Texas Corporation FAQ — Formation, Governance, and Compliance

What document creates a Texas corporation?

The Certificate of Formation — For-Profit Corporation (Form 201), filed with the Texas Secretary of State. It sets out the corporate name, registered agent and office, number of authorized shares, initial directors, and the organizer. You can file it online through SOSDirect, by upload, or by mail.

Do I have to live in Texas to incorporate there?

No. Texas imposes no residency requirement on shareholders, directors, officers, or the organizer. You can form and own a Texas corporation from anywhere. The single in-state connection Texas insists on is the registered agent, who has to keep a physical Texas street address.

How many directors and officers does a Texas corporation need?

At least one director. There's no maximum. For officers, a corporation typically needs at least a president and a secretary, and often a treasurer. One person can hold all officer roles and be the sole director and sole shareholder — the roles are legally distinct even when one individual fills them.

How long does formation take?

Standard processing runs on the timeline shown in your receipt card, with online filings through SOSDirect being fastest. Texas offers expedited handling for an additional state fee if you're on a deadline. When approved, you receive a stamped, filed Certificate of Formation.

Should I form a corporation or an LLC in Texas?

It depends on your plans. A corporation is owned by shareholders, run by a board and officers, and governed by bylaws — the standard structure for raising venture capital, issuing stock, and granting employee equity. An LLC is owned by members, governed by an operating agreement, and carries far less mandatory formality. If you want investment-ready structure, choose the corporation; if you want simplicity, the LLC often wins. Both provide liability protection under the Texas Business Organizations Code.

What's the difference between a C-corp and an S-corp?

Both are the same state-law corporation — the difference is a federal tax election. A C-corporation is the default: it pays corporate income tax, and shareholders are taxed again on dividends (so-called double taxation). An S-corporation elects pass-through treatment by filing IRS Form 2553, so profits flow to shareholders' personal returns, but it comes with restrictions (limited number of shareholders, U.S. shareholders only, one class of stock). Whether an S election helps depends on your finances — a question for your CPA.

Does Texas have a corporate income tax?

Texas has no traditional corporate income tax. Instead it levies a franchise tax, a privilege tax administered by the Comptroller. Many small corporations fall below the no-tax-due revenue threshold and owe nothing, but they must still file the report every year.

Do I have to file bylaws with the state?

No. Bylaws are an internal document you adopt at your organizational meeting and keep in your corporate minute book. Texas never sees them. You should still have them — banks and investors ask for them, and observing the rules they set protects your liability shield.

What is an organizational meeting?

It's the first meeting of the initial directors after formation. At it, the board adopts bylaws, elects officers, authorizes and issues stock to the founders, approves opening a bank account, and records everything in the organizational minutes. It's what turns the filed certificate into a functioning corporation.

What's the difference between authorized and issued shares?

Authorized shares are the ceiling set in your Certificate of Formation — the most the corporation may ever issue. Issued shares are the ones actually distributed to shareholders. Corporations commonly authorize more than they issue at formation to leave room for investors and an employee option pool.

Do I really need to keep corporate records?

Yes. Minutes, resolutions, the stock ledger, and updated bylaws are what demonstrate you're treating the corporation as a genuine separate entity. If a plaintiff tries to pierce the corporate veil and reach shareholders personally, sloppy or nonexistent records are among the first things they'll point to.

Does a Texas corporation file an annual report?

Not with the Secretary of State — Texas has no SoS annual report for for-profit corporations. The recurring obligation is with the Texas Comptroller: an annual franchise tax report and a Public Information Report (PIR), both due May 15. The PIR keeps your officer and director information current and functions as Texas's substitute for an annual report.

What if my corporation owes no franchise tax?

You still have to file. Corporations below the state's no-tax-due revenue threshold owe zero franchise tax, but the report and the Public Information Report are still required each year. Filing a "no tax due" report is what keeps you in good standing.

What happens if I miss the May 15 deadline?

A corporation that fails to file with the Comptroller can lose its right to sue or defend in Texas courts and, if the delinquency continues, can have its corporate charter forfeited. Reinstating a forfeited corporation is more expensive and disruptive than simply filing on time. Treat May 15 as a hard deadline.

Do I need a business license in Texas?

Texas has no general statewide business license. However, many industries require state-level occupational or professional licenses, and cities and counties often impose their own permits. These are separate from your Secretary of State registration and run on their own cycles.

Can I be my own registered agent?

Yes, if you're a Texas resident with a physical street address (not a P.O. box) and you're available during business hours. Note that your address becomes public, and missing a service-of-process delivery can lead to a default judgment. Many owners use a commercial agent to avoid both problems. A corporation cannot serve as its own agent.

Does the registered agent have to consent?

Yes. Texas requires the agent to consent, documented on Form 401-A. You don't file it with the certificate, but you must keep the signed consent on record.

How do I check if my corporate name is available?

Search the Secretary of State's records through SOSDirect. Your name must be distinguishable from existing entity names and must include a corporate designator like "Inc." or "Corporation." The Secretary of State's name filing FAQs explain how the distinguishability standard is applied.

Can I use a different name to operate?

Yes. File an Assumed Name Certificate (Form 503) with the Secretary of State to do business under a name other than your legal corporate name. A Texas assumed name can be valid for up to ten years.