How To Form A Company In Texas

With our 5-step method, forming a company in Texas is simple. A company may be formed by submitting formation paperwork with your state and forming a board of directors.

We’ll teach you how to form your own company in Texas.

In Texas, it is simple to form a corporation.

In Texas, you may form a company by submitting the Certificate of Incorporation, drafting corporate bylaws, and naming your first director (s).

To get started, follow the steps in our How to Start a Corporation in Texas tutorial below:

Step 1: Give Your Texas Corporation a Name

Step 2: Select a Registered Agent.

Hold an Organizational Meeting in Step 3

Step 4: Submit your Certificate of Formation.

Step 5: Obtain an EIN

Step 1: Give Your Texas Corporation a Name

The first step in forming a company is to choose a business name. You must choose a distinct name that conforms with Texas corporate naming regulations.

1. Texas naming conventions:

The words “corporation,” “business,” “incorporated,” or “limited,” or an acronym of one of these keywords, must appear in your name.

Your name must be distinct from any other current company in the state. This covers reserved names in Texas.

2. Is my business name accessible in Texas?

Your Texas company name must be distinct and distinct from existing Texas business names. To see whether your selected company name is available, use the Texas SOSDirect portal.

3. Is the URL accessible?

Before forming your Texas company, check to see whether an appropriate URL for your preferred business name is accessible. Even if you don’t intend to create a company website right immediately, we recommend purchasing a web domain right away to avoid other companies from obtaining it.

Step 2: Select a Registered Agent in Texas.

When you file your company with the Secretary of State, you must choose a Texas registered agent.

What exactly is a Registered Agent? A registered agent is a person or organisation chosen by an LLC or corporation to accept service of process, government communications, and compliance paperwork on behalf of a company.

Who Is Eligible to Be a Registered Agent? An person, a corporate organisation, or a professional registered agent service may serve as your registered agent. Any organisation or individual may act as your Texas registered agent as long as the person:

is at least 18 years old

has a physical address in the state where business is done

is accessible during regular business hours (in person).

Appointment Consent

Your registered agent must also provide written or electronic approval to the appointment. The following information should be included in the consent statement:

Your company’s name

An explicit declaration that the person chosen agrees to act as the LLC’s registered agent.

The person chosen as the registered agent’s name

The registered agent’s signature

The execution date

It is not necessary to submit the consent statement with the Secretary of State. View Texas Form 401-A: Consent of Agent for more information on this requirement, as well as a fillable consent form.

Step 3 Hold an Organizational Meeting

Before filing the Certificate of Formation formally in Step 4, you must convene an organisational meeting to perform the following tasks:

Complete and sign the Certificate of Formation.

Establish and approve bylaws

Choose your first director (s)

Determine your ownership structure.

Fill out an Incorporator’s Statement.

Establish and Approve Corporate Bylaws

Bylaws are the rules that regulate and control how your organisation is governed and operated. Consider the bylaws to be your corporation’s constitution. It clarifies the norms and priorities for all parties involved.

The bylaws of a company will augment any regulations established by the federal government or the state.

Include the following in your bylaws:

The governance of the company, including the roles of directors and officials

Meeting processes, voting procedures, and the election of executives or directors

How will records be preserved and managed?

How will disagreements be resolved?

How will bylaws be added/modified in the future?

The annual shareholder meeting date

Contract Negotiation Techniques

Fiduciary responsibilities to the company (i.e. acting in the best interests of the corporation)

What is a quorum for voting purposes?

What exactly is a quorum? A quorum is the minimal number of members who must be present at a meeting in order for the meeting’s actions, including any votes, to be legitimate.

Appoint the First Directors

At least one director must be appointed to monitor your Texas company until the first shareholder meeting.

A corporate director is in charge of operational bylaw adoption, modification, and repeal, as well as the election, monitoring, and removal of officers.

Following the incorporation of the company, the first director(s) specified on the formation papers should convene an organisational meeting. The officers will be elected at this inaugural meeting by the initial director(s).

Selecting a Share Structure and Strategy

A share of stock is a corporation’s unit of ownership. Each share of stock reflects a proportion of the company’s ownership. If a business issues one share of stock, the shareholder (stock owner) owns 100% of the corporation.

Shares may be divided into classes. Each class, known as a share class, has unique rights and advantages. There may be several classes, and each class can have an unlimited number of shares.

The Texas Secretary of State’s Certificate of Formation form may only be used to establish a company with one share class. If the company requires a multiple share class structure, you must provide it in the form’s extra information area.

NOTE: We suggest that you begin with a large number of authorised shares. Many lawyers advocate for a million dollars. Starting with a large number allows you to issue shares as required without incurring legal expenses to enhance your original permitted share size.

Make and implement an Incorporator’s Statement

The incorporator(s) shall sign and preserve an Incorporator’s Statement with the full names and addresses of all initial directors in the corporate records book.

The first director(s) named in this agreement will serve until the board of directors is chosen at the first shareholder meeting. It should be kept with the rest of your company’s records.

Step 4: Submit your Texas Certificate of Formation.

To form a company in Texas, you must submit the Texas Certificate of Formation. The Certificate of Formation is the formal document that establishes your Texas company. You may submit it with the Texas Secretary of State by mail, fax, in person, or online. Payment forms must be included with fax submissions. The price for filing is $300.

This paper will address the fundamentals of your company, such as:

Statement of mission and corporate name

Name and location of the corporate registered agent

The number of authorised shares that a company may issue.

Name(s) and address of corporate directors (es)

Name and address of the organiser

The Texas Secretary of State’s Certificate of Formation form may only be used to establish a company with one share class. If the company requires a multiple share class structure, you must provide it in the form’s extra information area.

Step 5: Obtain a Federal Employer Identification Number (EIN) for Your Texas Corporation

What exactly is an EIN? The federal government uses an Employer Identification Number (EIN) or Federal Tax Identification Number (FTIN) to identify a company organisation. It is effectively the company’s social security number.

Why do I need an EIN? An EIN is necessary for the following activities:

To establish a commercial bank account for the firm

In terms of federal and state taxation

To recruit workers for the firm

How can I get an EIN? After founding the firm, the business owner obtains an EIN from the IRS (free of charge). This may be done online or in the mail.