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Corporation

Steps to Setting Up Your Texas Corporation

Forming a corporation in Texas can be a great way to establish a professional, legally protected, and scalable business. Here’s a step-by-step guide to help you set up your Texas corporation successfully.

Step 1: Choose Your Corporation’s Name

  • Unique Name Requirement: Your corporation’s name must be distinguishable from other business names registered with the Texas Secretary of State.
  • Include Corporation Designators: Your name must include “Corporation,” “Incorporated,” “Company,” or an abbreviation (e.g., Corp., Inc.).
  • Check Availability: Use the Texas Secretary of State’s online tool to confirm that your desired name is available.

Step 2: Appoint a Registered Agent

  • A registered agent is required to receive legal and official documents on behalf of your corporation.
  • The agent must have a physical address in Texas and be available during regular business hours.
  • You can appoint yourself, another individual, or a professional registered agent service.

Step 3: File a Certificate of Formation (Form 201)

  • File with the Texas Secretary of State online or by mail.
  • Include the following information:
    • Corporation name and address.
    • Registered agent’s name and address.
    • Number of shares the corporation is authorized to issue.
    • Name and address of the incorporator(s).
    • Purpose of the corporation (optional for general business purposes).
  • Filing Fee: $300.

Step 4: Create Corporate Bylaws

  • Corporate bylaws outline the internal rules and management structure of your corporation.
  • While not required to be filed with the state, they are crucial for:
    • Defining roles (directors, officers, shareholders).
    • Setting voting procedures and meeting guidelines.
    • Establishing rules for issuing shares.

Step 5: Hold an Organizational Meeting

  • During this meeting, the incorporators or initial directors will:
    • Adopt the bylaws.
    • Appoint corporate officers (e.g., CEO, CFO).
    • Authorize the issuance of shares.
    • Record decisions in meeting minutes.

Step 6: Obtain an EIN (Employer Identification Number)

  • Apply for an EIN through the IRS website (free of charge).
  • An EIN is required to:
    • Open a business bank account.
    • Hire employees.
    • File corporate taxes.

Step 7: Open a Business Bank Account

  • Use your EIN and Certificate of Formation to open a corporate bank account.
  • This separates your business finances from your personal finances, a key factor in maintaining limited liability protection.

Step 8: Register for Texas State Taxes

  • If applicable, register with the Texas Comptroller of Public Accounts for:
    • Franchise Tax: Corporations in Texas must file an annual franchise tax report.
    • Sales Tax: Required if your corporation sells taxable goods or services.
    • Beneficial Ownership Information (BOI)

Step 9: Obtain Necessary Business Licenses and Permits

  • Research and apply for any required licenses or permits specific to your industry or location.
  • Texas doesn’t have a general business license, but local permits may be needed.

Step 10: Stay Compliant

  • File an Annual Report with the Texas Secretary of State.
  • Maintain corporate records, including meeting minutes and financial statements.
  • Keep your registered agent’s information up to date.

Benefits of Forming a Corporation in Texas

  • Limited Liability: Protects personal assets from business debts and liabilities.
  • Credibility: Adds professionalism and trustworthiness to your business.
  • Investment Opportunities: Easier to attract investors by issuing shares of stock.