Formation of Texas Entities FAQs

The answers to our Frequently Asked Questions are provided for informational purposes and are not intended to provide legal advice or to substitute for the advice of an attorney. If you have specific legal questions, consult your attorney.

• Before Formation
• Name Issues
• After Formation
• "Nonprofit" LLCs
• Series LLCs
• Limited liability partnerships (LLPs) and limited liability limited partnerships (LLLPs)
• Social Purposes
• Public Benefit Corporations

Before Formation

1. What type of entity should I form?
2. Can I file a certificate of formation online?
3. How do I form a minority-owned business?
4. Do you have to be a U.S. citizen or a U.S. resident to incorporate and/or own a corporation in Texas?
5. Can a person younger than 18 be a director, officer, or owner of a business entity in Texas?
6. What is a registered agent? What are the agent's duties? Where may a registered office be located? Can the Secretary of State be the registered agent of a corporation, limited liability company, or limited partnership?
7. Do I need to publish a notice before incorporating a business?
8. What are the differences between a corporation, a limited liability company (LLC), a limited partnership (LP), a limited liability partnership (LLP), and a limited liability limited partnership (LLLP)? What are the benefits of forming each of these entity types?
9. Am I required to form a professional entity?
10. Who can form a professional association?
11. How do I form a "C" corporation, an "S" corporation, or a "501(c)(3)" corporation?
12. What is a close corporation? What are the benefits of forming a close corporation?
13. Can one person be the sole shareholder, director, and officer of a corporation?
14. Does a corporation have to issue stock? What is par value? How do you determine the par value of the corporation's stock? Is there a minimum or maximum value for corporate stock?
15. What is the difference between a member and a manager of an LLC? Which should I choose on my certificate of formation?
16. Are there restrictions on who can be an owner, governing person, or officer of a Texas professional entity?

What type of entity should I form?

Can I file a certificate of formation online?

How do I form a minority-owned business?

Do you have to be a U.S. citizen, U.S. resident, or a Texas resident to form and/or own a business entity in Texas?

Can a person younger than 18 be a director, officer, or owner of a business entity in Texas?

What is a registered agent? What are the agent's duties? Where may a registered office be located? Can the secretary of state be the registered agent of a corporation, limited liability company, or limited partnership?

Do I need to publish a notice before incorporating a business?

What are the differences between a corporation, a limited liability company (LLC), a limited partnership (LP), a limited liability partnership (LLP), and a limited liability limited partnership (LLLP)? What are the benefits of forming each of these entity types?

Am I required to form a professional entity?

Who can form a professional association?

How do I form a "C" corporation, an "S" corporation, or a "501(c)(3)" corporation?

What is a close corporation? What are the benefits of forming a close corporation?

Can one person be the sole shareholder, director, and officer of a corporation?

Does a corporation have to issue stock? What is par value? How do you determine the par value of the corporation's stock? Is there a minimum or maximum value for corporate stock?

What is the difference between a member and a manager of an LLC? Which management structure should I choose on my certificate of formation?

Are there restrictions on who can be an owner, governing person, or officer of a Texas professional entity?

• "Professional individual" means an individual who is licensed to provide the same professional service as is rendered by that professional entity. BOC §301.003(5).
• "Professional organization" means a person other than an individual that renders the same professional service as the professional entity only through owners, members, managerial officials, employees, or agents, each of whom is a professional individual or professional organization. BOC §301.003(7).

Table Showing Requirements for Owners, Governing Persons, and Officers for Texas Professional Entities.

Name Issues

1. Will filing a certificate of formation keep others from using my company name?
2. Can I register a trade name?
3. How can I protect a trade name nationwide?
4. Can a corporate general partner of an LP have the same name as the limited partnership, except for the organizational identifier, i.e., "Co.," "Corp.," or "Inc."?
5. How to Obtain a Letter of No Objection from the Banking Commissioner in Order to Use Certain Words in a Proposed Business Title
6. How to obtain approval from the Texas Higher Education Coordinating Board (THECB) for use of the terms "college," "university," "school of medicine," "medical school," "health science center," "school of law," "law school," or "law center" in an entity name.
7. Are there limitations on the use of the terms “engineer”, “engineering” or any variation thereof in filing entity names?

Will filing a certificate of formation keep others from using my company name?

Can I register a trade name?

How can I protect a trade name nationwide?

Can a corporate general partner of an LP have the same name as the limited partnership, except for the organizational identifier, i.e., "Co.," "Corp.," or "Inc."?

How to Obtain a Letter of No Objection from the Banking Commissioner in Order to Use Certain Words in a Proposed Business Title

• Bank
• Banc
• Bank and Trust
• Trust Persons seeking the issuance of a letter of no objection should submit a letter containing the following information to the Banking Department's Corporate Activities Division at the address appearing below:
  1. A detailed letter describing in plain language:
     1. the exact name they are seeking to use and the primary business activities of the entity in Texas; and
     2. why use of the term "bank," "banc," "trust," etc., is important to use in the name and yet is not deceptive to the public; and
     3. the license status on the entity either: (1) indicating the status of any license(s) that the corporation must obtain in order to do business in this state, or (2) representing that no license or authorization is necessary to conduct that business in this state.
  2. A commitment addressed to the Commissioner from management of the entity, or an agent authorized to bind the entity, that the entity will not advertise or hold out to the public in any manner that it is a state or national bank, trust company or
  3. A full explanation of any affiliation with a bank, bank holding company, trust company, or other financial institution;
  4. Evidence of any qualification to do business in other states; and,
  5. $100 filing fee.
  6. If the entity owns or operates a web site, that contains the words "bank," "banc," "trust etc., management of the entity, or an agent authorized to bind the entity, must submit a commitment that the entity will prominently display the following disclaimer on its homepage "(name of entity) is not a chartered bank or trust company, or depository institution. It is not authorized to accept deposits or trust accounts and is not licensed or regulated by any state or federal banking authority."
     

The Banking Commissioner will review the proposed name and use of terms, along with other material submitted as a whole in order to make a decision. Submission of the $100 filing fee is required for consideration, but does not constitute guarantee of approval of the proposed name. Generally, the Commissioner will grant a request if, in context, the term is not misleading and is used (1) to indicate a permissible and authorized affiliation with a bank or trust company; (2) by an actual trust or entity controlled by the trust for the purpose of conducting its own business (other than the business of providing banking or fiduciary services to the public); (3) by a vendor of services or products to financial institutions in a manner and context that fairly describes its business; or (4) as a term of art in a manner and context that clearly invokes an established secondary meaning. If your request falls outside these parameters, the chance of approval is slim.

Requests should be addressed to:

Corporate Activities Division
Texas Department of Banking
2601 North Lamar Blvd.
Austin, TX 78705-4294

How to obtain approval from the Texas Higher Education Coordinating Board (THECB) for use of the terms "college," "university," "school of medicine," "medical school," "health science center," "school of law," "law school," or "law center" in an entity name.

1. Name of the entity as proposed to be filed with the secretary of state.
2. A brief statement of the business of the entity. One or two sentences should be sufficient; do not cut and paste boilerplate language from the certificate of formation.
3. The following disclaimer, providing it is true: "The entity is not now nor will be a private institution of higher education or an educational or training establishment."
   

If you wish to have your response faxed to you by THECB, in the body of the letter request a fax and provide your fax number. The request letter must contain the address and telephone number of the entity or person requesting the authorization (business letterhead is acceptable). The letter may be sent by the entity requesting the authorization or an agent representing the entity (attorney or other entity authorized to represent the entity to facilitate the approval)

Please mail or fax this information to:

Academic Affairs and Research Division
Texas Higher Education Coordinating Board
P.O. Box 12788
Austin, TX 78711
512-427-6168 (fax)

A copy of the approval letter from THECB should be submitted with your certificate of formation or other filing instrument to the secretary of state.

Are there limitations on the use of the terms “engineer”, “engineering” or any variation thereof in filing entity names?

1. is registered with the Texas Board of Professional Engineers and Land Surveyors (TBPELS),
2. employs a professional engineer, licensed by TBPELS in accordance with the Texas Engineering Practice Act, on a full-time basis [see Section 1001.004(c) and 1001.003 of the Texas Engineering Practice Act (PDF)], and
3. is actively engaged in the practice of engineering.

After Formation

1. Do I have to file an annual report with the secretary of state?
2. Where can I get a corporate seal, stock certificates, and a minute book?
3. Now that I've formed my corporation, does the secretary of state issue my federal employer identification number (EIN or FEIN)?
4. How much franchise tax must an entity pay?
5. Can I file my entity's bylaws, company agreement or other internal governing documents with the secretary of state?
6. Why didn't I receive a file-stamped copy of my certificate of formation?
7. I'm ready to issue shares in my corporation or ownership interests in my limited liability company or limited partnership. Do I need to file something with secretary of state? Do I need to register the shares or ownership interests as securities?

Do I have to file an annual report with the secretary of state?

• A Texas partnership registered as a Texas limited liability partnership (LLP) is required to file an annual report with the secretary of state no later than June 1 of each year following the calendar year in which the application for registration takes effect. A notice to file the LLP annual report is sent by the secretary of state no later than March 31 of the current report year.
• Nonprofit corporations (Texas and foreign) are required to file a periodic report with the secretary of state upon receiving notice, but not more than once every four years. The secretary of state will send notice to the nonprofit corporation at the registered agent address on file.
• Certain limited partnerships (Texas and foreign) that are not subject to state franchise tax are required to file a periodic report with the secretary of state upon receiving notice, but not more than once every four years. The secretary of state will send notice to a limited partnership at the registered agent address on file.

For-profit and professional corporations, professional associations, LLCs, and certain limited partnerships (whether Texas or foreign) that are subject to state franchise tax laws file annually with the Comptroller of Public Accounts. As part of the annual franchise tax reports, these taxable entities file a Public Information Report (PIR). The PIR lists the names and addresses of persons who are officers/directors and managers at the time the report is filed.

Where can I get a corporate seal, stock certificates, and a minute book?

Now that I've formed my corporation, does the secretary of state issue my federal employer identification number (EIN or FEIN)?

How much franchise tax must an entity pay?

Can I file my entity's bylaws, company agreement or other internal governing documents with the secretary of state?

Why didn't I receive a file-stamped copy of my certificate of formation?

I'm ready to issue shares in my corporation or ownership interests in my limited liability company or limited partnership. Do I need to file something with secretary of state? Do I need to register the shares or ownership interests as securities?

"Nonprofit" LLCs

1. Can I form a nonprofit LLC in Texas?
   
2. Will an LLC with a nonprofit purpose be tax-exempt?
   
3. Does the secretary of state have a form I can use to form an LLC with a nonprofit purpose?
   
4. Which filing fees apply to my LLC? Do I pay the filing fees for a nonprofit corporation?

Can I form a nonprofit LLC in Texas?

Will an LLC with a nonprofit purpose be tax-exempt?

Does the secretary of state have a form I can use to form an LLC with a nonprofit purpose?

If I form an LLC with a nonprofit purpose which filing fees apply to my LLC? Do I pay the filing fees for a nonprofit corporation?

Series LLCs

1. What is a series LLC? Should I form a series LLC?
2. How do I form a series LLC in Texas?
3. What is a protected series? How do I form a protected series?
4. What is a registered series? How do I form a registered series?
5. What are the differences between a protected series and a registered series?
6. Should I form a protected series or a registered series?
7. If a protected series or registered series does business under a specific name, should an assumed name certificate be filed?
8. Can I register my out-of-state series LLC to transact business in Texas?
9. If I do business in another state, how do I register my series LLC to transact business?

What is a series LLC? Should I form a series LLC?

How do I form a series LLC in Texas?

What is a protected series? How do I form a protected series?

What is a registered series? How do I form a registered series?

• The name of the existing domestic series LLC;
• The name of the registered series, which must:
  • Meet the entity name availability standards in chapter 5 of the Texas Business Organizations Code;
  • Contain the name of the series LLC; and
  • Contain the phrase “registered series” or the abbreviations “R.S.” or “RS”.
  • You may create a registered series with the name AB Diversified LLC-R.S. Phase IA Dallas.
  • You may create a registered series with the name 101 Main Properties, a registered series of AB Diversified LLC.
  • You may not create a registered series with the name Phase IA Dallas, R.S.
  • You may not create a registered series with the name 101 Main Properties, a series of AB Diversified LLC.

  You should consult with your private attorney if you are considering forming a registered series.

  What are the differences between a protected series and a registered series?

  Should I form a protected series or a registered series?

  If a protected series or registered series does business under a specific name, should an assumed name certificate be filed?

  Can I register my out-of-state series LLC to transact business in Texas?

  If I do business in another state, how do I register my series LLC to transact business?

  Limited liability partnerships (LLPs) and limited liability limited partnerships (LLLPs)

  1. What is a Limited Liability Partnership (LLP)?
  2. What is the difference between a general partnership, a limited partnership (LP), a limited liability partnership (LLP), and a limited liability limited partnership (LLLP)?
  3. What are the benefits of registering an existing partnership as an LLP?
  4. Why did the secretary of state reject my application to register an LLP?
  5. Are LLPs exempt from franchise taxes?
  6. How do I form an LLP?
  7. How do I convert my entity into an LLP?
  8. I already created a general partnership or a limited partnership (LP). How does my partnership register as an LLP? What does the partnership need to do to maintain its LLP registration with the secretary of state?
  9. How long does my partnership's LLP registration last?
  10. My LLP registration expired. May I renew it?
  11. Does an out-of-state LLP have to register with the secretary of state before it transacts business in Texas?
  12. Does an LLP need to inform the secretary of state that the underlying partnership has been dissolved or otherwise voluntarily terminated its existence?

  What is a Limited Liability Partnership (LLP)?

  What is the difference between a general partnership, a limited partnership (LP), a limited liability partnership (LLP), and a limited liability limited partnership (LLLP)?

  What are the benefits of registering an existing partnership as an LLP?

  Why did the secretary of state reject my application to register an LLP?

  Are LLPs exempt from franchise tax?

  How do I form an LLP?

  How do I convert my entity into an LLP?

  I already created a general partnership or a limited partnership (LP). How does my partnership register as an LLP? What does the partnership need to do to maintain its LLP registration with the secretary of state?

  How long does my partnership's LLP registration last?

  My LLP registration expired. May I renew it?

  Does an out-of-state LLP have to register with the secretary of state before it transacts business in Texas?

  Does an LLP need to inform the secretary of state that the underlying partnership has been dissolved or voluntarily terminated its existence?

  Social Purposes

  May a for-profit corporation include a social purpose in its certificate of formation?

  Public Benefit Corporations

  1. What is a Public Benefit Corporation?
  2. How do I form a Public Benefit Corporation?
  3. What are the requirements for management of a Public Benefit Corporation?
  4. I am currently a for-profit corporation, can I convert to a public benefit corporation?

  What is a Public Benefit Corporation?

  How do I form a Public Benefit Corporation?

  What are the requirements for management of a Public Benefit Corporation?

  I am currently a for-profit corporation, can I convert to a public benefit corporation?

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