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Texas Incorporation Options
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Texas Incorporation Facts
- LLC
- S Corp
- C Corp
- Nonprofit
Texas Facts for LLCs
Here are some key facts you should know as you consider forming an LLC in Texas.
At the time of incorporation, Texas requires you to take the following steps:
- Certificate of Formation. The document is required to form an LLC in Texas. LLCs are required to have one or more members/managers listed in the documentation along with their names and addresses. The business name must end with "Limited Liability Company," "Ltd. Co.," "LC," "LLC," or "L. L. C." Symbols cannot be used in the name. Names submitted with superscript and/or subscript letters or numbers will not appear in that format in the official company name. The name may not contain the word "Lottery." The name must not imply a purpose other than that stated in the Certificate of Formation. It may not be the same as or deceptively similar to the name of any domestic or foreign LLC or reserved or registered name. However, a name already in use may be used if the LLC gets written consent from the existing name holder. Use of words tied to education (such as but not limited to "College," "School" and "Seminary" cannot be used without approval from the Texas Higher Education Coordinating Board. Use of words such as "Bank," "Trust" and those implying ties to Veterans ("Veterans," "War," etc.) also require approvals prior to use.
- Registered Agent. LLCs must list the name and address of a registered agent with a physical address (no post office boxes allowed) in Texas. The registered agent must be available during normal business hours to accept important legal and tax documents for the business.
- Federal Tax Identification Number (EIN). An EIN is required for LLCs that will have employees. Additionally, most banks require an EIN in order to open a business bank account.
Professional Services Businesses. Texas allows professionals, such as accountants, attorneys and physicians, to form a professional limited liability company (PLLC).
After incorporating Texas also has the following ongoing requirements:
- Franchise Tax and Public Information Report. Texas requires LLCs to file a Franchise Tax and Public Information Report with the Comptroller of Public Accounts. The report is due between January 1st and May 15th. The fee is calculated based on taxable margin.
Why choose an LLC?
Consider forming an LLC if you are fearful of personal risks to lawsuits arising from your business. For example, if you decide to open a storefront business that deals directly with the public, you may fret that your commercial liability insurance won’t fully cover your personal assets from potential slip-and-fall lawsuits or claims by your vendors for unpaid debts. Running your business as an LLC may ease your mind because it instantly offers you an additional layer of security against these and other possible claims against your business.
Ready for Your LLC?
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Our Process
5 steps to online incorporation.
1 Quality check
We ensure your information meets state requirements.
2 Name check
We confirm your business name availability.
3 Documents filed
We prepare and send your incorporation documents to the state, providing tracking.
4 Delivery
You receive a complete package of incorporation documents and materials.
5 Ongoing support
After incorporating, we inform you of upcoming annual reports/franchise tax payments.
Texas Facts for S Corporations
Here are some key facts you should know as you consider forming an S corporation in Texas.
At the time of incorporation, Texas requires you to take the following additional steps:
- Certificate of Formation. The document is required to form a corporation in Texas. S corporations are required to have one or more directors listed in the documentation along with their names and addresses. Additionally, the business name must contain either the word or an abbreviation of "Corporation," "Incorporated," "Company" or "Limited." Symbols cannot be used in the name. Names submitted with superscript and/or subscript letters or numbers will not appear in that format in the official company name. The name may not contain the word "Lottery." The name must not imply a purpose other than that stated in the Certificate of Formation. It may not be the same as or deceptively similar to the name of any domestic or foreign corporation or reserved or registered name. However, a name already in use may be used if the corporation gets written consent from the user filed with the Secretary of State. Use of words tied to education (such as but not limited to "College," "School" and "Seminary") cannot be used without approval from the Texas Higher Education Coordinating Board. Use of words such as "Bank," "Trust" and those implying ties to Veterans ("Veterans," "War," etc.) also require additional approvals prior to use.
- Stock. Authorized shares and par value (minimum stated value) must be listed in the Certificate of Formation. An increase in the number of shares or par value does not affect initial filing fees.
- Registered Agent. S corporations must list the name and address of a registered agent with a physical address (no post office boxes allowed) in Texas. The registered agent must be available during normal business hours to accept important legal and tax documents for the business.
- Federal Tax Identification Number (EIN). An EIN is required for corporations that will have employees. Additionally, most banks require an EIN in order to open a business bank account.
Professional Services Businesses. Texas allows professionals, such as accountants, attorneys and physicians, to form a professional corporation (PC).
After incorporating Texas also has the following ongoing requirements:
- Franchise Tax and Public Information Report. For taxable entities with a beginning date of October 4, 2009, or later, both the first public information report and payment of the tax due, if any, are due no later than May 15 of the year following the year the entity became subject to the tax (i.e., the beginning date). On an annual basis going forward, the franchise tax report must be filed and the tax paid no later than May 15 of each year. Entities filed prior to October 4, 2009 may wish to discuss taxes and fees with the Texas Comptroller of Public Accounts Office.
- Corporate Records. Texas requires corporations to keep extensive records at the principal place of business.
- S Corporation Election. Texas recognizes the federal S corporation election and does not require a state-level S corporation election.
Why choose an S corporation?
An S corporation allows the owners to offset non-business income with losses from the business, unlike a C corporation which is a completely separate tax entity. When compared to an LLC, the S corporation enables an owner to characterize a portion of income as “dividend,” rather than “earnings” that are subject to employment taxes.
Ready for Your S Corp?
Compare packages and view pricing.
Our Process
5 steps to online incorporation.
1 Quality check
We ensure your information meets state requirements.
2 Name check
We confirm your business name availability.
3 Documents filed
We prepare and send your incorporation documents to the state, providing tracking.
4 Delivery
You receive a complete package of incorporation documents and materials.
5 Ongoing support
After incorporating, we inform you of upcoming annual reports/franchise tax payments.
Texas Facts for C Corporations
Here are some key facts you should know as you consider forming a C corporation in Texas.
At the time of incorporation, Texas requires you to take the following additional steps:
- Certificate of Formation. The document is required to form a corporation in Texas. C corporations are required to have one or more directors listed in the documentation along with their names and addresses. Additionally, the business name must contain either the word or an abbreviation of "Corporation," "Incorporated," "Company" or "Limited." Symbols cannot be used in the name. Names submitted with superscript and/or subscript letters or numbers will not appear in that format in the official company name. The name may not contain the word "Lottery." The name must not imply a purpose other than that stated in the Certificate of Formation. It may not be the same as or deceptively similar to the name of any domestic or foreign corporation or reserved or registered name. However, a name already in use may be used if the corporation gets written consent from the user filed with the Secretary of State. Use of words tied to education (such as but not limited to "College," "School" and "Seminary") cannot be used without approval from the Texas Higher Education Coordinating Board. Use of words such as "Bank," "Trust" and those implying ties to Veterans ("Veterans," "War," etc.) also require additional approvals prior to use.
- Stock. Authorized shares and par value (minimum stated value) must be listed in the Certificate of Formation. An increase in the number of shares or par value does not affect initial filing fees.
- Registered Agent. C corporations must list the name and address of a registered agent with a physical address (no post office boxes allowed) in Texas. The registered agent must be available during normal business hours to accept important legal and tax documents for the business.
- Federal Tax Identification Number (EIN). An EIN is required for corporations that will have employees. Additionally, most banks require an EIN in order to open a business bank account.
Professional Services Businesses. Texas allows professionals, such as accountants, attorneys and physicians, to form a professional corporation (PC).
After incorporating Texas also has the following ongoing requirements:
- Franchise Tax and Public Information Report. For taxable entities with a beginning date of October 4, 2009, or later, both the first public information report and payment of the tax due, if any, are due no later than May 15 of the year following the year the entity became subject to the tax (i.e., the beginning date). On an annual basis going forward, the franchise tax report must be filed and the tax paid no later than May 15 of each year. Entities filed prior to October 4, 2009 may wish to discuss taxes and fees with the Texas Comptroller of Public Accounts Office.
- Corporate Records. Texas requires corporations to keep extensive records at the principal place of business.
Why choose a C corporation?
C corporations offer more flexibility than S corporations when it comes to the number of owners (shareholders) they can have as well as who can be an owner. Plus, the owners can hold different types of stock interests (such as preferred versus common stock.) This is one reason why venture capitalists choose C corporations when they offer funding to a business. Investors are drawn with the prospect of dividends if the corporation makes a profit. A C corporation can also retain and accumulate earnings (within reasonable limits) from year to year.
Ready for Your C Corp?
Compare packages and view pricing.
Our Process
5 steps to online incorporation.
1 Quality check
We ensure your information meets state requirements.
2 Name check
We confirm your business name availability.
3 Documents filed
We prepare and send your incorporation documents to the state, providing tracking.
4 Delivery
You receive a complete package of incorporation documents and materials.
5 Ongoing support
After incorporating, we inform you of upcoming annual reports/franchise tax payments.
Texas Facts for Non-Profits
Here are some key facts you should know as you consider forming a Non-profit corporation in Texas.
At the time of incorporation, Texas requires you to take the following additional steps:
- Certificate of Formation. The document is required to form a corporation in Texas. Non-profit corporations are required to have one or more directors listed in the documentation along with their names and addresses. Additionally, the business name must contain either the word or an abbreviation of "Corporation," "Incorporated," "Company" or "Limited." Symbols cannot be used in the name. Names submitted with superscript and/or subscript letters or numbers will not appear in that format in the official company name. The name may not contain the word "Lottery." The name must not imply a purpose other than that stated in the Certificate of Formation. It may not be the same as or deceptively similar to the name of any domestic or foreign corporation or reserved or registered name. However, a name already in use may be used if the corporation gets written consent from the user filed with the Secretary of State. Use of words tied to education (such as but not limited to "College," "School" and "Seminary") cannot be used without approval from the Texas Higher Education Coordinating Board. Use of words such as "Bank," "Trust" and those implying ties to Veterans ("Veterans," "War," etc.) also require additional approvals prior to use.
- Registered Agent. Corporations must list the name and address of a registered agent with a physical address (no post office boxes allowed) in Texas. The registered agent must be available during normal business hours to accept important legal and tax documents for the business.
- Federal Tax Identification Number (EIN). An EIN is required for corporations that will have employees. Additionally, most banks require an EIN in order to open a business bank account.
Professional Services Businesses. Texas allows professionals, such as accountants, attorneys and physicians, to form a professional corporation (PC).
After incorporating Texas also has the following ongoing requirements:
- Periodic Report Filings. A complete listing of reporting requirements for Non-profits can be found here.
- Franchise Tax and Public Information Report. For taxable entities with a beginning date of October 4, 2009, or later, both the first public information report and payment of the tax due, if any, are due no later than May 15 of the year following the year the entity became subject to the tax (i.e., the beginning date). On an annual basis going forward, the franchise tax report must be filed and the tax paid no later than May 15 of each year. Entities filed prior to October 4, 2009 may wish to discuss taxes and fees with the Texas Comptroller of Public Accounts Office.
- Corporate Records. Texas requires corporations to keep extensive records at the principal place of business.
Why choose a Non-Profit?
While incorporating your not-for-profit venture is not a requirement, it lends more credibility to your organization. Also, in order to become tax-exempt, you must incorporate and also file Form 1023 with the Internal Revenue Service. A few states require a separate file for state tax-exempt status as well.
Ready for Your Nonprofit?
Compare packages and view pricing.
Our Process
5 steps to online incorporation.
1 Quality check
We ensure your information meets state requirements.
2 Name check
We confirm your business name availability.
3 Documents filed
We prepare and send your incorporation documents to the state, providing tracking.
4 Delivery
You receive a complete package of incorporation documents and materials.
5 Ongoing support
After incorporating, we inform you of upcoming annual reports/franchise tax payments.
What does it mean to incorporate?
Incorporating a business means turning your sole proprietorship or general partnership into a company formally recognized by your state of incorporation. When a company incorporates, it becomes its own legal business structure set apart from the individuals who founded the business. Through incorporation, the company's owner or owners create a separate legal entity to transact business. This new business entity corporation or limited liability company (LLC) transforms the way the business is seen through the eyes of the law and often has more credibility with potential customers, vendors and employees.
How does incorporation work?
Wondering how to incorporate a business as a C corporation or S corporation or how to form an LLC? Here are some of the steps included in the process:
- Determine where you want to incorporate.
- Decide which business type is best for your business and goals. Consult with an attorney or accountant.
- Determine who the directors of the corporation or who the members/managers of the LLC will be.
- Select a registered agent. Your registered agent must be listed on your Articles of Incorporation or Articles of Organization. The registered agent is appointed by you to receive important legal and tax documents on behalf of your business and forward them to you. BizFilings includes this service in all incorporation packages.
- Prepare and file the Articles of Incorporation or Articles of Organization per instructions from the Secretary of State's office. BizFilings handles this step for you, allowing you to concentrate on running your business.
Why is incorporating a business important?
The primary benefit to business incorporation is limited liability. When you own a small business, you will invest a lot of money into not only getting it launched, but in keeping it running smoothly as well. As the owner you are responsible for any debts and losses your business may accumulate along the way. However, when you incorporate, you are typically only held responsible for the amount of money you personally invest. Your personal assets typically cannot be used to satisfy the debts and liabilities of your business.
View our Benefits of Incorporation or Benefits of Creating an LLC article to learn more about this and other benefits of incorporating a business.
For a comparison between multiple incorporation types view our article
Which Business Type is Right for Me? C Corp, S Corp, or LLC to help with your decision.
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