Houston Guide to Business and Corporate Formation
Houston Guide to Business and Corporate Formation
The geographical location of Houston Texas is just one of the factors that make the place very attractive and a hub for businesses to thrive. When one is starting a business, one has to consider some factors including the chances of the company surviving in the coming years, the market conditions, the availability of a workforce and liabilities. Houston is characterized by the presence of a workforce that is highly skilled, reasonable living costs, predictable regulatory environment and a lower and bearable tax burden. It is what makes it an attractive destination for people to set up businesses and establish a corporation. RunRex provides a guide to business and corporate formation in Houston, Texas.
Choose a name and establish the structure of your business or corporation
If you are creating a corporation, the name must contain the word “Incorporated,” “Company,” ”Corporation” or the abbreviation “Co.,”, “Inc.,” ”Corp.,” or “Ltd.” The name has to be unique and distinguishable from the names of other businesses that have already been established in the state. You can reserve a name for your business for up to 120 days with the Texas Secretary of State by filing a Name Reservation form.
Other than the name, ensure that you determine the proper legal structure for your business or corporation and file the same too as that is part of the legal requirements.
Prepare a Certificate of Formation and File it
For your business or corporation to be legally recognized by the city of Houston, Texas State and the country in general, one has to file a “Certificate of Formation For-Profit Corporation” with the Secretary of State. The form when submitted should include the name of the corporation you are establishing, the physical address, the address and the name of the agent to facilitate serving of the process. The business’s nature, the authorized number of shares the corporation can issue, the organizer’s name and physical address and the names and the addresses of members of the board of directors. One is, also, required to file an effective date of certificate online through the SOSDirect website and include them in the file. The filing for the certification comes at the cost of $300.
Appoint an Agent
It is a state requirement that every corporation in Texas should have an agent to facilitate the serving process. An agent is a person or an organization that is willing to be served with the legal papers on behalf of the organization if sued. The agent can be a resident of Texas or a business entity based either locally or in a foreign state but legally authorized to conduct business in the state. The agent has to have a valid official name and a street address in the State. They, also, have to act as the agent to the formed corporation.
Having a Corporate Records Book Set Up
The corporate records book is a book in which all necessary papers for your corporation lime meetings of shareholders and directors and stock certificates are kept. This records book bears all the critical information about your business and its operations and should be stored in a secured location in the business’s premises. You can get a corporate records kit from a supplier to offer you the same.
Internal Corporate Bylaws
Other than providing establishing the structure of the business, one of the additional requirements is that you establish the basic rules for your firm or corporation that will govern the operations. These internal laws are not to be filed to with the State as that is not a legal requirement. They are, however, very critical in business since they provide a clear guide of the operating rules for members and staff and help in proving the legitimacy of your business or corporation to banks, IRS, creditors, and others. Every company has its own unique house rules.
Comply with Tax and other regulatory requirements
Some of the conditions you have to comply with include:
EIN – This is the Employer Identification Number to be obtained from the federal government. You can apply for the same by applying online for free on the IRS website.
Business licenses – depending on where the business or corporation has its physical location, you may have to comply with the local business licenses requirements of that place.
S Corporation is filing – If for tax purposes, the business opts to elect S corporation status, you will have to submit form 2553 called “Election by a Small Business Corporation” after being signed by all shareholders. The same should be submitted before a 2-month, 15-day period after commencement of first tax year for the corporation elapses.
Business Employer requirements
Determine the employer requirements set by the federal and state government and comply fully with the same.
For foreign businesses or corporations that want to set up in Houston, they have to first register with the Secretary of State for Texas and appoint a registered agent with a physical location in Texas for service of process.
