How to Start a Corporation in Texas

Incorporating in Texas gives your business legal protection, tax flexibility, and credibility. Unlike a sole proprietorship or partnership, a corporation is its own legal entity, separate from its owners (called shareholders). This means your personal assets are protected if the business faces liability or debt.

Texas has no corporate income tax, which makes it attractive for corporations. Instead, you'll file an annual franchise tax report based on total revenue. The process itself is straightforward: file your Articles of Incorporation with the Texas Secretary of State, pay a one-time filing fee, and maintain basic compliance going forward.

What You'll Need Before You Start

Gather these materials before filing:

• Chosen corporate name: Must be distinguishable from existing businesses in the Secretary of State records, include a corporate designation (Corporation, Corp., Incorporated, Inc., etc.), and cannot imply a purpose your corporation is not authorized to pursue.
• Registered agent information: You must appoint a registered agent, either a Texas resident or a registered business entity in Texas. This person or entity receives official documents on behalf of your corporation. Post office boxes don't qualify; you need a physical street address.
• Initial directors: The number of directors you want to start with (minimum one). These individuals will make major business decisions and oversee operations.
• Shareholders: Identify who will own shares and how many each person holds.
• Business purpose statement: A brief description of what your corporation will do (optional but recommended).
• $300 filing fee: Payment method accepted through SOSDirect (credit/debit card).

Optional but recommended: Draft corporate bylaws before filing. These are your corporation's internal rules for governance. You can write them yourself or have an attorney review them.

Step 1: Verify Your Corporate Name Is Available

Your chosen name must be distinguishable from every other filing entity already registered with the Texas Secretary of State. Search for free at https://www.sos.state.tx.us/corp/searches.shtml. Use the "Search Entity Records" tool.

If your preferred name is taken, you have two options: choose a different name, or file a name reservation. A name reservation costs $40 and holds your name for 120 days while you finalize other details. You can file this reservation through SOSDirect at https://direct.sos.state.tx.us/acct/acct-login.asp.

You can also call the Secretary of State's office at (512) 463-5555 to verify name availability by phone before you file.

Step 2: Prepare Your Certificate of Formation (Form 201)

The Certificate of Formation is the legal document that creates your corporation. Texas Secretary of State Form 201 requires:

• The corporation's name (exactly as you want it registered)
• The purpose or purposes for which the corporation is formed (usually "any lawful business purpose" is acceptable)
• Information about your registered agent (name and Texas address) and registered office
• The name of the incorporator (the person filing, usually you, an attorney, or a registered agent service)
• Effective date of the certificate (you can file to be effective immediately or on a future date)

Download Form 201 from the Secretary of State at https://www.sos.state.tx.us/corp/index.shtml. The form includes detailed instructions. You do not need to provide the directors' or shareholders' names on the Certificate of Formation, that information stays in your corporate records.

Step 3: File Your Certificate of Formation with the Secretary of State

You have three filing options:

Option A: Online through SOSDirect (fastest)
Go to https://direct.sos.state.tx.us/acct/acct-login.asp. Create an account, upload your completed Certificate of Formation as a PDF, pay the $300 filing fee with a credit card, and submit. Electronic filing through SOSDirect gives the fastest processing time.

Option B: Mail your filing
Print and sign your Certificate of Formation, then mail it to:

Texas Secretary of State
Corporations Section
P.O. Box 13697
Austin, TX 78711-3697

Include a check for $300 payable to "Texas Secretary of State." Mailed filings typically take at least one business day to show as "Received" in the system, longer for full processing.

Option C: Hand-deliver to the Secretary of State office
Take your original Certificate of Formation and a check to the Secretary of State office in Austin during business hours. This offers the fastest in-person turnaround but requires travel.

Note on expedited processing: If you need faster processing than standard, the Texas Express expedite service is available. Standard Expedite ($50) processes within two to three business days. Next Day Expedite ($500) is processed by close of business the next day for filings received by noon. Same Day Expedite ($750) is processed the same day for filings received by noon. These fees are in addition to the $300 filing fee.

Step 4: Obtain an EIN and Set Up Business Banking

Once your Certificate of Formation is filed and accepted by the Secretary of State, apply for a federal Employer Identification Number (EIN) from the IRS. Even if you have no employees, a corporation needs an EIN for tax purposes and business banking.

Apply for free at https://www.irs.gov/ein or by calling the IRS at 1-800-829-4933. You can receive your EIN immediately by phone or online.

After you have your EIN, open a business bank account under your corporation's name. This keeps your personal and business finances separate and is essential for liability protection. Bring your Certificate of Incorporation (the filed and stamped copy you receive from the Secretary of State), your EIN letter, and your ID to the bank.

Step 5: Handle Initial Corporate Filings and Compliance

After formation, complete these tasks:

Adopt corporate bylaws: Hold an organizational meeting with your board of directors and shareholders (these can be the same people). During this meeting, adopt bylaws, elect permanent directors, and authorize the issuance of stock. Document this in meeting minutes.

Issue stock certificates: Distribute stock to your shareholders according to ownership percentages. This formalizes who owns what portion of the corporation.

File for a sales tax permit: If your corporation will sell taxable goods or services in Texas, register for a sales tax permit at no charge through the Texas Comptroller of Public Accounts at https://comptroller.texas.gov/taxes/permit/. The permit typically takes two to three weeks to process.

Determine if you need specialized licenses: Texas does not require a general state business license, but certain industries require specific licenses or permits (real estate, healthcare, professional services, etc.). Check with your local city or county government and the Texas Business Licenses and Permits Guide on the Comptroller's website.

Ongoing Annual Requirements

Franchise tax filing: Every year, your corporation must file a Public Information Report or Ownership Information Report with the Texas Comptroller of Public Accounts. This is due by May 15, regardless of whether you owe franchise tax.

Franchise tax applies if your total revenue exceeds $2,650,000 in the 2026 and 2027 tax years. If you're below that threshold, you file the report but owe no tax. Above the threshold, the rate is 0.375% for retail and wholesale businesses, or 0.75% for all other business types.

File at https://comptroller.texas.gov/taxes/. This report is not filed with the Secretary of State, it goes to the Comptroller only.

Registered agent maintenance: Your corporation must continuously maintain a registered agent and registered office in Texas. If you change your registered agent or office address, file a statement of change with the Secretary of State for a $15 fee.

Sales tax filings: If you hold a sales tax permit, file sales tax returns (typically monthly or quarterly) based on your transaction volume.

Corporate minutes and record-keeping: Keep minutes of all board and shareholder meetings. Maintain a corporate record book with bylaws, meeting minutes, stock ledger, and director/officer information. These records protect your liability protection in case of legal challenge.

Common Mistakes to Avoid

• Choosing a name too similar to an existing business: The Secretary of State will reject your filing if your name isn't distinguishable. Run multiple searches and consider variations.
• Using a post office box for your registered office: The registered office must be a physical street address where documents can be personally served during business hours. A mail forwarding service isn't sufficient.
• Forgetting the franchise tax filing: Even if you owe no tax, you must file the annual Public Information Report by May 15. Failing to file can result in penalties and loss of good standing.
• Neglecting to obtain an EIN: A corporation's EIN is required for tax purposes, payroll, and business banking. Don't operate without one.
• Mixing personal and business finances: Use your business bank account exclusively for business transactions. Commingling funds weakens your liability protection.
• Failing to maintain corporate formalities: Hold director and shareholder meetings, keep minutes, and document major decisions. Courts can "pierce the corporate veil" and hold you personally liable if you treat the corporation as a personal piggy bank.
• Missing the 120-day name reservation deadline: If you reserved your name but don't file your Certificate of Formation within 120 days, you'll need to pay the $40 reservation fee again.

What to Expect After Filing

After you submit your Certificate of Formation, the Secretary of State reviews it for completeness and legal sufficiency. If you filed electronically through SOSDirect, you should receive confirmation within hours. The office will either accept your filing or send you an email with a list of corrections needed.

Once accepted, your corporation is officially formed. You'll receive an official filed Certificate of Incorporation (a stamped copy of your form). Keep this document, you'll need it to open a bank account, apply for an EIN, and handle other business setup tasks.

Processing time varies. Electronic filing through SOSDirect is fastest, with most accepted filings showing approved status within hours to one business day. Standard mailed filings take at least one business day just to enter the system, often longer for full processing. If you need guaranteed timing, use the Texas Express expedite service.

When to Get Professional Help

You can file your Corporation's Certificate of Formation yourself and save on attorney fees. However, consider consulting a lawyer or CPA if:

• You're uncertain about corporate structure for your specific business
• Your business will have multiple shareholders with different ownership percentages
• You need help with tax planning or S-Corp election decisions
• Your industry requires specialized compliance or licensing

The Texas Small Business Development Center Network (https://www.sbdctexas.org/) and the SBA's Dallas-Fort Worth District Office both offer free or low-cost business formation guidance.

Final Checklist

Before you consider your corporation fully formed, verify you've completed:

• ☐ Checked name availability on Secretary of State website
• ☐ Completed Certificate of Formation (Form 201) with all required information
• ☐ Filed Certificate of Formation and paid $300 fee
• ☐ Received filed Certificate of Incorporation from Secretary of State
• ☐ Applied for and received federal EIN from the IRS
• ☐ Opened business bank account under corporation name
• ☐ Adopted bylaws and held organizational meeting
• ☐ Issued stock certificates to shareholders
• ☐ Applied for sales tax permit (if applicable to your business)
• ☐ Researched any industry-specific licenses or permits required
• ☐ Marked calendar for annual May 15 franchise tax filing deadline

Disclaimer

This article is informational guidance on Texas corporation formation requirements and processes. It is not legal advice, tax advice, or a substitute for professional counsel. Business formation decisions involve legal and tax implications that vary based on your specific situation, industry, and ownership structure. Consult a qualified attorney or certified public accountant before making final decisions about your corporate structure or filing your formation documents. The fees, filing procedures, and requirements described here were accurate as of the publication date but are subject to change, always verify current requirements on the official Texas Secretary of State website before filing.