How to Start a Texas S Corp in 2023

If you’re considering starting a business in Texas, setting up an S Corporation can be a wise choice. An S Corp is a type of corporation that offers both liability protection and pass-through taxation, making it an attractive option for small business owners.

As we approach 2024, there are several steps you need to take to start your texas s corp.

Firstly, you’ll need to decide on a name for your business and ensure that it’s available by conducting a name search with the Texas Secretary of State.

Next, you’ll need to file your Certificate of Formation with the state and obtain any necessary licenses or permits for your specific industry.

If you’ve already formed an LLC in texas and now want to switch to an S Corp, it’s important to follow specific steps and timelines under Texas law.

Before diving into the process of forming an S Corp in Texas, it’s important to note that a limited liability company (LLC) in Texas may also be a viable option for your business structure.

A key aspect of starting a Texas s corp is selecting a registered agent, which can be an individual or a texas LLC service provider. It’s important to choose a reliable and trustworthy agent who can handle legal filings and other important documentation on your behalf.

Additionally, it’s crucial to set up your company’s corporate governance structure and establish your shareholders’ rights and responsibilities.

In this article, we’ll guide you through the process of starting a Texas S Corp so that you can get your business up and running smoothly in the new year.

Choosing A Name For Your Business

Starting a Texas S Corp can be a complicated and overwhelming process, but it all starts with choosing the right name for your business.

The brainstorming process is crucial, as it sets the tone for your company’s brand and identity. Consider what you want your business to represent and what message you want to convey. Your name should also be easy to remember, pronounce, and spell.

When selecting a name, there are legal considerations as well. It’s important to ensure that the name you choose isn’t already taken by another business in Texas, or even nationally if you plan on expanding in the future.

You can check for availability through the Texas Secretary of State website or hire a professional service to help with the search process. Additionally, your chosen name should comply with Texas laws regarding corporate names and not infringe on any trademarks or copyrights.

Taking these legal precautions can save you from potential legal issues down the line.

Filing Your Certificate Of Formation

Choosing a name is an important first step in forming your Texas S corp.

Filing requirements need to be adhered to in order to obtain approval, so make sure you have all the necessary documentation.

Obtaining approval can be a lengthy process, so it’s important to make sure you’ve met all the requirements before submitting your application.

Choosing A Name

Choosing a name for your Texas S Corp is an important step in filing your Certificate of Formation.

Trademark considerations should be taken into account when brainstorming techniques to come up with the perfect name.

Before finalizing your choice, it’s important to conduct a trademark search to ensure that the name is not already in use by another company or entity.

Additionally, you’ll want to consider how the name will resonate with your target audience and whether it accurately reflects your brand identity.

By taking these factors into account, you can choose a name that will set your Texas S Corp up for success.

Filing Requirements

Now that you have chosen the perfect name for your Texas S Corp, it’s time to focus on the filing requirements for your Certificate of Formation.

The filing timeline for this document typically takes around 2-3 weeks, so be sure to plan accordingly.

You will also need to pay the required fees, which can vary depending on the type of business you are forming and other factors.

It’s important to follow all filing requirements carefully in order to ensure that your Texas S Corp is properly registered and ready to do business in the state.

Obtaining Approval

Once you have successfully filed your Certificate of Formation, the next step is obtaining approval from the state of Texas.

This process involves meeting partner requirements and ensuring that all tax implications are properly addressed.

It’s important to note that approval may take some time, so it’s best to be patient and prepare all necessary documents beforehand.

Once your Texas S Corp is approved, you can focus on growing and expanding your business in the state.

Obtaining The Necessary Licenses And Permits

Now that you have filed your Certificate of Formation, it’s time to move on to the next step in the Texas S Corp formation process: regulatory compliance and permitting requirements.

This step is crucial as failure to obtain the necessary licenses and permits can result in fines, legal action, and even the dissolution of your business.

The first thing you need to do is research what licenses and permits are required for your specific industry and location. You can start by checking with the Texas Secretary of State’s office and the Texas Comptroller of Public Accounts.

In addition, you may need to apply for a tax ID number, register for state taxes, and obtain any necessary professional licenses.

It’s important to ensure that all regulatory compliance and permitting requirements are met before starting operations to avoid any legal issues down the line.

Establishing Your Corporate Governance Structure

Let’s talk about choosing a board of directors and establishing corporate bylaws- two key elements of establishing a corporate governance structure.

We’ll need to decide who’ll be on the board and how the bylaws will be drafted.

Choosing A Board Of Directors

When it comes to establishing your corporate governance structure, one important aspect to consider is choosing a board of directors.

Board member qualifications should be carefully considered to ensure they have the necessary experience and expertise to guide your company’s strategic direction.

Additionally, it’s important to determine board member compensation in order to attract top talent while still being financially responsible.

By selecting a strong group of individuals with diverse backgrounds and skill sets, your Texas S Corp can benefit from their collective knowledge and experience as you navigate the business landscape in 2024.

Establishing Corporate Bylaws

Now that we have discussed the importance of selecting a board of directors, let’s move on to another crucial aspect of establishing your corporate governance structure: writing policies and shareholder agreements.

Your Texas S Corp’s bylaws are essentially its operating manual, outlining how the company will be run and what rules will govern its operations.

This includes details such as how decisions will be made, how shares will be issued and transferred, and what happens if a shareholder wants to sell their stake in the company.

By establishing clear policies and agreements from the outset, you can help ensure that everyone involved understands their rights and responsibilities, reducing the risk of disputes or other issues down the line.

Defining Shareholder Rights And Responsibilities

When forming a Texas S corporation, it is essential to define the rights and responsibilities of shareholders. Shareholders are the owners of the corporation and hold a portion of the company’s stock. As such, they have specific rights and responsibilities that must be outlined in the corporation’s bylaws.

One crucial right of shareholders is voting power. Shareholders have the power to vote on critical decisions related to the corporation, such as electing board members, approving mergers or acquisitions, or amending the bylaws. The number of votes each shareholder has is typically proportional to their ownership percentage.

Another important responsibility of shareholders is dividend distribution. Dividends are payments made to shareholders from the corporation’s profits. In an S corporation, profits and losses pass through to the shareholders’ personal tax returns, so dividend distribution can impact their tax liability.

By defining these rights and responsibilities in advance, shareholders will have a clear understanding of their role in the corporation and how they can participate in its success. When establishing a Texas S corporation, it is important to ensure that all shareholder rights and responsibilities are defined clearly and unambiguously in writing. This includes outlining voting power, dividend distribution policies, and any other pertinent information relevant to shareholder participation within the company.

Clear communication with shareholders can help prevent misunderstandings down the road and foster a more productive working relationship between investors and management alike. As such, companies should take adequate time during formation to develop comprehensive bylaws that outline these key provisions accurately while also reviewing them regularly for updates as needed over time.


Starting a Texas S Corp in 2024 can be an exciting and rewarding experience, but it requires careful planning and attention to detail.

By following the steps outlined in this article, you can ensure that your business is set up for success.

Remember to:

– Choose a name that accurately reflects your brand and values

– File your Certificate of Formation with the state of Texas

– Obtain any necessary licenses and permits

– Establish your corporate governance structure

– Define shareholder rights and responsibilities

With these key elements in place, you’ll be well on your way to building a thriving S Corp that can withstand the test of time.

Good luck on your entrepreneurial journey!

If you’re starting an LLC for the first time in 2024, it may be helpful to work with a LLCPilot who can guide you

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