How to Start an S Corp in Texas

June 10, 2023
Kayn Ars
How to start an S Corp in Taxes

The process of forming a TX corporation doesn’t need to be complicated. This guide will help you form a corporation in Texas in a straightforward manner.

If you are forming a limited liability company (LLC) or a corporation in Texas, you will need to file a Certificate of Formation or Articles of Incorporation, respectively, and then elect S corporation status from the IRS Form 2553 once you apply for your EIN.

S corporations are IRS tax classifications (Subchapter S), not business structures. Business owners can reduce their tax burden by adopting the S corp status.

There are five basic steps to start an LLC and elect S corp status:

Step 1: Name Your LLC

Step 2: Choose a Registered Agent

Step 3: File the Certificate of Formation

Step 4: Create an Operating Agreement

Step 5: Get an EIN and File Form 2553 to Elect S Corp Tax Status

What are the benefits of an S Corporation?

  • The liability protection provided by the Texas corporations protects your personal assets and finances from those of your business.
  • You can save money by forming a Texas S Corporation if you want to pay less self-employment tax.
  • There are several ways in which you can create, transfer, and sell stock in Texas S Corporations.
  • A Texas C Corporation offers more options for creating, buying, selling, and transferring stock (including publicly).

Read More:

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What are the S Corporation Requirements

The Internal Revenue Service (IRS) imposes restrictions on what businesses can file as S corp. In order to qualify for S corporation status, an entity must meet the following requirements:

  • Be a domestic corporation or LLC
  • Have only one class of stock
  • Have no more than 100 shareholders or members (“shareholders” is the term for owners of a corporation, while “members” is the term for owners of an LLC)
  • Not be an ineligible corporation, such as certain financial institutions, insurance companies, and domestic international sales corporations
  • Have only allowable shareholders or members, which includes individuals, certain trusts, and estates. The shareholders may not be partnerships, corporations, or non-resident aliens. A nonresident alien is an alien who has not passed the green card test or the substantial presence test.


1 comment


Thanks for sharing. I read many of your blog posts, cool, your blog is very good.

March 12, 2024

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