Texas has the second-biggest economy in the U.S. (worth $1.9 trillion), behind only California. It also ranks first for its growth aspects, which makes it a favorable state for doing business.

Want to learn how to incorporate a business in Texas?

The following is everything you need to know about incorporating inTexas.

The process of forming a corporation, an LLC, or any other business entity in Texas involves a variety of steps. These include choosing a business name, state and federal filings, obtaining the Certificate of Formation, and getting your business up and running.

Let’s go through the process of forming a legal business entity in the state of Texas. I’ll also tell you how our Texas incorporation service packages can help you along the way.

The Step-by-Step Texas Incorporation Guide for Budding Entrepreneurs

Assuming that you’ve already worked on your business idea, planning, and funding, let’s take a look at the steps you need to follow to incorporate in Texas.

Choose a Business Structure to Incorporate in Texas

To incorporate a business in Texas, you first need to decide on a business structure. You can choose from multiple business structures including a limited liability company (LLC), a partnership, and a corporation. This choice totally depends on how you want to operate your business in Texas.

Here’s what different business entities have to offer:

  • An LLC or a limited liability company is a business structure used commonly by small business owners due to the flexibility it offers. An LLC can have one or more members, including individuals, corporations, other LLCs, and foreign entities.

Forming an LLC in Texas offers more tax options, less liability, more asset protection, profit sharing, and very few restrictions.

  • A Partnership refers to an incorporated business where two or more owners contribute their time, money, and resources before sharing the company’s profits and losses. Setting up Partnerships is an easy process and they are relatively affordable business entities.
  • A Corporation, also known as a Corp, is the most common type of incorporated business structure in the U.S.

Forming a corporation in Texas offers infinite growth potential due to its investment-friendly structure, the option to have multiple stakeholders, and stock selling provisions.

However, forming a corporation involves more legal requirements and paperwork.

Want to explore other business entity types? Click here.

If you’re not sure about the type of business entity that will be the best for you, you can fill out our simple entity selection survey to make a decision. This will help you incorporate a business entity that suits your flexibility, taxation, and profit-sharing requirements.

Choose a Name for Your Business

The next step to incorporate a business in Texas is to select a unique business name. The name you choose should not be too similar to the names of businesses registered with the Texas Secretary of State.

Brainstorm to come up with at least 4-5 potential names that are creative and relate to your niche. Make sure they are easy to read, pronounce, understand, and recall.

Remember, your Texas business name can’t imply a false or illegal purpose else the Texas Secretary of State is not likely to approve it. It should not be offensive as well.

To ensure that your business name is unique and has not been registered already, you should search the web for potential names. Search for misspellings, plurals, variations of spelling, and sound-alikes of your selected names.

Also, conduct a trademark search with the U.S. Patent and Trademark Office (USPTO). If your chosen business name is available, you can apply for a trademark.

Last but not the least, you should look for domain name availability as you’ll be developing a business website sooner or later. Finding and registering a domain is an important step when you want to incorporate a business in Texas to avoid problems with taking your business online at later stages.

Register Your Business in the State of Texas

Now that you have chosen a business structure and name, it’s time to register your business. But each U.S. state has its own requirements for business formation and registration.

Let’s take a look at what you need to do to incorporate a business in the state of Texas.

For a smooth Texas incorporation, you should find a Registered Agent for your business who will be the point of contact between your company and the Texas Secretary of State’s office. They must have a physical street address in Texas as they’ll receive all important legal documents on behalf of your business.

The next step to incorporate in Texas is to file the Certificate of Formation with the Texas Secretary of State and pay state filing fees. You will have to fill out a form to ensure compliance with the state’s business formation laws.

It may take up to 2-3 business days for online state filing and 3-5 business days for mail filings to process the paperwork. It may take a longer time if you’re incorporating your business during peak times.

Many Texas incorporation service providers also charge extra for expedited processing of your applications. The good news is — GovDocFiling does not.

Once your application is accepted, you can operate as a recognized legal entity and conduct business within the state of Texas.

If you’re incorporating an LLC, you need to fill out an LLC Operating Agreement in Texas to determine the financial and working relationships among your LLC owners, managers, and other members.

Similarly, you need to draft your Corporate Bylaws if you are forming a corporation in Texas. They should set internal rules and procedures for the functioning of your corporation to ensure that employees, shareholders, and executives know how the business will operate.

Obtain a Federal Employer Identification Number (EIN)

You need to file with the IRS for a Federal Employer Identification Number (EIN), which is a unique nine-digit Tax ID assigned to businesses for tax filing and reporting purposes. It is like a Social Security Number for your company.

If you’re incorporating a Corporation or an LLC in Texas, it’s essential to obtain an EIN.

You can quickly apply for your federal EIN/Tax ID in Texas with us to benefit from expedited filing time without any additional costs.

Fulfill Texas’ Annual Taxation, Permits, and Other Requirements

Once you’ve incorporated a business in Texas, you can start operating your business within the state. However, don’t forget to also fulfill the ongoing legal requirements to remain relevant.

Both LLCs and Corporations in Texas need to file a Franchise Tax Report every year by May 15th. In addition, you may have to pay extra fees for certain insurance, permits, and licenses.

Some common business licenses and permits that limited liability companies and corporations in Texas may need to apply for include:

  • Sales Permit
  • Building Permit
  • Business License
  • Health Permit
  • Occupational Permit
  • Zoning Permit

However, the profits of an LLC are not taxed at a business level in Texas, unlike those of corporations. Texas’ LLC tax requirements include self-employment tax on business profits, Federal income tax on profits minus expenses, and the payroll tax for employers and employees.

Operate Your Business and Stay Compliant to the State’s Business Rules

Once you’ve completed all initial legal formalities, you can start operating your business in Texas. You should also build a business website to mark your presence online, attract more clients, and generate more leads, sales, and revenue.

Make sure that your Texas business remains compliant, you file all necessary reports appropriately, and you pay your taxes on time.

You can also hire an accountant or a tax professional for record-keeping and paperwork.

Ready to Incorporate Your Business in Texas?

Incorporating your business is a time-consuming but simple process. You just need to follow all of these steps properly.

Take your first step today to form an LLC, a corporation, or any other legal business entity in Texas. Texas incorporation is an important part of operating your business smoothly within the state.

It may seem daunting at first but there’s nothing to worry about. You can also check out our business formation and startup packages that can help make the process easier for you.

With our reliable Texas incorporation service packages, all you need to do is fill out a simple form and leave the rest to us. We’ll manage the boring but important paperwork (state filing and EIN/Tax ID filing) for you.

What are y’all waiting for?

Work on your business idea and take the plunge to incorporate your business in Texas.

Do you have questions about choosing the right entity or incorporating your business in Texas? Feel free to get in touch with our experts.