When Do You Need To Register A Business In Texas

Strange or Out-of-State Entities

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Notice: Businesses performing disaster- or emergency-related work: Certain out-of-state businesses who enter the land to perform disaster- or emergency-related piece of work in this state during a disaster response catamenia are exempt from the requirement to register every bit a strange entity pursuant to Chapter 112 of the Business concern & Commerce Lawmaking. If your out-of-state business concern is exempt, you may choose to file a notification statement with the secretary of state. Delight come across Course 3901 (PDF) for out-of-country businesses and Grade 3902 (PDF) for affiliates of in-country businesses. All exemptions under Chapter 112 of the Business organisation & Commerce Code cease at the end of the disaster response period. The secretarial assistant of country cannot advise yous regarding whether your business qualifies for an exemption under Chapter 112.

For data regarding state tax issues for out-of-land businesses assisting with recovery, please see the Texas Comptroller of Public Accounts website.

Whether an entity is domestic or strange does non depend on the location of the principal concern office. Instead, it depends on where the entity was formed and what law governs its internal affairs. If an organization was formed under, and the internal affairs are governed by, the laws of a jurisdiction other than Texas, the organization is a "strange entity." We sometimes refer to foreign entities as out-of-state entities to reinforce the concept that entities formed in other U.Due south. states are foreign entities, as well every bit entities formed outside of the U.s..

Registration Requirements

Section nine.001 of the Texas Business Organizations Code ("BOC") requires the post-obit types of foreign entities to file an awarding for registration with the Texas secretary of state if the entity is "transacting business concern" in Texas:

corporations;
limited partnerships;
limited liability partnerships;
limited liability companies;
business organisation trusts;
real estate investment trusts;
cooperatives;
public or private limited companies;
any other strange entity that, if formed in Texas, would be formed equally a corporation, limited partnership, limited liability company, professional association, cooperative, or real estate investment trust; and
whatsoever other foreign entity that affords limited liability under the law of its jurisdiction of formation for whatsoever owner or member.

Other laws or circumstances may also be reasons for registration.

Section 201.102 of the Texas Finance Code requires an out-of-state fiscal establishment to annals with the secretary of state before opening a branch or other role in Texas.
It has been the do of the Texas Section of Insurance to refuse a non-resident agency license for a foreign entity unless the entity has registered with the secretary of state. HB 2503, passed in the 2011 Legislative Session, removes this requirement effective 09/01/2011.
Some banks will not practise business with an unregistered strange entity, despite that BOC § ix.251 states that maintaining a banking company account in this country is non, in and of itself, transacting business in Texas.

Name Requirements

A strange entity registering to transact business in Texas must register under a name that:

contains a recognized term of organization for the entity type every bit listed in sections v.054 to v.059 of the BOC;
does not contain any word or phrase that indicates or implies that the entity is engaged in a business that the entity is not authorized to pursue; and
is available in Texas, that is, is distinguishable in the records of the secretarial assistant of state from the name of whatsoever existing domestic or foreign filing entity, or any name reservation or registration filed with the secretary of land.

View our proper name availability rules.

You may request a preliminary name availability determination past calling (512) 463-5555 or by email.

Registration Under a Fictitious Proper name

If the entity'south legal name does non come across the higher up requirements the entity must register in Texas under an assumed name (d/b/a). This special type of assumed name is oft referred to as a fictitious proper noun.

A fictitious name is a special type of assumed proper noun because, unlike other assumed names, a fictitious proper name must meet the above requirements.
A foreign entity that registers to transact business under a fictitious proper name is stating that the entity will transact business organization in Texas under that name. BOC § 9.004.
A strange entity registering under a fictitious name must file causeless name certificates with the secretary of state (Course 503 (Word 125kb, PDF 74kb)) and the appropriate county or counties.

Where to file assumed proper name certificates.

The proper noun requirements for registration to transact business in Texas do non touch trademark or other intellectual property rights. A document of registration or causeless name certificate does not authorize use of the name in violation of another person's legal rights and does not, in and of itself, offer any trademark protection. Run across Trademark FAQs for more information.

Determining Whether to Register

Texas statutes exercise non define "transacting business organisation." Helpful resources to decide whether an entity'south activities in Texas crave registration include:

BOC § nine.251, which lists activities that are non considered transacting business concern;
Case law from Texas and other U.Southward. jurisdictions regarding foreign qualification;
Texas Attorney General Opinions; and
Private attorneys familiar with corporate law.

Another helpful resource may be the comptroller's Texas Nexus Questionnaire (PDF), used past the comptroller to determine if a foreign entity is "doing business" in Texas for tax purposes.

The threshold level of action required for a revenue enhancement nexus is generally lower than the threshold level of activity that requires registration with the secretary of state.
Therefore, if the Texas Nexus Questionnaire results in a determination of "no nexus," the entity is probably not transacting business in Texas either.
On the other hand, if the Texas Nexus Questionnaire results in a decision of "nexus," the entity should consider registration.
Remember that, for registration with the secretarial assistant of country, the Texas Nexus Questionnaire tin can be a useful tool, but does not requite a definitive answer.

Don't forget that even if y'all determine that your entity is not transacting business in Texas under the BOC, you lot may need to register under other law, such every bit the Insurance or Finance Codes.

No member of the secretary of country staff can decide whether an entity is transacting business in Texas or needs to file an awarding for registration. Determining whether to register is a business determination that may have tax consequences, raise legal issues, or affect licensing from another agency or state board.

Penalties for Not Registering

Failure to register can result in penalties, including:

Inability to maintain an action, suit, or proceeding in a Texas court until registration;
Injunction from transacting business in Texas;
Civil penalty equal to all fees and taxes that would have been imposed if the entity had registered when first required; and
Tardily filing fees owed to the secretary of state by an entity registering more than 90 days later on first transacting business organization in Texas.

How Do I Calculate My Late Filing Fees?

Tardily filing fees are determined by multiplying the number of whole or partial calendar years that have passed since the date the entity initially transacted business organisation in Texas times the registration fee.

For nonprofit corporations and cooperative associations, the registration fee is $25.
For all other entities, the registration fee is $750.
Example: A for-profit corporation that has been transacting business in Texas since June i, 2007 would owe $3,000 in late filing fees if registering on Dec 1, 2010. The total fees due with the awarding for registration would therefore exist $3,750.

(The following entity types are not charged late fees for years prior to 2006: professional corporations, professional person associations, business trusts, existent estate investment trusts, and other foreign entities not required to register under prior law.)

Try Our Late Fees Calculator! (XLS, 63kb)

Limitation of Late Fees

If your entity will be assessed more five years of tardily penalties, and you meet certain criteria, you may request that the secretary of state limit the fees yous owe. The secretary of state will cap the late fees at 5 years for an entity that (1) submits testify of an active right to transact business with the comptroller's office; and (2) certifies to the truth of the post-obit statements:

The entity has satisfied all of its franchise, sales, and other taxation obligations with the Texas Comptroller of Public Accounts. Attach a screen print from the comptroller'due south office showing the entity has a condition of "agile correct to transact business".
The entity does not owe any other taxes, fees, or assessments that are administered by any other Texas land agency.
The entity has not received a alphabetic character from the Office of the Secretary of State regarding the need to submit an application for registration, or if it has received such a alphabetic character, it has responded to the secretarial assistant of country within 45 days.

The full general policy of the secretary of country is that we exercise not waive late fees for foreign entities, bated from the five year fee cap, if applicable. If an entity believes it has unique circumstances and wishes to appeal the assessment of tardily fees, the entreatment shall be in writing and may be sent by email, fax to 512-475-2781 or mail to P.O. Box 13697, Austin, TX 78711-3697, Attn: Corporations Attorneys.

Special Issues for Limited Liability Limited Partnerships (LLLPs)

A foreign limited liability limited partnership transacting business in Texas must utilise for 2 certificates of registration. An LLLP transacting business organisation in Texas must register as both a limited partnership and as a limited liability partnership.

Form 306 (Give-and-take 167kb, PDF 126kb) – Limited Partnership Awarding for Registration
Form 307 (Word 115kb, PDF 67kb) – Limited Liability Partnership Awarding for Registration

Other Issues for Strange Entities in Texas

Texas Taxes

If an entity has failed to file franchise tax reports and/or pay franchise taxes, information technology is invited to contact the comptroller to make up one's mind if the entity qualifies to enter into a Voluntary Disclosure Agreement.
Overview of Taxes Nerveless past the Texas Comptroller of Public Accounts
- Sales Revenue enhancement
- Franchise Taxation
Unemployment Tax Collected by the Texas Workforce Commission

Permits and Licenses

At that place is no general business license in Texas; however, depending upon the type of business the entity engages in, additional licensing requirements from other Texas agencies might use.

Texas Department of Licensing and Regulation
Find Business Licenses & Permits (SBA.gov)
Historically Underutilized Business Programme
Texas Authorities Portal

Employer Issues

Texas Workforce Commission: Information on requirements when you take Texas employees.
Texas Section of Insurance: Information about the Texas workers' compensation system.
Texas Attorney General Employer Information Center: Data virtually employer new hire and termination reporting requirements.

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