Some types of business entities must file paperwork with the state of Texas to become incorporated. Once you have decided on the business entity you wish to use, filing the incorporation documents is a simple process. When you file your incorporation documents through the Texas Secretary of State's portal, you'll immediately receive confirmation that your documents will arrive in the mail.
Choose the right entity
There are multiple types of entities you can choose from to suit your business. Each entity type has its own rules and potential tax and operational benefits. Choose from:
- Limited liability company (LLC): It is common for small businesses in Texas to register as LLCs. This entity provides liability protection while giving you great flexibility in how your business taxes are handled. Learn more about how to form an LLC in Texas here. It is established by filing a certificate of incorporation with the state.
- C-corp: A C-corp is the best business entity for publicly traded companies because it allows the business's stock to be split into multiple classes of stock. They are usually not chosen by small businesses looking to start a business unless the owner has raised significant amounts of capital. It is established by submitting a certificate of establishment.
- S-corp: When most people talk about corporations, they're probably referring to the C-corps mentioned above. However, there are other types of corporations that offer tax benefits to their owners. This comes from the “S” subchapter of the tax code and is a tax classification to avoid double taxation. Click here to learn more about S corps. An S-corp is just a tax designation and is registered with the state in the same way as a C-corp.
- Sole proprietorship: A sole proprietorship is a business run by one person. All responsibility and finances remain with the individual. There are no formation documents to file with the state to form this business.
- General partnership: If you choose to do business with at least one other person, you can form a general partnership. You don't have to file anything with the state to form an entity. You are both responsible for the partnership's debts.
- Limited liability partnership: If you and one or more other people form a business together and have at least one general partner and one limited partner, you can form a limited partnership after filing a certificate of incorporation with the state. I can. Limited partners are only liable to the extent of their financial interest in the company, while general partners are personally liable for the company's debts.
You may also need to file your business as a DBA with Texas if you conduct business under a name other than your own name or the name of the company you formed by filing incorporation documents with Texas. This tells the state who runs the business and who is responsible.
Find the right business name
Before you register your business with the state, you need to make sure the name isn't being used by another business. You can perform an online search to see if your name is available for up to $1 per search. This is something you need to pay to avoid delays in the application process and have the confidence that you can legally purchase a domain name and create marketing materials with your chosen name.
Apply for a Business Employer Identification Number (EIN)
An EIN is your business' tax identification number that the federal government uses to identify your business. You can apply for an EIN online through IRS.gov. This process is easy, free, and only takes a few minutes. This is necessary for certain business entity tax purposes and to be able to hire employees.
See step-by-step instructions on how to obtain an EIN.
Please select a registered agent
A registered agent is the person or entity responsible for receiving important legal documents on behalf of your business. Businesses that file formation documents with the state must have a registered agent.
If someone files a lawsuit against your business, your registered agent can receive the documents. Registered agents need someone they can trust to check their email. You can act as a registered agent or hire a registered agent service to handle this responsibility on your behalf.
Apply for a business license
Once you have officially established your business in Texas, you will need to check for any necessary federal, state, or local business licenses before you can operate. There are a wide variety of licenses required depending on the type of industry and occupation. It may take some time to obtain a registered name, so please apply as soon as you obtain a registered name. Learn more about Texas business licenses.
If your business sells taxable products or services, you must apply for a sales tax permit so you can collect Texas sales tax.
