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Strange or Out-of-State Entities

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

For data regarding state revenue enhancement problems for out-of-state businesses assisting with recovery, please see the Texas Comptroller of Public Accounts website.

Whether an entity is domestic or foreign does not depend on the location of the principal business office. Instead, it depends on where the entity was formed and what police 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 arrangement is a "foreign 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 foreign entities, as well as entities formed exterior of the Usa.

Registration Requirements

Section 9.001 of the Texas Business organisation Organizations Code ("BOC") requires the post-obit types of foreign entities to file an awarding for registration with the Texas secretary of country if the entity is "transacting business" in Texas:

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

Other laws or circumstances may as well exist reasons for registration.

Department 201.102 of the Texas Finance Lawmaking requires an out-of-state fiscal institution to register with the secretary of state before opening a branch or other office in Texas.
It has been the practice of the Texas Department of Insurance to pass up a non-resident agency license for a strange entity unless the entity has registered with the secretary of land. HB 2503, passed in the 2011 Legislative Session, removes this requirement constructive 09/01/2011.
Some banks will non do business with an unregistered strange entity, despite that BOC § nine.251 states that maintaining a bank account in this state is not, in and of itself, transacting business in Texas.

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Name Requirements

A strange entity registering to transact business in Texas must register under a name that:

contains a recognized term of organization for the entity blazon every bit listed in sections v.054 to v.059 of the BOC;
does not contain whatever word or phrase that indicates or implies that the entity is engaged in a concern that the entity is not authorized to pursue; and
is available in Texas, that is, is distinguishable in the records of the secretary of state from the name of any existing domestic or foreign filing entity, or whatever proper noun reservation or registration filed with the secretarial assistant of state.

View our name availability rules.

Y'all may request a preliminary name availability determination by calling (512) 463-5555 or by email.

Registration Under a Fictitious Proper noun

If the entity'due south legal name does not come across the above requirements the entity must register in Texas nether an causeless name (d/b/a). This special blazon of causeless proper noun is often referred to equally a fictitious name.

A fictitious name is a special type of causeless name because, dissimilar other assumed names, a fictitious name must encounter the above requirements.
A strange entity that registers to transact business organisation under a fictitious proper name is stating that the entity will transact business concern in Texas under that name. BOC § 9.004.
A foreign entity registering under a fictitious name must file assumed name certificates with the secretary of state (Class 503 (Word 125kb, PDF 74kb)) and the appropriate canton or counties.

Where to file assumed proper noun certificates.

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

Determining Whether to Register

Texas statutes do not define "transacting business." Helpful resources to determine whether an entity's activities in Texas require registration include:

BOC § 9.251, which lists activities that are non considered transacting concern;
Case law from Texas and other U.S. jurisdictions regarding strange qualification;
Texas Chaser General Opinions; and
Individual attorneys familiar with corporate law.

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

The threshold level of action required for a tax nexus is generally lower than the threshold level of activity 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 paw, if the Texas Nexus Questionnaire results in a determination of "nexus," the entity should consider registration.
Retrieve that, for registration with the secretarial assistant of state, the Texas Nexus Questionnaire tin can be a useful tool, but does not give a definitive reply.

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

No member of the secretary of land staff can 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 organisation decision that may take tax consequences, raise legal issues, or affect licensing from another agency or state board.

Penalties for Not Registering

Failure to register can upshot in penalties, including:

Inability to maintain an activeness, suit, or proceeding in a Texas court until registration;
Injunction from transacting business in Texas;
Ceremonious punishment equal to all fees and taxes that would have been imposed if the entity had registered when first required; and
Late filing fees owed to the secretarial assistant of state past an entity registering more than than 90 days after first transacting business in Texas.

How Do I Calculate My Tardily Filing Fees?

Belatedly filing fees are determined by multiplying the number of whole or partial calendar 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.
Example: A for-profit corporation that has been transacting concern in Texas since June 1, 2007 would owe $3,000 in tardily filing fees if registering on December i, 2010. The full fees due with the awarding for registration would therefore be $3,750.

(The post-obit 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 Tardily Fees Calculator! (XLS, 63kb)

Limitation of Late Fees

If your entity will be assessed more than than five years of late penalties, and you encounter certain criteria, y'all may request that the secretary of state limit the fees y'all owe. The secretary of state will cap the late fees at v years for an entity that (i) submits testify of an active right to transact business with the comptroller's office; 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. Adhere a screen print from the comptroller'due south part showing the entity has a condition of "active right to transact business".
The entity does not owe whatsoever other taxes, fees, or assessments that are administered by any other Texas state agency.
The entity has not received a letter from the Role of the Secretary of Land regarding the need to submit an application for registration, or if information technology has received such a letter of the alphabet, it has responded to the secretary of state inside 45 days.

The full general policy of the secretary of country is that we do not waive late fees for foreign entities, aside from the 5 year fee cap, if applicative. If an entity believes it has unique circumstances and wishes to appeal the assessment of tardily fees, the appeal shall exist in writing and may be sent past e-mail, fax to 512-475-2781 or mail to P.O. Box 13697, Austin, TX 78711-3697, Attn: Corporations Attorneys.

Special Issues for Limited Liability Limited Partnerships (LLLPs)

A strange limited liability limited partnership transacting business in Texas must apply for two certificates of registration. An LLLP transacting business organisation in Texas must register as both a express partnership and as a limited liability partnership.

Form 306 (Word 167kb, PDF 126kb) – Express Partnership Application for Registration
Class 307 (Discussion 115kb, PDF 67kb) – Limited Liability Partnership Awarding for Registration

Other Issues for Strange 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 determine if the entity qualifies to enter into a Voluntary Disclosure Understanding.
Overview of Taxes Collected past the Texas Comptroller of Public Accounts
- Sales Tax
- Franchise Revenue enhancement
Unemployment Revenue enhancement Nerveless by the Texas Workforce Commission

Permits and Licenses

At that place is no general business concern license in Texas; even so, depending upon the type of business organization the entity engages in, additional licensing requirements from other Texas agencies might apply.

Texas Department of Licensing and Regulation
Find Business concern Licenses & Permits (SBA.gov)
Historically Underutilized Business Plan
Texas Government Portal

Employer Problems

Texas Workforce Commission: Information on requirements when you have Texas employees.
Texas Department of Insurance: Information virtually the Texas workers' compensation system.
Texas Attorney General Employer Information Center: Information about employer new rent and termination reporting requirements.

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