Foreign Corporation
in Texas

1. Do I need to register my business in Texas?

Generally, yes. However, there are a few types of business activities that do not qualify as ‘transacting business’ in Texas and would not require you to register with the state. The Texas statutes do not explicitly define transacting business, but there are a couple of ways to determine whether your corporation is technically engaging in business interactions.

Texas BOC § 9.251 lists activities that do not qualify as transacting business. These activities include maintaining a bank account, defending or settling a lawsuit, holding a member or shareholder meeting, or conducting a one-time business transaction that’s completed within 30 days.

Here’s an easy way to think of it: if your foreign corporation has an employee, office or warehouse in Texas, or is otherwise pursuing one of its business purposes here in the state, then it is transacting business in Texas.

Tips:

• Owning or renting real estate in Texas gives you a physical presence here in the state, and you’ll likely need to register your business.
• Making online sales in Texas (from another state) generally would not require you to register your business—especially if these sales are the only activities your business conducts in Texas.

2. How much are the Texas foreign corporation registration fees?

The Application for Registration for a Foreign For-Profit Corporation comes with a statutory fee of $750 (BOC § 4.152). Fees paid by credit card have an added convenience fee of 2.7 percent.

The fee is high, but operating in Texas without first registering with the TX SOS will cost you more in the long run. The penalties for delinquency range from significant late fees to being barred from transacting business in Texas.

3. What if I’ve already started transacting business in Texas?

Luckily, foreign entities (including corporations) are allowed a registration grace period of 90 days after they begin conducting business in Texas. Corporations that have been transacting business in the state for over 90 days are subject to a late filing fee, per section section 9.054 of the Texas Business Organizations Code.

The total late fee is set by the Texas Secretary of State’s office, at their discretion. As a rule, it is calculated by multiplying the $750 registration fee by each full or partial year of delinquency. For example, a corporation that had been operating in Texas for 3 years (or 2 years and 1 month) prior to registration would owe a late fee of $2250. An unregistered corporation that had been doing business in Texas for 91 days would owe a late fee of $750.

Foreign corporations that register after the deadline may also be required to pay a civil penalty equal to the total taxes and fees that they would have owed, if they had registered when first required.

4. What information do I need to include in my Application for Registration?

In order to process your filing, the Secretary of State will ask for some basic information about your existing corporation, including:

1. Your corporation’s full legal name Keep in mind that your current corporate name may not be available across state lines. There are a few simple ways to make sure your business name is not already in use in Texas. You can do a preliminary name availability check through SOSDirect—but note that there is a $1 fee per name searched. You can also email the Secretary of State’s clerks at corpinfo@sos.texas.gov, or call (512) 463-5555 to inquire about your business name.
2. Your federal Tax ID number Your corporation's EIN (or FEIN) is a 9-digit number that the IRS uses to identify your business for tax purposes. The Texas Comptroller of Public Accounts will need this number to create your business tax account. If your corporation does not yet have an EIN, note this fact on your application. You can apply for an EIN through the IRS website, or add our EIN service for you when you sign up for our foreign registration.
3. Jurisdictional information You’ll need to list your corporation’s home state, as well as its date of incorporation.
4. Your principal address This is your primary business location. When we file your application, we list our Austin office address here (so don’t worry if you don’t have a corporate office in Texas yet).
5. Your Texas registered agent’s name and address You can hire an organization or an individual Texas resident to serve this role. The important thing is that they have a physical address in Texas where they will be present during normal business hours. When we register your foreign corporation in Texas, we automatically list ourselves as your Texas registered agent. The first month is included in the price of our foreign registration package, and maintaining service is just $7.99 a month after that.
6. Governing person You’ll need to list the name and address of a minimum of one director of your corporation. Generally, this is the person who is authorized to manage business operations. To prevent anyone’s home address from becoming part of the Texas public record, we list our address for every director and officer of your corporation.

5. Do I need to provide a Certificate of Existence from my Corporations home state?

Nope! The State of Texas does not require foreign entities to include a Certificate of Existence (also known as a Certificate of Good Standing) in their Application for Registration.

6. Do foreign Corporations in Texas have annual fees?

No again! Texas is one of the few states that does not require for-profit entities to pay annual maintenance/reporting fees. Since these fees can sometimes be hundreds of dollars (depending on where you’re doing business), this is great news for Texas corporations.

You do need to file a Public Information Report (PIR) with the Texas Comptroller annually to keep your foreign corporation in good standing. The PIR is connected to the Texas Franchise Tax report (which we go over in a bit more detail below). Fortunately, there is no flat fee for filing the Franchise Tax Report—or the Public Information Report. As your Texas registered agent, we send you multiple reminders to let you know the Texas Franchise Tax deadline is approaching.

7. What do I need to know about Texas business taxes?

For favorable corporate tax treatment, it doesn’t get much better than Texas. The state does not impose a net income tax on its corporate entities, and since there’s no personal income tax here either, any shareholders located in Texas will be able to keep more of their dividends. Here are the main state taxes you should be aware of.

• Texas Franchise Tax The Texas Franchise Tax is essentially a “privilege” tax that you pay for the opportunity to do business in Texas. Every for-profit business organization in Texas, whether foreign or domestic, is subject to the Texas Franchise Tax. The current no-tax-due threshold is $1,230,000, so if your corporate revenues are under this amount your business will not owe any franchise tax. However, you must still file a franchise tax report by May 15 each year. For specifics, check out the Texas Comptroller’s Texas Franchise Tax page.
• Sales Tax If your business provides services or sells tangible goods, you’re required to apply for a sales tax permit. Without this permit, you cannot legally withhold sales tax. To find out if your foreign entity is required to collect sales tax in Texas, visit the Texas Comptroller’s sales tax requirements page. You can apply for a sales tax permit online. Sales tax permits generally take 2-3 weeks to arrive.