Texas Articles of Incorporation: Definition, Purpose

What are Texas Articles of Incorporation?

Articles of incorporation, referred to as a “Certificate of Formation” in Texas, is the legal document that must be filed with the Texas Secretary of State to legally incorporate a business. Once the certificate is approved, you can operate your company as a corporation.

A corporation is just one way to structure a new business, but this type of entity is very popular due to the benefits it offers owners and shareholders. Some of these benefits include:

1. Limited liability protection. Corporations are separate legal entities from the shareholders, directors, and officers who run the company. This means that if the business is involved in litigation, a bankruptcy, or debt collection, the personal assets of those running the company are protected. The only exceptions to limited liability protection are when damages occur due to personal liability for your own negligence or malpractice.
2. Tax benefits. Corporations are subject to a flat tax rate of 21% which is lower than the tax rate on most individuals. Corporations can also deduct business expenses from their taxable income to reduce the business’s overall tax liability.
3. Business security. The ownership of a corporation is structured around percentage of stock ownership. This means that transferring ownership of and ensuring the longevity of the business is easier than with other business entities.
4. Access to capital. Corporations have more access to funding than any other business entity because most corporations sell shares of the company to the public. This provides the opportunity to grow the business as well as save the business in cases of financial difficulties.

The main purpose of a certificate of incorporation is to prove that the company exists so that it can operate legally. After filing the certificate of incorporation, business owners can request a tax identification number, open business bank accounts, and apply for professional licenses and permits necessary for operation.

How Do I Find Articles of Incorporation in Texas?

The Texas Secretary of State provides residents with PDF and Word templates for various business forms including a Certificate of Formation for for-profit corporations. To find this form, follow these steps:

1. Visit the Texas Secretary of State website.
2. Hover over the tab labeled “Forms and Other Services” and select “Forms”
3. Under “Business Services and Forms”, click “Business and Nonprofit Entity”
4. Choos the first option, “Formation of Business Entities…”

This will bring you to a list of forms necessary to start a corporation in Texas. The first option is the Certificate of Formation and it is available in a fillable PDF or Word file format. It also includes detailed instructions for filing out the forms.

If you have already filed your articles of incorporation and need to find a copy of the document, this can also be achieved through the Secretary of State website. Articles of incorporation are public records so anyone can search for these business documents. Follow these steps:

1. Visit the Texas Secretary of State website.
2. Click the tab labeled “Business Services”
3. Click the first box titled “SOSDirect Online Searches and Filings”

You will need to create a User ID and password to access the search engine and pay a $1.00 fee per search. From here, you can search for any business incorporated in Texas and access important documents like articles of incorporation.

Does Texas Require Articles of Incorporation?

Yes. Texas requires articles of incorporation for any business that wishes to operate as a corporation.

Are Texas Articles of Incorporation Public?

Yes. Certificates of formation in Texas are public documents. The Secretary of State allows users to search a database of every business entity registered in Texas. The search results will show basic corporation information like the entity name, incorporation date, and address.

Texas Articles of Incorporation Example

[Your Company Name]

ARTICLES OF INCORPORATION

OF

[YOUR COMPANY NAME]

A Texas For-Profit Corporation

I. NAME

The name of this corporation is [Your Company Name].

II. PURPOSE

The purpose for which this corporation is organized is to engage in any lawful act or activity for which a corporation may be organized under the Texas Business Organizations Code.

III. AUTHORIZED SHARES

This corporation is authorized to issue two classes of shares designated as "Common Stock" and "Preferred Stock." The total number of shares that this corporation is authorized to issue is [Total Number of Shares], of which [Number of Common Shares] shall be Common Stock, and [Number of Preferred Shares] shall be Preferred Stock.

A. Common Stock

1. Voting Rights: Each holder of Common Stock shall be entitled to one vote for each share of Common Stock held on all matters submitted to a vote of shareholders.

B. Preferred Stock

1. The Preferred Stock may be issued in one or more series, each with such designation, rights, preferences, and limitations as the Board of Directors may determine by resolution. The Board of Directors is expressly granted the authority to determine and alter the rights, preferences, privileges, and restrictions granted to or imposed upon any wholly unissued series of Preferred Stock.

IV. REGISTERED OFFICE AND AGENT

The address of the initial registered office of this corporation in the State of Texas is:

[Registered Office Street Address] [City, State, Zip Code]

The name of its initial registered agent at that address is [Registered Agent's Name].

V. INCORPORATOR

The name and address of the incorporator are:

[Incorporator's Name] [Incorporator's Street Address] [City, State, Zip Code]

VI. DIRECTORS

The number of directors constituting the initial board of directors is [Number of Directors], and the names and addresses of the persons who are to serve as the initial directors are:

[Director 1's Name] [Director 1's Street Address] [City, State, Zip Code]

[Director 2's Name] [Director 2's Street Address] [City, State, Zip Code]

[Additional Directors, if applicable]

IN WITNESS WHEREOF, the undersigned, being the incorporator hereinbefore named, has executed these Articles of Incorporation on this [Day] day of [Month], [Year].

[Incorporator's Name]

[Note: This is a basic example of Articles of Incorporation for a for-profit business in Texas. Depending on the specific circumstances and requirements of your company, additional provisions may need to be included. It is always recommended to consult with an attorney or other qualified professional to ensure your Articles of Incorporation comply with all applicable laws and regulations.]

How Do I Fill Out Articles of Incorporation in Texas?

You can fill out articles of incorporation in Texas using the state provided form, or by drafting your own document. If you choose to draft your own articles, they must adhere to the Texas Business Organizations Code (BOC) and contain the following provisions:

• Article 1: Entity name and type. The corporate name must be distinguishable from every other registered business name in the State. It must comply with all provisions of Chapter 5 of the BOC. It is important to conduct a name search before filing your articles. A duplicate name will result in your articles being rejected by the state.
• Article 2: Registered agent and office. The registered agent is the person or business entity that is designated to accept legal documents on behalf of the corporation. The corporation cannot act as its own registered agent, but a shareholder or director can be the registered agent as long as they provide a physical address in Texas. PO boxes cannot be used for the registered agent address.
• Article 3: Texas requires a minimum of one director to be added on the certificate of formation. The director’s name and address must be included. Because these documents are public record, a PO box may be used for the director’s address to maintain privacy.
• Article 4: Authorized Shares. Shares represent ownership interest in the corporation. The total number of shares that the corporation is authorized to issue must be listed on the certificate of organization along with the states par value of the shares (if applicable).
• Article 5: Business Purpose. The general purpose of the corporation is usually described as conducting lawful business in the state of Texas.

Additional information that must be included in the certificate of formation outside of the articles include:

• Initial mailing address. The mailing address of the business entity.
• Supplemental provisions. Any information or additional provisions the incorporators want to provide the state.
• Duration. How long the corporation will exists. Incorporators usually select “perpetual”.
• Organizer. For profit corporations must designate at least one organizer.
• Effective date. Usually the date of filing but can be delayed for up to 90 days.
• Execution. The certificate of formation must be signed by the organizer.

While the state provided template will work for most corporations, some businesses require additional documents or information. If you are unsure whether you must provide additional business information, you should consult with a knowledgeable attorney.

An attorney will assist you in drafting your articles of incorporation and ensure that you have met all legal requirements under Delaware law. If you make a mistake on your articles, it could cause significant delays in incorporating your business and additional fees.

How Do I Submit Articles of Incorporation in Texas?

The Texas Secretary of State encourages businesses to file all business related documents online through the SOSDirect or SOSUpload portals. These online portals provide expedited services and you can complete the following tasks using this service:

• File business formation documents
• Receive evidence of processing in real-time
• Order certified or plain copies and order certificates of fact
• Print copies of imaged documents
• Obtain entity status
• Check name availability and reserve entity names.

You can also pay for all filings through the website using any major credit card.

If you don’t want to file your documents online, you do have the option to either mail or fax your documents to the Secretary of State office, however this method will take longer to process.

Relevant Laws

• 21.051. NO PROPERTY RIGHT IN CERTIFICATE OF FORMATION
• 21.057. BYLAWS
• 21.101. SHAREHOLDERS' AGREEMENT
• 21.151. NUMBER OF AUTHORIZED SHARES