Guide to Texas corporation law. If you're forming a for-profit corporation in Texas, you'll need to pay close attention to state regulations.
Texas laws · Texas corporation law
Starting a for-profit corporation in Texas is a serious endeavor. From choosing a business name to filing the necessary documents with the Texas Secretary of State, understanding the legal requirements in the Texas Business Organizations Code (TBOC) is essential for success.
This guide will walk you through the basics of Texas corporation law. If you have any questions, consult with your attorney about your specific situation.
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Forming a for-profit corporation in your jurisdiction
Texas Business Organization Code overview
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To form a corporation in Texas, keep in mind the following.
1. Your first document: Certificate of Formation
The primary document you’ll need is a Certificate of Formation (Form 201), filed with the Texas Secretary of State. It should include:
- Business name and entity type
- Corporation’s purpose
- Duration of the corporation (if it’s not perpetual)
- Registered agent’s name: The registered agent can be a Texas resident or an organization registered to do business in Texas. Keep the agent’s signed consent (via a Form 401-A) in your files.
- Registered office’s street address in Texas
- Corporation’s mailing address
- Details on the shares: You’ll need to provide specific details on the shares you’re issuing, depending on if you’re issuing only one class, more than one class, or a class with more than one series.
- If managed by a board of directors: Number of initial directors and their names and addresses.
- If managed by a shareholder’s agreement: Names and addresses.
- If formed under a plan of conversion or merger: Instead of organizers’ names and addresses, you’ll need to provide alternative information.
- Note: There may be additional TBOC requirements based on specific shareholder situations.
Filing can be done online through SOSDirect.
For more requirements about details on shares, and a Q&A guide to for-profit corporation law in Texas — Corporation Law: Texas
2. Corporate actions after formation
Once the Certificate of Formation is filed, your corporation should take several additional actions:
- Adopt bylaws: While you don’t need to file your bylaws with the state, they’re a good way to outline your corporation’s procedures, officers and committees, and methods of issuing and transferring stocks.
- Elect officers
- Open a business bank account
- Issue stock: Issue shares in accordance with your Certificate of Formation.
- Obtain an EIN: Texas corporations are required to obtain an employer identification number (EIN) from the IRS.
3. Name requirements and reservation options
Choosing a name for your corporation is a major decision. You can reserve a business name for up to 120 days by filing a Name Reservation Request (Form 501) with the Texas Secretary of State.
Texas corporation law requires that your name adhere to specific regulations, including:
- Distinct from existing Texas businesses: Check the Texas Secretary of State’s website to make sure the name is available. You can also request a preliminary determination on availability. However, a final determination won’t be made until your document is received and processed.
- Include specific words: Your corporation’s name must include either Company, Corporation, Incorporated, or Limited.
- Avoid restricted business terms: Your name should not use restricted terms that give the impression it’s engaged in a type of business you’re not authorized to conduct. These include terms such as bank, trust, university, college, school of medicine, health science center, school of law, law center, engineer, or engineering.
- Don’t use the terms lotto or lottery
- Avoid veteran-associated terms: The name can’t imply it’s created for or by war veterans or their families. This includes terms like veteran, legion, foreign, Spanish, disabled, war, or world war.
Remember, choosing a business name with the Secretary of State does not provide complete legal protection. You may also want to consult an attorney about registering a trademark for nationwide protection.
Additional filing requirements under Texas corporation law
In addition to the Certificate of Formation, your corporation will need to comply with other filing requirements, such as:
- Franchise tax report: File an annual franchise tax report with the Texas Comptroller’s Office. Even if you don’t owe a franchise tax, you’ll be fined if you don’t file on time.
- Public information report: The PIR (Form 05-102) is part of the annual franchise tax report and is searchable via the Taxable Entity Search.
- Ownership information report: The OIR (Form 05-167) is part of the annual franchise tax report. This form is confidential and not displayed on the Comptroller’s website.
- Beneficial owner information report: The BOI must be filed with the U.S. Treasury Department’s Financial Crimes Enforcement Network, not through the state.
- Assumed name certificates: File this with the secretary of state and county clerk if your corporation will be doing business under another name.
Failure to meet these filing requirements can result in penalties or dissolution by the state.
Texas Business Organization Code overview
The Texas Business Organizations Code (TBOC) governs the formation and operation of business entities in the state, such as corporations, LLCs and partnerships. It consolidates Texas business laws into a single framework where they’re easier to cite and understand. By understanding the TBOC, you can ensure your business complies with Texas corporation law.
Key provisions of the TBOC include (but aren’t limited to):
- Title 2, Chapter 20: General provisions for corporations
- Title 2, Chapter 21: Requirements for for-profit corporations
- Title 2, Chapter 22: Requirements for nonprofit corporations
- Title 2, Chapter 23: Requirements for special-purpose corporations
From filing the Certificate of Formation to complying with annual franchise tax reports, forming and running a for-profit corporation in Texas requires close attention to detail. If you have any questions, consult an attorney.
More resources for attorneys
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Practice notes
- Forming and Organizing a Corporation (TX)
- Corporate Transparency Act (CTA) Beneficial Ownership Reporting
- Filing Documents with the Secretary of State (TX)
- Terminating a Corporation (TX)
Standard documents
- Bylaws (TX)
- Certificate of Amendment of Certificate of Formation: Corporation (TX)
- Certificate of Formation: For-Profit Corporation (TX)
- Certificate of Merger (TX)
- Notice of Annual Shareholders’ Meeting (TX)
- Plan of Termination: Corporation (TX)
- Unanimous Written Consent of the Board in Lieu of Organizational Meeting (TX)
- Written Consent of Shareholders (TX)
Checklists
- Choosing an Entity Comparison Chart (TX)
- Corporate Maintenance Checklist (TX)
- Entity Conversion Checklist (TX)
- Forming a Corporation Checklist (TX)
- Qualifying a Foreign Entity to Do Business in Texas Checklist
State Q&A tools
