Entity Formation
In What State Should I Incorporate My Entity?

You should incorporate your entity in Texas if it will be primarily based in Texas. Only in rare circumstances will it make sense to incorporate in another state.

Texas has a thorough and well written Business Organizations Code based on the model statutes. Texas also has a well developed case law that provides more certainty than less developed jurisdictions. Finally, the Texas secretary of state provides a good level of service with reasonable fees.

There is an urban myth that incorporating in Delaware or Nevada provides tax or other advantages. Under current Texas tax law, any company that does business in Texas will be subject to the same Texas margin tax regardless of where incorporated. Furthermore, a foreign company must register with the Secretary of State to transact business in Texas lawfully. The base filing fee for registration for a foreign for‐profit corporation, for example, is $750. The base filing fee for incorporating a for‐profit corporation in Texas is only $300.

Certain out‐of‐state institutional investors and underwriters sometimes insist the company be incorporated under Delaware law as a condition to receiving their investment or going public. These institutions are already familiar with Delaware law and do not want to learn another state's laws. Also, they perceive Delaware law and courts as more favorable to them. Unless you are in the situation where a third party dictates that you incorporate in Delaware or some other state, then you should incorporate in Texas if the company is going to be primarily based in Texas.

Do I Need an Incorporation Lawyer?

Selecting the Right Lawyer

Types of Incorporations

In What State Should I Incorporate My Entity?

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