Top FAQs for Setting Up a Corporation

If you're considering forming a corporation, it's essential to understand the key aspects and answer the most common corporation FAQs in Houston, TX surrounding this business structure. Whether you're curious about the benefits of incorporating, the legal requirements for operating a corporation, or the process of forming one, our Texas business law attorneys can help. 

At GK Law PLLC, we are dedicated to serving the needs of businesses in Houston, providing exceptional legal services and strategic guidance to help you achieve your goals.  If you're an entrepreneur looking to form a corporation or an established business owner seeking to expand your knowledge, our goal is to provide you with the insights you need to make informed decisions. Contact us now to schedule an initial consultation and learn more about the basics of forming a corporation.

What is a Corporation?

A corporation is a legal entity that is separate and distinct from its owners, known as shareholders or stockholders. It is one of the most common and widely recognized forms of business organization. A corporation is created by following specific legal procedures and obtaining the necessary approvals from the jurisdiction in which it operates.

At its core, a corporation is designed to function as an independent entity with its own rights and responsibilities. It can enter into contracts, own assets, incur debts, and engage in various business activities. By understanding the nature of a corporation, a Houston business law attorney can help you make informed decisions regarding the most suitable form of business organization for your specific needs.

How Do I Form a Corporation in Houston, TX?

Forming a corporation in Houston, Texas involves several steps and requires adherence to specific legal procedures. By following these guidelines, you can successfully establish a corporation in the state. While this outline provides a general overview, it is crucial to consult with our Houston business law attorney to ensure compliance with all legal requirements and to address any specific needs or circumstances related to your corporation. Here's a general outline of the process:

Choose a Name for Your Corporation

Select a unique and distinguishable name for your corporation that complies with the naming rules and guidelines of the Texas Secretary of State. Ensure that the chosen name is not already in use by another corporation in Texas.

Prepare and File Articles of Incorporation

Draft your corporation's Articles of Incorporation, which typically include the corporation's name, purpose, registered agent, registered office address, and the number and types of authorized shares. File the completed Articles of Incorporation with the Texas Secretary of State. 

Appoint Directors and Hold an Organizational Meeting

Appoint the initial directors of your corporation. The number of directors required may vary depending on your specific circumstances. Conduct an organizational meeting with the directors to establish bylaws, elect officers, and address other important matters related to the corporation's governance and operations.

Obtain an Employer Identification Number (EIN)

Apply for an Employer Identification Number (EIN) from the Internal Revenue Service (IRS). This unique identifier is necessary for tax purposes, hiring employees, opening bank accounts, and conducting other financial transactions.

Register for State Taxes

Register your corporation for state taxes with the Texas Comptroller of Public Accounts. This includes sales tax, franchise tax, and other applicable taxes based on your business activities.

Maintain Ongoing Compliance

After forming your corporation, it is essential to maintain ongoing compliance with state regulations. 

What are the Benefits of Forming a Corporation?

Incorporating a business offers several advantages that can benefit entrepreneurs and business owners. The benefits of incorporating a business can vary based on your specific circumstances, industry, and location. Consulting with a Houston TX business law attorney is highly recommended to ensure you make informed decisions and maximize the benefits of incorporating for your particular business. 

Here are some key advantages of incorporating:

• Power Structure: The corporate business form has an established power and management structure: directors, officers, and shareholders. Each group has its own set of clearly-defined roles and responsibilities within the corporate framework.
• Limited Liability Protection: As a shareholder or owner of a corporation, your personal assets are generally separate from the corporation's debts and legal liabilities. This means that in the event of legal claims or financial obligations, your personal assets are generally shielded from being used to satisfy the corporation's obligations. This protection helps safeguard your personal wealth and minimizes personal risk.
• Ability to Attract Investors: Operating as a corporation often enhances your business's credibility and professional image. Incorporating can instill confidence in stakeholders and attract potential customers or clients who may prefer to engage with established and recognized corporate entities. The corporation's ability to issue stock is a strong selling point to those willing to invest capital in a business venture.  
• Stock and Stock Options for Employees: Especially for larger businesses, the corporate business structure offers an appealing opportunity to potential employees such as stock benefits and stock options.
• Transfer of Ownership and Easy Exit Strategy: Corporations generally offer greater flexibility in transferring ownership. Shares of stock can be easily transferred or sold to new investors or shareholders, allowing for a smoother transition of ownership and potential exit strategies. This can be valuable when planning for retirement, selling the business, or bringing in new partners or investors.

How Much Does it Cost to Form a Corporation in Texas?

The cost of forming a corporation in Texas can vary based on several factors such as the specific requirements of your corporation, the level of legal assistance sought, and any additional services or documentation needed. Consulting with a Houston business law attorney can help you understand the full scope of costs associated with forming a corporation in Texas and ensure that all necessary steps are taken correctly. Some of the expenses associated with forming a corporation include the following:

• You can register your business name with the Texas Secretary of State for $40.
• To file your Certificate of Incorporation, the Texas Secretary of State charges a $300 filing fee.

Who Should Form a Corporation?

Because of the legal complexities, formalities, and expenses associated with setting up a corporation and issuing stock, you should form a corporation only if you have good reason to do so. Here are some situations in which incorporating your business instead of forming a corporation might make sense:

• Your business is so profitable that you can save significant income tax dollars by keeping some profits in the corporation each year.
• Your business needs the ability to issue stock or stock options to attract key employees or outside investment capital.
• You own a family business and you want to begin making gifts of ownership to your family as part of your financial or estate plan or to plan for the next generation of owners. 

Does my Corporation Need a Business License in Texas?

The State of Texas does not require a general business license. However, some types of businesses require state-wide licenses. It is advisable to check with your city or county government website to determine your local requirements.

Why Do I Need a Business Law Attorney in Texas?

Operating a business in Texas comes with a multitude of legal considerations and challenges. Navigating the complex landscape of business law can be overwhelming, which is why working with a Houston TX business law attorney can be an invaluable asset. Whether you're starting a new venture or managing an established company, here are compelling reasons why you need a business law attorney in Texas:

• Legal Knowledge and Guidance: We can help you understand the applicable regulations, rights, and obligations, ensuring that your business operates in full compliance with the law.
• Formation and Structure: We can help you select the appropriate business structure and determine the best fit for your goals and circumstances.
• Contract Drafting and Review: We can help you review and draft business contracts and ensure that your interests are protected.
• Compliance and Regulatory Matters: We can assist with licenses, permits, zoning, data privacy, employment laws, and other regulatory matters, mitigating the risk of non-compliance and potential legal issues.
• Dispute Resolution and Business Litigation: We can represent you in court, negotiate on your behalf, and guide you through the litigation process, striving for the best possible outcome for your business.

From the formation of a business to ongoing legal advice, compliance, and dispute resolution, our business law firm is committed to safeguarding your interests, minimizing risks, and ensuring your business operates within the bounds of the law. Contact us now to schedule an initial consultation with our Texas business lawyers and learn more about how we can help you gain the peace of mind and confidence you need to focus on growing your business.

Call Our Houston TX Business Law Attorneys Now!

Forming a corporation is an exciting venture that can offer various benefits and opportunities. However, navigating the complex legal landscape of business in Texas can be challenging and overwhelming. By following the necessary steps and seeking legal advice from our Houston business law attorney at GK Law PLLC, you can establish a legally compliant and successful corporation in the vibrant business environment of Texas.

Our business law firm understands the unique challenges faced by businesses in Texas. We are well-versed in the intricacies of state regulations, enabling us to provide strategic advice tailored to your needs and objectives. Contact us today to schedule an initial consultation and let us help you overcome challenges, protect your interests, and pave the way for your business's long-term success. We also offer the following legal services:

• Real Estate Law
• Condemnation Law