Starting a business in Texas is an exciting and rewarding venture, but getting it right from the start is critical for long-term success and legal protection. Texas has long been known for its business-friendly climate, but entrepreneurs must still take specific legal steps to ensure compliance with state and federal laws. At Slotter Law, PLLC, we help Texas business owners and startups navigate this process with clarity and confidence. Below is a legal guide to forming your business the right way.
1. File Formation Documents with the Texas Secretary of State
The first official step in starting your business is filing the appropriate formation documents with the Texas Secretary of State:
- If you’re forming a Limited Liability Company (LLC), you’ll file a Certificate of Formation – LLC (Form 205).
- For a corporation, you’ll submit a Certificate of Formation – For-Profit Corporation (Form 201).
- For other entity types such as professional corporations, nonprofits, or limited partnerships, different forms may apply.
This filing creates your legal entity and reserves your business name. Once accepted, you will receive a stamped Certificate of Formation confirming your business’s legal existence in Texas.
2. Draft and Sign a Company Agreement or Corporate Bylaws
Even though Texas law does not require LLCs to have a company agreement or corporations to adopt bylaws, these governing documents are crucial. They set the rules for ownership, operations, decision-making authority, dispute resolution, profit-sharing, and more.
- LLC Operating Agreement (Company Agreement): Defines the roles, rights, and responsibilities of the members or managers.
- Corporate Bylaws: Outline how the board of directors operates, how officers are appointed, and how shareholder meetings are conducted.
Failing to adopt proper internal governance documents can lead to confusion, disputes, and weakened liability protection down the road.
3. Obtain an EIN from the IRS
Every business entity other than a sole proprietorship must obtain an Employer Identification Number (EIN) from the Internal Revenue Service (IRS). This number functions like a Social Security number for your business and is used for:
- Opening a business bank account
- Filing business tax returns
- Hiring employees
- Applying for business licenses and permits
You can apply for an EIN online for free through the IRS website.
4. Set Up an Account with the Texas Comptroller
Your business must register with the Texas Comptroller of Public Accounts to report and pay state taxes, including:
- Sales and use tax
- Franchise tax
- Hotel occupancy tax (if applicable)
- Other industry-specific taxes
Registration is done online via the Comptroller’s eSystems portal.
5. Open a Dedicated Business Bank Account
A business bank account is not just about keeping your books organized—it’s essential to protect your personal assets. Commingling personal and business funds can allow courts to pierce the corporate veil, exposing you to personal liability for business debts and lawsuits.
Keeping finances separate is a key factor in:
- Maintaining the legal integrity of your LLC or corporation
- Avoiding IRS scrutiny
- Demonstrating proper corporate formalities in the event of litigation
Choose a local bank or credit union and bring your EIN, Certificate of Formation, and governing documents to open the account.
6. Register with the Texas Workforce Commission (TWC)
If you plan to hire employees in Texas, you must register with the Texas Workforce Commission for unemployment tax reporting and wage reporting purposes. The TWC oversees Texas employer responsibilities under the Texas Unemployment Compensation Act. Registration is completed online through the TWC Unemployment Tax Registration portal.
Why You Need a Business Attorney — And How Slotter Law Can Help
Starting a business is more than just filing paperwork—it’s about laying the legal foundation for your company’s growth and longevity. At Slotter Law, PLLC, we provide personalized legal guidance to entrepreneurs and business owners throughout Texas. From drafting bulletproof operating agreements and bylaws to reviewing contracts, negotiating leases, and advising on regulatory compliance, we ensure your business is legally sound from day one.
We help you:
- Choose the right business structure (LLC, S-Corp, etc.)
- Protect your personal assets through smart legal planning
- Avoid costly mistakes that could harm your business later
Whether you’re launching a small startup or acquiring an existing company, Slotter Law is your trusted partner for business formation in Texas. Contact us today to schedule a consultation and let’s build your business the right way.