Forming a Texas Business Corporation

Forming a Texas Business Corporation

Starting a Texas business corporation is not as complicated as one might imagine. Corporations are widely used as a business structure for small thriving entrepreneurs for many reasons. Corporations allow limited liability, a pooling of resources from many parties willing to invest, centralized management, and free transferability of ownership at any time. All these reasons make the corporation business model agreeable and a logical option for many entrepreneurs.

The forming of a corporation with legal assistance may be a smooth and efficient transition. There are a few requirements needed to form a corporation in Texas.

First, an individual must fill out specific requirements to complete their Articles of Incorporation’s, which are:

  1. Corporate Name
  2. Authorized shares
  3. Registered Agent
  4. Contact information (business address and number)
  5. Other miscellaneous terms and offers

After the Articles of Incorporation are completed, the individual must submit all paperwork to the Secretary of State. The Secretary of State will certify and return a copy to you, which will then be the Certificate of Formation. Once the Certificate of Formation has been received, an entrepreneur has an authorized corporation of record.

The Articles of Incorporation are basic documents to form the corporation and an individual should employ basic and specific terms required and desired in the Articles of Incorporation for more flexibility. The Articles of Incorporation basically places the public notice of its existence and authority.

The Bylaws of a corporation are the basic operating document. There are no formal filling requirements for the Bylaws. The Bylaws should be scrutinized by an experienced attorney as they govern the specific ways by which the corporation will be run. If there are multiple safe-guard provisions or limitations on power at an individual would like is corporation to be bound by then all of these should be placed into the Bylaws. The Bylaws of a corporation are easier to change than the Articles of Incorporation and that is why the Articles of Incorporation should be as flexible and broad in most cases as possible. The Articles of Incorporation are the governing law and will override the Bylaws. The Bylaws are comparable to a partnership agreement and both serve the same purpose.

In what venue should an individual create his corporation? The answer depends on what an individual wishes to do. Many young entrepreneurs wish to form corporations in the state to which their business is located. If an entrepreneur forms a corporation in another state or jurisdiction, they will be subject to those laws of that state and as well as the laws of the state of the principal office. For a start-up business, it might not be worth subjecting the business to two different laws if they are sued. Generally, absent state income tax issues, the best policy for a start-up corporation is to form a corporation in the same state that their business will be owned and operated.

Forming a Corporation is an important step in becoming a thriving business and it should be done with an experienced lawyer. A lawyer can ensure that the Articles of Incorporation and the Corporation Bylaws are created properly and address the stated needs of the owner while avoiding many more legal complications in the future.

 

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