Summary
The fact that you may need to register with state agencies like Texas Secretary of State is a sneaky misconception that many folks miss.
However, with the rise of remote work, states have begun cracking down and levying penalties for those who (unknowingly) fail to register.
If you're considering operating in Texas, use this guide to:
- Explore the that triggers the need to register with the Texas Secretary of State, including criteria such as physical presence, economic activity, and advertising efforts.
- Determine where and how to register with the Texas Secretary of State.
- Understand additional requirements such as Registered Agents, registration with other state departments, and ongoing annual reports.
What criteria would trigger the requirement to register with the Texas Secretary of State?
Key Factors
Physical Presence: The following indicate strong physical presence in Texas:
- Having an office, store, warehouse, or other physical location.
- Having employees, contractors, or sales representatives operating in the state.
- Owning or leasing property in Texas (real estate or tangible property).
Economic Activity: These economic activities also suggest you're doing business in Texas:
- Selling goods or services to Texas customers (even remotely or online).
- Providing services within Texas.
- Regularly engaging in business transactions within the state.
Nexus: Texas recognizes the concept of nexus – a sufficient connection to the state, whether physical or economic, that creates a tax obligation.
Specific Examples of Doing Business in Texas
The following activities would likely be considered doing business in Texas:
- Operating a physical retail store or restaurant in Texas.
- Having a Texas-based office for your business.
- Maintaining a warehouse or distribution center in Texas.
- Providing consulting or repair services to Texas clients.
- Selling products to Texas residents through an online store or marketplace (especially if you hit certain sales thresholds).
Important Considerations
Franchise Tax: Most entities doing business in Texas are subject to a franchise tax.
Activities Not Considered Doing Business: Texas specifically lists certain activities that do not constitute doing business in the state, such as maintaining bank accounts or defending lawsuits.
Where do I register, and what else is required?
- A Certificate of Good Standing is not required.
In addition:
A Registered Agent is required to serve as the company's physical in-state presence to receive important legal documents. Do not fall victim to the common misconception that you can leverage an in-state employee as your Registered Agent. It's far too risky.
You'll want to review the other registrations required in Texas. Here's a Texas specific guide we put together.
What is the registration fee?
The fee charged by Texas is $750.
How long does Texas usually take to process?
Texas usually takes approximately 1 - 2 weeks to process registrations.
What is required ongoing?
Each state has a complex schedule of required annual reports, which can vary by entity type. Let's take a look at Texas's:
C-Corporation
- Filing Date: December 31
- Filing Frequency: Annual
LLC
- Filing Date: December 31
- Filing Frequency: Annual
Non-Profit
- Filing Date: Not required
- Filing Frequency: Not required
There is an Easier Way
Automate registration and annual report tracking in AbstractOps.This guide should definitely help reduce some of the confusion for Texas. However, if you have multiple states to worry about, you may look to:
Automate state registrations and annual reports
Centralize email, snail mail, state ID’s, and registered agents, and
Take control of action items, eliminating risks before they become penalties.
Start the AbstractOps product demo to see how easy this can be.
Note: For the avoidance of doubt, nothing provided here shall contemplate, constitute or include tax or legal advice. Always double check with state agency websites for the most up-to-date requirements.
