How To Form a Corporation in Texas in Eight Steps

You must first choose a unique name for your corporation that is not registered to any other business entity in Texas. Your business name should include Company, Corporation, Incorporated, or Limited (or the abbreviation). Do not use prohibited terms such as “bank,” “trust,” or “college,” as these terms are misleading. Rules about naming are found in Chapter 5, Section 5.054 of the Texas Business Organizations Code.

To verify your name is available, search for it on the Texas Division of Corporations SOSDirect website. There is a $1 fee for each search. You can reserve the name for 120 days for $40 by filing Form 501, Application for Reservation or Renewal of Reservation of an Entity Name.

It is also a good idea to check that your business name is available to use on the internet. Searching for the name on the ICANN domain registry lets you know if the name is already registered as a domain name. Finally, you want to ensure that you are not using a registered trademark name. Search for the name on the United States Patent and Trademark Office (USPTO)’s trademark database for your business name. If it is not a registered trademark, it is free to use.

Texas law requires a corporation to have a registered agent and office in the state. A registered agent is a person or entity that receives service of process or legal documents for the corporation. The registered office must have a physical address in Texas. If you are a Texas resident or have another business entity in Texas, you can serve as your own registered agent.

If you do not have a registered agent, you can use our trusted partner, LegalZoom, to provide registered agent services to meet this Texas requirement and keep your corporation in good standing.

In Texas, you must file Form 201, Certificate of Formation – For-Profit Corporation. In the certificate of formation, Texas requires the following information:

• The name of the business entity
• The registered agent and registered office address
• The name(s) and address(es) of the director(s)
• The number of shares the company can issue and the par value of the stock (per share)
• A statement of corporate purpose, such as “for the transaction of any and all lawful business for which a for-profit corporation may be organized under the Texas Business Organizational Code.”
• The initial mailing address
• The name and address of the organizer/incorporator
• The effective start date of the corporation

Online filing is available through the Texas Secretary of State’s SOS Direct portal. You must set up an SOS Client Account to use this service. Generally, the Secretary of State should take 3-4 business days to approve an online submission.

You can also file by mail to the Business & Public Filings Division, The Office of the Secretary of State, P.O. Box 13697, Austin, TX 78711. The approval process can take up to a month if you mail it.

If you are a professional who requires a license in Texas, such as a dentist, lawyer, or accountant, you must file for a professional corporation. File Form 203, Certificate of Formation Professional Corporation.

The filing fee is $300 for either a for-profit or professional corporation.

Corporate bylaws are the rules on how you govern your company. You will want to include details to keep your company organized. Some items you may include in your bylaws are the following:

• Roles of directors and officers
• Meeting schedule and procedures for voting
• The number of stock shares the company can issue
• How to change bylaws if necessary
• How to handle conflicts of interest

Texas does not require a corporation to have bylaws, but bylaws are still important. A bank or investor may want to see how your company is structured.

The incorporators appoint the initial directors with an incorporation statement. Once the corporation is formed, the shareholders appoint the board of directors. The directors then hold an initial organizational meeting. At this meeting, they may do the following:

• Approve the actions of the incorporators
• Approve the corporate bylaws
• Elect company officers (i.e., President, Secretary, and Treasurer)
• Determine the corporation’s fiscal year
• Authorize initial business transactions such as opening business bank accounts, and applying for licenses and permits

The secretary should take notes, known as “minutes,” of this meeting and all subsequent meetings. As a corporate formality, keeping a record of the minutes is essential.

Stock certificates represent the percentage of ownership of a corporation. A sole owner has 100% of the stock. Three partners in a corporation may own ⅓ each. The stock is assigned a “par value” (the minimum price at which the company can sell the stock). The par value is not the market value. Many business owners assign the stock a “no par” value.

An EIN is a federal identification number for business entities. You can request an EIN (Employer Identification Number) from the IRS website. You use this EIN on your corporate bank accounts and for federal tax and employment accounts. If you apply to the IRS online, there is no fee. You should expect to receive your EIN immediately.

You set up business and tax accounts for your corporation. Texas does not require a general business license, but you should check with your county or town for local business license requirements or permits.