FAQs
How to Create an S Corp in Texas?
To legally form an S Corporation in Texas, a number of steps have to be followed through. Here's a step-by-step guide on how to form an S Corp in Texas. The steps are as follows:
- Choose a Business Name:
The business name should be unique and follow the naming guidelines in Texas. Check its availability using the Texas Secretary of State database.
- File a Certificate of Formation:
File Form 201, the Certificate of Formation, with the Texas Secretary of State. The form calls for basic information about your business, such as business name, address, registered agent's information, and business purpose. A filing fee is roughly $300.
- Register an Agent:
Identify a registered agent who shall serve the legal process on behalf of the business. This person needs a physical address in Texas.
- Draft Corporate Bylaws:
Draft the bylaws: These describe the internal management of your company, including the responsibilities of shareholders, voting procedures, and operational principles.
- Obtain an EIN from the IRS:
Apply for an Employer Identification Number (EIN) through the IRS website. This number is required for tax filings, hiring employees, and opening a business bank account.
- Elect S Corp Status:
File IRS Form 2553 for the election of S Corp. tax status within 75 days from the date of formation or the beginning of the first tax year in which it wants to be treated as an S Corp.
- Follow Texas Tax Requirements:
To obtain state tax registration requirements for franchise tax and sales tax permits, if applicable, register with the Texas Comptroller.
- Initial Board Meeting:
The initial board meeting should be held, where the shareholders will need to approve bylaws, issue shares, and record minutes.
By following such steps, one can efficiently create an S Corp in Texas and stay compliant both legally and operationally.