tax and fee requirements that must be addressed by corporations in Texas. They are as follows:

Taxation All states have complex taxation requirements. For more information regarding taxes in Texas, it is advised that you visit the state’s official business related website. 

Annual Report Requirements Corporations in Texas are subject to a complicated set of annual report and franchise tax requirements, which are determined by the organization’s start date. It is recommended that all corporations contact the Texas Comptroller’s Office of Public Accounts to determine what your new corporation will need to do to stay compliant. Learn more about annual reports.

Tax Identification Numbers Texas requires an EIN (Employer Identification Number) for all corporations that will have employees, and most banks will require one to open accounts. Texas does not require corporations to obtain state tax ID numbers. Learn more about EINs.

Business License Requirements

The business licenses and permits required in Texas vary wildly depending on the county or municipality where your new corporation is located. If you would like to see more in-depth information on licenses and permits, please feel free to visit the content in our learning library that covers business licenses and permits.

Need a Texas LLC instead? We can help you form online!