Incorporate in Texas for FREE^*

Incorporation is the process of registering a business as a corporation and making it recognizable under law as its own legal entity. Incorporating a business can be a complicated process because each state has its own requirements for registering and operating a business as a corporation. Knowing the necessary steps and forms, however, will help keep you organized and stress-free. 

With our easy business registration service, you simply answer a few questions and we create your initial paperwork and file it with the state for you. The first business entity registration is free for Rocket Legal+ members—you pay only the state filing fees. Then, you can make and personalize all the legal documents you need for your business. Store everything online in your Rocket Lawyer account.

What is a C-Corp? 

A C-Corp, or C-Corporation, is a common business entity type. More specifically, a C-Corp is a corporation taxed under Subchapter C of the U.S. Code. Under Subchapter C, corporations are subject to tax at both the corporate and individual level (sometimes called “double taxation”). Depending on the situation, this may result in lower or higher tax burdens for the shareholders. 

C-Corps allow for anyone to be an investor and for an unlimited number of shareholders and multiple share classes.

As with other types of corporations, C-Corporations provide a common and well-known legal structure for businesses and offer their shareholders some limited liability. Except for certain instances of fraud or misconduct, a shareholder is not liable for the debts or obligations of a corporation beyond the shareholder's investment into the corporation.

Corporations are treated as a C-Corp by default, unless another type of tax treatment is selected, such as an S-Corp.

What is an S-Corp? 

Like C-Corps, S-Corps provide a common and well-known legal structure for businesses and offer their shareholders some limited liability. However, S-Corps have two main differences from C-Corps: they are taxed differently and they have more restrictions with shares.

An S-Corporation, or S-Corp, is an IRS election that allows a company to be treated like an LLC for income tax purposes, that is, as a “pass-through" entity. Instead of income taxes being owed at both the company and individual level, the income of an S-Corp is only taxed at the individual level, which means it passes through the company directly to the owners and shareholders. Again, this may result in lower or higher tax burdens for the shareholders depending on the situation.

S-Corps have more restrictions regarding shares and shareholders than C-Corps. Specifically, S-Corps can have no more than 100 shareholders, only one class of shares, and only U.S. residents or citizens as investors.

One area of common confusion is what type of entity can elect S-Corp status. Remember that this election is simply a tax choice, not a governance or legal structure choice. Both limited liability companies (LLCs) and corporations can choose S-Corp status if they qualify under the IRS's guidelines.

There are similarities between a Texas S-Corp and a C-Corp regarding personal liability, management, structure, and compliance. The differences in Texas, however, come down to the following:

• Ownership Rules: A C-Corp can have an unlimited number of shareholders and unlimited stock classes. An S-Corp is limited to a maximum number of shareholders, usually 100, and only one stock class.
• Taxes: A C-Corp is taxed on a separate basis. It files taxes at the corporate level, then shareholders may pay taxes on individual dividends they receive. S-Corps are "pass-through" entities. No taxes are paid at the corporate level, but owners pay taxes individually.
• Documents: A Texas S-Corp must file IRS Form 2553 to elect S-Corp status.

Your corporation’s name should be unique and make a statement about your business. Make sure it complies with the following Texas requirements:

• Your name must end with "Corporation," "Corp.," "Incorporated," "Inc.," "Company," "Co.," "Limited," or "Ltd."
• You cannot use a deceptive name for your Texas corporation. For example, don't name your corporation "Noah's Ark Art Supplies" if your business is a home and garden store.
• Your name must be distinguishable from that of any other existing domestic or foreign corporation, name reservation, or registration filed with the Texas Secretary of State.
• The Secretary of State can tell you if the name you've chosen is available, but a final determination won't be made until your documentation is received and processed.

Need help coming up with a business name for your corporation? Try the Rocket Copilot™ AI Business Name Generator, a free tool to help you brainstorm business names and get started registering your corporation.

Each state has its own personnel requirements for incorporating. In Texas, you must follow these rules:

• Age requirement: Directors and incorporators must be at least 18 years old.
• Minimum number of directors: Single-officer or single-director corporations are OK in Texas. The same individual can hold more than one position. Texas law requires only one organizer for corporate formation.
• Residency: Corporate directors and organizers do not have to live in Texas. Directors are permitted to reside in foreign jurisdictions and to receive mail and notice there. The addresses of directors must be included in a corporation's Certificate of Formation. A business or post office box address can be used instead of a private residence.

All corporations in Texas must designate a registered agent and you must name your registered agent in your corporation's Certificate of Formation. A registered agent is the party responsible for receiving tax, legal, and government documents for your corporation during regular business hours. Your registered agent must live in or, if you use a business as your agent, have an office in Texas. 

Although your corporation cannot act as its own agent, a director or officer of the corporation can. In this case, their name and address will be recorded in public records as the registered agent. A common alternative is to use a registered agent service so your personal business address can remain private and you can avoid unwanted third-party solicitations.   Rocket Lawyer can help you designate your registered agent when you register your business with us.

You must also include the following in your Certificate of Formation in Texas:

• Your corporation's name and type.
• The number of shares the corporation is authorized to issue.
• The par value of each stock share, or a statement that shares will have no par value.
• The purpose for which your corporation has been formed.
• The effective date of the corporation's filing.
• The name and signature of the organizer confirming that the registered agent has consented to the appointment.
• The names of directors.

Texas does not require that corporations file annual reports with the Secretary of State. However, corporations are subject to a state franchise tax assessment and must file annual franchise tax reports, which include a Public Information Report or PIR. Your PIR lists the names of officers and directors at the time of the report's filing.

Nearly every state has standard processing times, but not all provide expedited processing for corporations. In Texas, there are a few fees that you may be charged when you register your business as a corporation. They include the following:

State fee: $308.10.

Rocket Lawyer filing fee: $0 $99.99.

• First filing FREE* for Rocket Legal+ members (excluding state fees).
• Get additional filings HALF OFF with Rocket Legal+.

Processing time: 2-3 weeks.

Note: The above state fees and processing times (including expedited processing fees and times) are provided as a summary and may or may not encompass various fees mandated by your state or local authorities. Your state may also change these fees and processing times over time and without notice. If you have questions, speak to a Rocket Lawyer Business Pro to understand the costs and processing times that apply to your specific filing.

Businesses can save up to $2,500 per year with a Rocket Legal+^™ membership. This calculation is based on total savings on an initial business registration and registered agent, trademark, and business tax filing services for Rocket Legal+ members (a total cost of $924.97) compared to Rocket Legal members (a total cost of $1,949.96). This is in addition to savings on the average cost of 5 hours for document preparation by a non-Rocket Lawyer network attorney at the average attorney hourly rate in the U.S. of $300 (an estimated cost of $1,500 when purchased without any form of Rocket Lawyer membership) compared to unlimited use of customizable business documents for both Rocket Legal+ and Rocket Legal members at no extra cost.

Yes – Texas corporations must pay taxes. Before you open our doors for business, apply to the IRS for an employer identification number, or EIN. This is similar to a Social Security number, but it's for businesses. All corporations in Texas that have or will have employees must obtain an EIN.

We have more information about the tax structures of Texas S-Corps and C-Corps.

Texas recommends that corporations create and maintain certain business records, such as Bylaws, as well as Minutes. We have more detailed information about Texas' requirements for Bylaws and Meeting Minutes. These documents can help protect your corporate status. Bylaws and Meeting Minutes also help shield owners, management, and organizers from personal liability for corporate activities and transactions.

We wish you success with your new Texas corporation! You can count on Rocket Lawyer for all the business, tax, and legal help you need at a price you can afford. 

If you are planning to operate in another state, you may need to register a corporation in that state. Rocket Lawyer can help you determine which states you should register in.

Other states may have their own rules for foreign corporations that originate in Texas or domestic corporations that also operate in Texas. Talk to an attorney to understand the legal and tax requirements for the state(s) in which you plan to operate.