Texas is known as the “Lone Star State”, reminding of the battle for independence with Mexico, and it is the second largest state located in the south region of the USA. Being a major economic engine in USA and having excellent developed industries, Texas is a preferred destination for business by many investors from abroad. We have prepared a general guide to company incorporation in Texas which comprises the main requirements of how companies are established in this state. Our company formation agents in USA are at your disposal with assistance and in-depth information at the time of company incorporation in Texas.

How can I open an LLC in Texas?

Limited liability companies, the most popular business entities in Texas, can be registered with the Business Division of the Secretary of the State of Texas by sending the main documents of the company – the Articles of Association. These need to contain the following:

• complete information about the shareholders (name, nationality, country of residence);
• the company’s activities and the name of the registered agent who represents the firm;
• information about the business address of the company in Texas;
• the name of the appointed managers of the firm in Texas;
• the responsibilities and the rights of each company owner.

If you want to start a business in USA and need information and guidance in this direction, it is suggested to talk to one of our company incorporation specialists in USA.

Do I need an operating agreement for a company in Texas?

Even though it is not mandatory, it is recommended to create an operating agreement for your business in Texas. This is an internal document which comprises information about the status of the owners or, in other words, the liabilities, the voting rights and the capital contribution of the stockholders, as established before the company incorporation. Also, an operating agreement provides information about how the company can be closed.

What other companies can I register in Texas?

Besides a limited liability company in Texas, foreign investors can set up other types of businesses, in accordance with their activities and purposes, such as:

• a general partnership set up by two individuals or associates under a partnership arrangement;
• a corporation which has the attributes of an LLC, with stockholders and board of directors;
• sole proprietorships which can be easily and fast registered in USA, including Texas;
• limited partnerships created by at least two individuals for which an agreement is necessary.

The sales tax in Texas

The sales tax in Texas is set at 6.25% rate, but it can change, depending on the type of purchase in this state. One should know that the municipalities can collect their own taxes in Texas. For complete information about the tax structure in Texas, we suggest you address your inquiries to our specialists who can also provide you with support for USA company formation.

What is EIN for a company in Texas?

Businesses in Texas need to have a tax identification number which is known in this case as the EIN (Employer Identification Number). This federal tax ID is allocated by the IRS (Internal Revenue Service) through the local tax offices. The EIN demonstrates that your company in Texas is a taxpayer.

A bank account in Texas

Another important requirement imposed at the time of company registration in USA, including Texas, is opening the business bank account. Foreign investors should choose the proper financial institution which can meet their needs. It is good to know that there are several important banks in Texas, and these institutions will only ask for the EIN of the company and related documents before opening a bank account for the capital contribution of your firm.

Virtual office in Texas

Foreign entrepreneurs who want to remotely control their businesses in Texas can choose complete virtual office packages. This is a cost-effective service compared to traditional offices in USA. A notable business address, mail and call forwarding, fax services, correspondence collection and bank statements collection are only a few of the facilities offered for foreigners through virtual office packages in Texas.

Economy facts about Texas

Texas has the second highest GDP (gross domestic product) in USA gaining the status of the 4th largest economy in the U.S., sustained by the states’ prolific industries. The agriculture and mining, the manufacturing, the tourism, and the energy sector are among the generous and well-developed fields in Texas. The state is known for its large production of cotton, for the big number of farms and for the fishing industry. Austin is the capital of Texas and a solid business center that welcomes foreign investors in varied sectors. Dallas, San Antonio, Houston, Fort Worth, Arlington or Beaumont are significant cities in Texas with excellent business environments for any kind of entrepreneur.

Those looking for company formation in Texas will benefit from an important tax relief: there is no corporate income tax in Texas, the state that joins other five business destinations in USA where there is no such tax imposed. However, you should bear in kind the franchise tax, but for more information in this matter, feel free to talk to our team of company formation specialists in USA. They can help you start a business in USA, including Texas.

No corporate income tax in Texas

Texas, South Dakota, Ohio, Nevada, Wyoming and Washington are six American states where there is no corporate income tax imposed on the profits generated by companies established there. Also, it is good to know that there is no personal income tax in Texas.

What is the franchise tax rate in Texas?

The franchise tax is imposed for corporations, limited liability companies, professional corporations, savings and loan associations, trusts, partnerships, joint ventures and other legal entities established in Texas, except sole proprietorships, unincorporated passive entities etc. Here is the taxable margin on which the franchise tax is calculated, if equal to one of the following amounts:

• 70% of the total registered revenue;
• 100% of the total revenue minus the cost of goods sold;
• 100% of the total revenue minus the compensation;
• the total revenue except $ 1 million.

It is good to know that your company is not subject to the franchise tax if the business’s total tax due is less than $1,000 or if the business’s annualized total income is less than or equal to the no-tax-due threshold of $1,130,000 for this year. Even if the tax regime might seem complex, it is best to consider the services of our team of specialists and find out more about the taxes you need to pay in Texas. If you want to start a company in USA, and especially in Texas, do not hesitate to address your inquiries to our company formation specialists in USA for comprehensive information and support.

What is the sales tax rate in Texas?
Texas imposes a standard sales tax ranging from 6.25% to 8.25%, comprising the tax rate collected by municipalities in this state. For instance, the sales tax rate of 8.25% is applicable in Dallas, San Antonio and Houston.

Taxes for LLCs in Texas

Limited liability companies are considered pass-through entities, and therefore, the taxation is made on the incomes of each company member. Moreover, the franchise tax is imposed for such type of companies.

Taxes for sole proprietors in Texas

Sole proprietorships in Texas benefit from tax advantages because there are no personal income taxes imposed on such businesses. We remind that Texas aligns with other five American states where there are no corporate and income taxes imposed. We kindly invite you to read the general guide to company incorporation in Texas and find out information about how you can open a company in this state. You can also talk to our specialists and discover the ways in which you can set up a company in any preferred US state for business. Our company formation agents in USA are at your service with complete assistance and information, so feel free to solicit a personalized offer.

Other tax facts in Texas

A property tax of 1.83% is imposed for households in Texas, and it represents the primary income source in most of the cities. We also mention that in Dallas, the property tax is established at 1.99%, while in Houston is set at a rate of 2.09%. It is good to know that there is no estate tax in Texas since 2005. If you would like to start a business in USA, do not hesitate to get in touch with us.

What are nexus and multistate business?

Foreign entrepreneurs who have a business in Texas and in other American states too should bear in mind the local taxation applied in those states. This means that the income generated in Texas might be subject to taxation if there are established companies outside this state. Multistate business and Nexus can be entirely explained by our team of company formation representatives in USA who can also offer details about how you can open a company in Texas. Let us remind you that we are at your disposal with complete guidance and information because it is important to skip all the possible misunderstandings that might occur during the registration procedure of a business. Also, it is important to have an idea about the taxation structure in Texas and about the taxes imposed on each type of company, in order to properly register from a taxation point of view and to align with the requirements in this matter.