State Processing Times and Fees
Many states have standard and expedited processing times for corporate formations. The fees for expedited filings are usually higher. Businesses in Texas can file forms exclusively online to streamline the filing process. We have a list of the average wait times for standard and expedited filings.
Texas charges fees for corporation filings. Visit "compare pricing" in our incorporation center to see all state fees for Texas.
Deciding Between a Texas C-Corp or S-Corp Tax Designation
Because limits on liability, structure, management and compliance are nearly the same, deciding between an S Corp or C Corp tax designation comes down to the following considerations:
- Ownership Rules: A C Corp can have an unlimited number of shareholders and unlimited stock classes. An S Corp is limited to a maximum number of shareholders, usually 100, and only one stock class.
- Taxes: A C Corp is taxed on a separate basis. It files taxes at the corporate level, then shareholders may pay taxes on individual dividends they receive. S Corps are "pass-through" entities. No taxes are paid at the corporate level, but owners pay taxes individually.
- Documents: A Texas S Corp must file IRS Form 2553 to elect S Corp status.
Personnel Requirements
Every state has its own personnel requirements for incorporating. In Texas, they include the following:
- Age requirement: Directors and incorporators must be at least 18 years old.
- Minimum number of directors: Single-officer or single-director corporations are OK in Texas. The same individual can hold more than one position. Texas law requires only one organizer for corporate formation.
- Residency: Corporate directors and organizers do not have to live in Texas. Directors are permitted to reside in foreign jurisdictions and to receive mail and notice there. The addresses of directors must be included in a corporation's Certificate of Formation. A business or post office box address can be used instead of a private residence.
Other Requirements for Your Certificate of Formation
All corporations in Texas must designate a registered agent. A registered agent is the party responsible for receiving tax, legal and government documents for your corporation during regular business hours. Every corporation must have one. Your registered agent must live in or, if you use a business as your agent, have an office in the state. Your corporation cannot act as its own agent. You must name your registered agent in your corporation's Certificate of Formation. We can help you designate a registered agent when you incorporate with us.
You must also include the following in your Certificate of Formation in Texas:
- Your corporation's name and type.
- The number of shares the corporation is authorized to issue.
- The par value of each stock share, or a statement that shares will have no par value.
- The purpose for which your corporation has been formed.
- The effective date of the corporation's filing.
- The name and signature of the organizer confirming that the registered agent has consented to the appointment.
- The names of directors.
Other Required Paperwork
Texas does not require that corporations file annual reports with the Secretary of State. However, corporations are subject to a state franchise tax assessment and must file annual franchise tax reports, which include a Public Information Report or PIR. Your PIR gives the names of officers and directors at the time of the report's filing.
Guidelines for Your Name
A corporation's name says a lot about the business. Make sure your's meets the following Texas requirements:
- Your name must end with "Corporation," "Corp.," "Incorporated," "Inc.," "Company," "Co.," "Limited" or "Ltd."
- You cannot use a deceptive name for your Texas corporation. For example, don't name your corporation "Noah's Ark Art Supplies" if your business is a home and garden store.
- Your name must be distinguishable from that of any other existing domestic or foreign corporation, name reservation, or registration filed with the Texas Secretary of State.
- The Secretary of State can tell you if the name you've chosen is available, but a final determination won't be made until your documentation is received and processed.
Texas Corporate Taxes & Reports
Texas corporations must pay taxes. Before you open our doors for business, apply to the IRS for an employer identification number, or EIN. This is similar to a Social Security number, but it's for businesses. All corporations in Texas that have or will have employees must obtain an EIN.
We have more information about the tax structures of Texas S Corps and C Corps.
Keeping Corporate Records and Ongoing Filing Requirements
Texas recommends that corporations create and maintain certain business records, such as bylaws, as well as meeting minutes. We have more detailed information about Texas' requirements for bylaws and meeting minutes. These documents can help protect your corporate status. Bylaws and meeting minutes also help shield owners, management and organizers from personal liability for corporate activities and transactions.
Best of luck forming your Texas corporation! We have all the legal documents, filing and tax information you'll need to get started.
This article contains general legal information and does not contain legal advice. Rocket Lawyer is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.
