As a Texas Corporate Attorney, I offer many services for small businesses, growing businesses, and entrepreneurs. While the LLC may be the “entity of choice” for many people recently, the corporation still has many benefits.
Among the services I offer, if you are looking to start a business and depending upon your choice of entity, I can help you create your Texas Corporation. Contact us today!
Benefits of a Texas Corporation:
Limit Personal Liability: shield your personal assets from business liabilities
Separate Legal Entity: also protection for Corporation’s assets
More Protection for Minority Shareholders: the Corporation typically provides more protection/voting rights for minority shareholders than the LLC and the Limited Partnership
Asset Protection Planning: one or several Corporations are frequently used in asset protection planning (sometimes in conjunction with other entities
Predictability and Appeal to Investors: Because Corporations are older, more rule-bound, and more traditional than LLCs, they are predictable for shareholders and hold a strong appeal for investors
… and more
When you hire your Texas Corporate Lawyer to prepare your business entity – in this case, a Texas Corporation – there are four main sets of documents that must be prepared. While it is possible to prepare some of these documents yourself, it will likely be necessary to retain a competent Texas Corporate Attorney to prepare a quality set of documents that “covers all the bases.” These three main sets of documents are:
Certificate of Incorporation
Organizational Resolutions (of different sorts)
Officer and Director Appointments, Consents, and Resolutions
Below, I will outline a few of the relevant areas that you will need to consider with regard to your Corporation. Some of these are questions that your San Antonio Corporate Attorney will be required to ask you before he or she is able to form your entity; others are simply matters that will behoove you to consider.
The Certificate of Incorporation
The Certificate of Incorporation must be filed with the Texas Secretary of State, including any Amendments, etc. The other documents referenced above (and others) need not be filed with the Texas Secretary of State, but do need to be prepared, executed, and kept in the Corporation’s minute book (and the events recited thereby, such as meetings, must, in fact, occur). The Texas Secretary of State publishes a simple, three-page version of the certificate of incorporation, accompanied by three pages of detailed instructions. This statutory form is the minimum required to form a Texas Corporation under the applicable legal requirements.
A skilled and qualified Texas Business Attorney can help you with preparing a certificate of formation for your Texas Corporation that will be more tailored and customized to your particular goals and circumstances.
Nominate a Registered Agent
You will need to appoint a registered agent to accept service of process for the Corporation. Because Corporations (like LLCs, Partnerships, and other entitites) are not physical bodies that can be found and served with process like natural persons, every entity, including a Corporation, is required to keep on file with the Texas Secretary of State’s office a designation of registered agent – i.e., the person who is designated and authorized to receive process on behalf of the Corporation or other entity.
The person you select as your Corporation’s registered agent should be someone reliable and someone you trust.
Names and Name Availability Searches
In the State of Texas (and in most other states), two entities cannot have the same name, or a confusingly-similar name. Accordingly, the Texas Secretary of State allows anyone to run a name availability search and reserve a name, each for a nominal fee (at present time, this fee is $1 per search). In addition, under Texas law, a Corporation must include in its name “Inc.,” “Corp.,” “Incorporated,” or another similar word to put customers and counterparties on clear notice that the entity is a Corporation and not an individual. This is similar to the requirement that that Limited Partnerships include in their names “Ltd.,” “Partners,” and that LLCs include “LLC.”
DBAs (Doing Business As)
Speaking of names, if you would like to do business under a different name than your Corporation’s formal registered name, you will want to file an assumed name certificate. These are sometimes known as “DBAs” (“doing business as”). They’re simply nicknames – not entities.
From time to time, people become very confused about the nature of DBAs. I prepared the attached video to attempt to clear up some of these common questions.
Unlike an LLC, a Corporation is required to have directors and officers. The directors serve in a fiduciary capacity for the shareholders, voting on certain major business decisions and appointing or removing the officers. The directors are referred to, in the aggregate, as a board of directors. The board of directors is required to hold meetings from time to time in order to conduct business. Directors are elected by shareholders at shareholder meetings (annual, plus one or more special meetings, per year). There are also certain, fundamental matters, where the shareholders are required to vote.
Officers, on the other hand, manage the day-to-day affairs of the corporation, in compliance with the general direction given from the board of directors. Some officer positions that you will want to appoint will be: chief executive officer, chief operating officer, secretary, treasurer, and potentially others.
Additionally, you should be aware that the individuals who you will nominate as directors and officers must consent to the appointment, and the appointment must be properly papered with resolutions and consents.
After considering the alternatives, you should inform your Texas Business Attorney of who you would like to serve as your Corporation’s directors and officers.
Under Texas law, entities are required to declare their purpose on the certificate of formation. If a Corporation attempts to undertake an action that is outside of its declared purpose, the action might be declared null and void, under the doctrine of ultra vires (literally “beyond the powers”.) Fortunately, Texas, like many other states, permits general purpose statements. If you would like to use a purpose clause other than a general purpose statement, we recommend that you discuss this with your Texas Business Lawyer to determine the best course of action.
A Texas Corporation also provides a basic level of privacy and anonymity – it makes it somewhat harder to determine ownership of assets (certainly not impossible! just a little harder). While this privacy and anonymity is less than that found in some other states, it may still be a consideration for some.
Texas Corporation Formation FAQs
Other Considerations + Conclusion
There are many more considerations that apply to the formation of your Texas Corporation that you will want to discuss. As a San Antonio business attorney, I counsel clients and new business owners on such matters on a weekly (sometimes daily) basis. Feel Free to contact me if you have any questions regarding the process of forming your Texas Corporation.
The attorney responsible for this site for compliance purposes is Ryan G. Reiffert.
Unless otherwise indicated, lawyers listed on this website are not certified by the Texas Board of Legal Specialization.