How to Form Corporation in Texas

Quick Answer

As of April 10, 2026, forming a corporation in Texas requires filing a Certificate of Formation with the Texas Secretary of State for a $300 fee. The process typically takes 5-7 business days when filed online, and Texas corporations benefit from no state income tax and no franchise tax for businesses with revenue under $2.47 million annually.

Step-by-Step Formation Process

1. Choose and Reserve Your Corporate Name

   • Ensure your name includes “Corporation,” “Corp.,” “Incorporated,” or “Inc.”
   • Check name availability through the Texas Secretary of State’s website
   • Consider reserving your name for 120 days if needed

2. Appoint a Registered Agent

   • Select an individual or entity with a Texas street address
   • The registered agent must be available during business hours to receive legal documents
   • You can serve as your own registered agent if you have a Texas address

3. Prepare Your Certificate of Formation

   • Download Form 201 from the Texas Secretary of State website
   • Include required information: corporate name, registered agent details, authorized shares, and incorporator information
   • Specify your business purpose (can be general or specific)

4. File the Certificate of Formation

   • Submit online through SOSDirect for fastest processing
   • Mail to Texas Secretary of State, Corporations Section, P.O. Box 13697, Austin, TX 78711-3697
   • Include the $300 filing fee

5. Obtain Your EIN

   • Apply for an Employer Identification Number through the IRS website
   • This is required for tax purposes and opening business bank accounts

6. Create Corporate Bylaws

   • Draft internal rules governing your corporation’s operations
   • While not filed with the state, bylaws are essential for corporate compliance

7. Hold Initial Board Meeting

   • Elect officers, adopt bylaws, and issue initial stock certificates
   • Document all decisions in corporate minutes

Costs Breakdown

Item	Cost	Notes
Certificate of Formation Filing Fee	$300	Required state fee as of April 2026
Name Reservation (optional)	$40	Valid for 120 days
Registered Agent Service	$100-300/year	If using third-party service
EIN Application	Free	Apply directly through IRS
Corporate Kit	$50-200	Optional but recommended
Legal/Professional Fees	$500-2,000	Varies by complexity

The minimum cost to form a Texas corporation is $300 if you handle the process yourself and serve as your own registered agent.

Requirements Checklist

Before filing your Certificate of Formation, ensure you have:

• ✅ Unique Corporate Name: Must include corporate designator and be distinguishable from existing entities
• ✅ Registered Agent: Texas resident or entity authorized to do business in Texas
• ✅ Incorporator: At least one person to sign the formation documents
• ✅ Authorized Shares: Determine the number and type of shares your corporation can issue
• ✅ Business Purpose: General purpose statement is acceptable
• ✅ Filing Fee: $300 payable to the Texas Secretary of State

Optional but recommended:

• Corporate bylaws drafted
• Initial directors identified
• Business bank account location selected

Tax Implications

Texas offers significant tax advantages for corporations:

State Taxes:

• No State Income Tax: Texas does not impose corporate income tax
• Franchise Tax: Applies to corporations with total revenue exceeding $2.47 million annually
• Sales Tax: Base rate of 6.25%, with local taxes potentially adding up to 2% more

Federal Taxes:

• C-Corporations face double taxation: corporate profits taxed at entity level, dividends taxed at shareholder level
• S-Corporation election allows pass-through taxation, avoiding double taxation
• Federal corporate tax rate is currently 21%

Employment Taxes:

• Standard federal payroll taxes apply
• Texas Unemployment Insurance (TUI) required for employees

The franchise tax exemption for smaller businesses makes Texas particularly attractive for new corporations expecting revenue under $2.47 million.

Ongoing Obligations

Texas corporations must maintain compliance through several ongoing requirements:

Annual Filings:

• Franchise Tax Report: Due May 15th annually (no fee unless revenue exceeds $2.47M threshold)
• Federal Tax Returns: Form 1120 for C-Corps or 1120S for S-Corps

Corporate Maintenance:

• Hold annual shareholder meetings
• Maintain corporate minutes and resolutions
• Keep registered agent information current
• Update registered office address if changed

Other Requirements:

• Renew any required business licenses
• File beneficial ownership reports with FinCEN if applicable
• Maintain separate business bank accounts

Failure to file required reports can result in forfeiture of corporate charter and loss of limited liability protection.

Registered Agent

Every Texas corporation must maintain a registered agent with a Texas street address. The registered agent serves legal documents and official state correspondence.

Requirements:

• Must have a Texas street address (P.O. boxes not accepted)
• Must be available during normal business hours
• Can be an individual Texas resident or business entity authorized in Texas

Options:

1. Self-Service: You can serve as your own registered agent if you have a Texas address
2. Professional Service: Hire a registered agent service ($100-300 annually)
3. Attorney or CPA: Many legal and accounting professionals offer this service

Professional registered agent services provide privacy, ensure availability, and handle document forwarding professionally.

Common Mistakes to Avoid

1. Choosing an Unavailable Name: Always check name availability before filing. Corporate names must be distinguishable from existing entities and include proper designators.

2. Inadequate Capitalization: Ensure your corporation has sufficient initial capital to operate and meet potential liabilities.

3. Mixing Personal and Business Finances: Maintain separate bank accounts and financial records to preserve limited liability protection.

4. Skipping Corporate Formalities: Hold required meetings, maintain minutes, and follow your bylaws to avoid piercing the corporate veil.

5. Ignoring S-Corporation Election Deadlines: File Form 2553 within 75 days of incorporation if you want S-Corp tax treatment.

6. Inadequate Record Keeping: Maintain proper corporate books, stock certificates, and meeting minutes.

7. Forgetting Annual Compliance: File franchise tax reports on time to avoid penalties and maintain good standing.

Related Guides

• How to Form Corporation in Arizona: 2026 Complete Guide
• How to Form Corporation in Delaware 2026: Complete Guide
• How to Form Corporation in Louisiana: 2026 Complete Guide
• How to Form Corporation in Maryland: 2026 Complete Guide
• How to Form Corporation in Michigan: 2026 Complete Guide

FAQ

How long does it take to form a corporation in Texas?

Online filings through SOSDirect typically process within 5-7 business days. Expedited processing is available for an additional fee and reduces processing time to 2-3 business days. Mail-in filings generally take 2-3 weeks to process.

Can I form a Texas corporation if I don’t live in Texas?

Yes, you can incorporate in Texas regardless of where you live. However, you must maintain a registered agent with a Texas street address. Many out-of-state business owners use professional registered agent services to meet this requirement.

What’s the difference between authorized and issued shares?

Authorized shares are the maximum number of shares your corporation can issue, as specified in your Certificate of Formation. Issued shares are the actual shares distributed to shareholders. You can issue fewer shares than authorized, but cannot exceed the authorized amount without amending your certificate.

Do I need an attorney to form a corporation in Texas?

While not legally required, consulting an attorney is recommended for complex situations. Simple incorporations can be handled independently using forms from the Texas Secretary of State website. Consider professional help if you have multiple owners, complex ownership structures, or specific legal concerns.

Can I change my corporation’s name after formation?

Yes, but it requires filing a Certificate of Amendment with the Texas Secretary of State and paying the associated fee. The new name must be available and meet Texas naming requirements. You’ll also need to update all business documents, contracts, and accounts.

What happens if I don’t file the annual franchise tax report?

Failure to file the franchise tax report results in forfeiture of your corporate charter. This means your corporation loses its legal status and limited liability protection. You can apply for reinstatement by filing the overdue reports and paying penalties, but this process can be complex and expensive.

Should I elect S-Corporation status for my Texas corporation?

S-Corporation election can provide tax advantages by avoiding double taxation, but it comes with restrictions on ownership and share classes. Consult with a tax professional to determine if S-Corp status aligns with your business goals and ownership structure. The election must be made within 75 days of incorporation.

How much does it cost to maintain a Texas corporation annually?

The minimum annual cost is $0 if your revenue stays below $2.47 million (no franchise tax owed). Additional costs may include registered agent fees ($100-300), accounting services, and any required business licenses. Corporations with higher revenue will owe franchise tax based on their total revenue.

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This information is provided for educational purposes only and should not be considered legal or tax advice. Business formation requirements and fees can change. Always consult with qualified professionals and verify current information with the Texas Secretary of State before making business decisions.