How To Set Up A Foreign Entity

Foreign or Out-of-State Entities

• Registration Forms
• Register Online
• FAQs for Foreign Entities
• Convert to a Texas Entity
• Registered Agents
• Late Fees Calculator (XLS)

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Observe: Businesses performing disaster- or emergency-related work: Certain out-of-state businesses who enter the country to perform disaster- or emergency-related piece of work in this state during a disaster response period are exempt from the requirement to register as a foreign entity pursuant to Chapter 112 of the Business concern & Commerce Code. If your out-of-land business is exempt, you lot may choose to file a notification statement with the secretary of land. Delight see Form 3901 (PDF) for out-of-country businesses and Form 3902 (PDF) for affiliates of in-land businesses. All exemptions under Chapter 112 of the Business & Commerce Code cease at the end of the disaster response period. The secretary of state cannot advise you regarding whether your business concern qualifies for an exemption under Chapter 112.

For information regarding country tax problems for out-of-land businesses assisting with recovery, please see the Texas Comptroller of Public Accounts website.

Whether an entity is domestic or strange does non depend on the location of the principal business organisation office. Instead, it depends on where the entity was formed and what law governs its internal affairs. If an organization was formed under, and the internal affairs are governed past, the laws of a jurisdiction other than Texas, the organization is a "strange entity." We sometimes refer to foreign entities as out-of-state entities to reinforce the concept that entities formed in other U.S. states are strange entities, besides as entities formed exterior of the United States.

Registration Requirements

Section 9.001 of the Texas Business Organizations Code ("BOC") requires the following types of strange entities to file an application for registration with the Texas secretary of land if the entity is "transacting business" in Texas:

• corporations;
• limited partnerships;
• limited liability partnerships;
• limited liability companies;
• business trusts;
• real estate investment trusts;
• cooperatives;
• public or private limited companies;
• any other foreign entity that, if formed in Texas, would be formed as a corporation, express partnership, limited liability company, professional person association, cooperative, or real estate investment trust; and
• any other foreign entity that affords limited liability under the constabulary of its jurisdiction of formation for whatever owner or member.

Other laws or circumstances may besides be reasons for registration.

• Department 201.102 of the Texas Finance Lawmaking requires an out-of-state fiscal establishment to register with the secretarial assistant of state before opening a branch or other office in Texas.
• It has been the practice of the Texas Section of Insurance to pass up a not-resident agency license for a strange entity unless the entity has registered with the secretarial assistant of state. HB 2503, passed in the 2022 Legislative Session, removes this requirement effective 09/01/2011.
• Some banks volition not do business with an unregistered foreign entity, despite that BOC § 9.251 states that maintaining a banking company account in this country is not, in and of itself, transacting business in Texas.

Annals Online

Name Requirements

A foreign entity registering to transact business in Texas must annals nether a name that:

• contains a recognized term of organisation for the entity type as listed in sections 5.054 to five.059 of the BOC;
• does non incorporate whatsoever word or phrase that indicates or implies that the entity is engaged in a business that the entity is not authorized to pursue; and
• is available in Texas, that is, is distinguishable in the records of the secretarial assistant of country from the name of whatsoever existing domestic or foreign filing entity, or whatsoever proper name reservation or registration filed with the secretary of state.

View our name availability rules.

You may asking a preliminary proper noun availability determination by calling (512) 463-5555 or by electronic mail.

Registration Under a Fictitious Name

If the entity's legal name does non meet the in a higher place requirements the entity must annals in Texas nether an assumed name (d/b/a). This special type of causeless proper noun is often referred to as a fictitious name.

• A fictitious name is a special type of assumed name because, unlike other causeless names, a fictitious name must meet the above requirements.
• A foreign entity that registers to transact business concern under a fictitious name is stating that the entity will transact business in Texas under that name. BOC § 9.004.
• A foreign entity registering under a fictitious proper noun must file assumed name certificates with the secretary of country (Form 503 (Word 125kb, PDF 74kb)) and the appropriate county or counties.

Where to file assumed name certificates.

The name requirements for registration to transact business organization in Texas practice not affect trademark or other intellectual belongings rights. A certificate of registration or assumed proper noun certificate does non authorize apply of the name in violation of another person's legal rights and does non, in and of itself, offer any trademark protection. See Trademark FAQs for more data.

Determining Whether to Register

Texas statutes practise non ascertain "transacting business organization." Helpful resources to determine whether an entity'south activities in Texas crave registration include:

• BOC § 9.251, which lists activities that are not considered transacting business;
• Example law from Texas and other U.S. jurisdictions regarding foreign qualification;
• Texas Chaser Full general Opinions; and
• Private attorneys familiar with corporate law.

Another helpful resource may exist the comptroller'southward Texas Nexus Questionnaire (PDF), used by the comptroller to determine if a foreign entity is "doing business organization" in Texas for tax purposes.

• The threshold level of activity required for a tax nexus is mostly lower than the threshold level of action that requires registration with the secretary of state.
• Therefore, if the Texas Nexus Questionnaire results in a determination of "no nexus," the entity is probably not transacting business in Texas either.
• On the other hand, if the Texas Nexus Questionnaire results in a determination of "nexus," the entity should consider registration.
• Remember that, for registration with the secretary of country, the Texas Nexus Questionnaire tin can be a useful tool, only does not give a definitive answer.

Don't forget that even if you determine that your entity is not transacting concern in Texas under the BOC, you may demand to register nether other law, such as the Insurance or Finance Codes.

No member of the secretary of state staff tin determine whether an entity is transacting business organization in Texas or needs to file an application for registration. Determining whether to register is a business concern conclusion that may have tax consequences, raise legal issues, or impact licensing from another agency or land lath.

Penalties for Not Registering

Failure to annals tin can result in penalties, including:

• Inability to maintain an activity, adapt, or proceeding in a Texas courtroom until registration;
• Injunction from transacting concern in Texas;
• Ceremonious penalty equal to all fees and taxes that would have been imposed if the entity had registered when showtime required; and
• Late filing fees owed to the secretary of state by an entity registering more than than xc days after outset transacting business in Texas.

How Do I Calculate My Late Filing Fees?

Late filing fees are determined by multiplying the number of whole or partial agenda years that have passed since the date the entity initially transacted business concern in Texas times the registration fee.

• For nonprofit corporations and cooperative associations, the registration fee is $25.
• For all other entities, the registration fee is $750.
• Instance: A for-profit corporation that has been transacting business in Texas since June ane, 2007 would owe $3,000 in late filing fees if registering on December 1, 2010. The total fees due with the application for registration would therefore be $iii,750.

(The following entity types are not charged late fees for years prior to 2006: professional person corporations, professional associations, business trusts, real estate investment trusts, and other foreign entities not required to register under prior law.)

Try Our Late Fees Calculator! (XLS, 63kb)

Limitation of Tardily Fees

If your entity will be assessed more 5 years of late penalties, and yous meet certain criteria, yous may asking that the secretary of state limit the fees you lot owe. The secretarial assistant of state will cap the tardily fees at five years for an entity that (one) submits testify of an active correct to transact business with the comptroller's function; and (2) certifies to the truth of the following statements:

• The entity has satisfied all of its franchise, sales, and other tax obligations with the Texas Comptroller of Public Accounts. Attach a screen print from the comptroller'southward office showing the entity has a status of "agile correct to transact business".
• The entity does not owe any other taxes, fees, or assessments that are administered by any other Texas state agency.
• The entity has not received a letter from the Office of the Secretary of State regarding the need to submit an application for registration, or if it has received such a letter, information technology has responded to the secretarial assistant of state within 45 days.

The general policy of the secretary of state is that nosotros do not waive late fees for foreign entities, aside from the five year fee cap, if applicative. If an entity believes it has unique circumstances and wishes to appeal the cess of belatedly fees, the entreatment shall exist in writing and may be sent by email, fax to 512-475-2781 or postal service to P.O. Box 13697, Austin, TX 78711-3697, Attn: Corporations Attorneys.

Special Bug for Limited Liability Limited Partnerships (LLLPs)

A foreign limited liability limited partnership transacting business in Texas must utilize for two certificates of registration. An LLLP transacting concern in Texas must register as both a limited partnership and equally a express liability partnership.

• Course 306 (Give-and-take 167kb, PDF 126kb) – Express Partnership Awarding for Registration
• Grade 307 (Word 115kb, PDF 67kb) – Limited Liability Partnership Application for Registration

Other Problems for Foreign Entities in Texas

Texas Taxes

• If an entity has failed to file franchise tax reports and/or pay franchise taxes, it is invited to contact the comptroller to decide if the entity qualifies to enter into a Voluntary Disclosure Agreement.
• Overview of Taxes Collected by the Texas Comptroller of Public Accounts
  • Sales Tax
  • Franchise Tax
• Unemployment Taxation Collected by the Texas Workforce Commission

Permits and Licenses

There is no full general business organization license in Texas; yet, depending upon the blazon of business the entity engages in, additional licensing requirements from other Texas agencies might apply.

• Texas Department of Licensing and Regulation
• Observe Business concern Licenses & Permits (SBA.gov)
• Historically Underutilized Concern Program
• Texas Authorities Portal

Employer Issues

• Texas Workforce Commission: Information on requirements when you accept Texas employees.
• Texas Department of Insurance: Information about the Texas workers' bounty system.
• Texas Chaser General Employer Information Eye: Information almost employer new rent and termination reporting requirements.

Ready to Register?

• Register Online
• Registration Forms (for submission by fax, mail service, or paw delivery)

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How To Set Up A Foreign Entity,

Source: https://www.sos.state.tx.us/corp/foreign_outofstate.shtml

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