How to Start an S Corp in Texas in 2026 (7-Step Guide)

Its strong economy, large workforce, and business-friendly tax environment make Texas one of the most popular states for launching a business. It's important to select the optimal business entity or tax status for your operations. If reducing self-employment taxes while maintaining liability protection is a priority, forming an S corporation in the Lone Star State may be the right move. This 2026 guide explains what an S corp is, Texas-specific requirements you must follow, and the seven steps you'll need to take to get started.

What Is an S Corporation?

Unlike a Texas limited liability company (LLC), which is a business structure, an S corporation is a tax status. After a successful S corp election, profits and losses pass through to shareholders’ (owners') personal income tax returns for federal tax purposes. As an owner, you can receive income in the form of both salary and distributions, potentially reducing self-employment taxes.

The 15.3% self-employment tax liability funds Medicare and Social Security. 

Benefits of an S Corporation

Before electing S corp status, it's essential to understand the benefits and significant tax advantages for your business. Top S corp benefits include: 

• Avoids double taxation (doesn't pay corporate income tax)

• Potential savings on self-employment taxes

• Pass-through taxation

• Limited liability protection

• Increased credibility with lenders and investors

While S corps offer substantial benefits, businesses must meet strict Internal Revenue Service (IRS) requirements to maintain this status. 

S Corporation Requirements in Texas (2026)

Your business must meet federal requirements set by the IRS before electing S corp status. To become an S corporation in Texas, your corporation must:

• Be a domestic corporation

• Have 100 shareholders or fewer (only allowable shareholders)

• Issue only one class of stock

• Have only eligible shareholders (U.S. citizens and residents, certain trusts and estates)

• Not be an ineligible corporation (e.g., certain financial institutions)

Once Texas S corp requirements are met, you'll first form a corporation in Texas with the Secretary of State. To complete the process, you'll then elect S corp tax status with the IRS, not the state of Texas.

How to Start an S Corp in Texas: 7 Steps

Are you wondering how to set up an S corp in Texas? Follow these seven Texas S corporation steps to elect this status in 2026.

Step 1: Check Name Availability

The first step to starting an S corp in Texas is to check your business name availability via the Texas Secretary of State’s SOS Direct Database. To proceed, your business entity’s name must be unique.

If your business name is available, you can reserve it online. Texas offers a 120-day name reservation for $40.

Step 2: Choose a Business Name

Next, you’ll choose a business name for your S corp. Follow these Texas naming rules: 

• The name must include “Corporation,” “Incorporated,” “Corp.,” or “Inc.”

• You cannot mislead external parties about your business purpose.

If you're having difficulty, this free tool from Business Name Zone generates name and domain combos for you based on your input – and it only takes a few minutes.

After choosing your business name, you’ll complete an application for registration to use your business name. You’ll provide your business name on Form 501, Application for Reservation or Renewal of Reservation of an Entity Name, and submit it with additional information about your S corp. 

You have the option of completing this form online. 

Step 3: Appoint a Registered Agent

You’ll need a registered agent for your S corp structure. In the state of Texas, the registered agent must: 

• Have a physical Texas address (no P.O. boxes)

• Be an individual Texas resident or a qualifying business entity

• Be available during regular business hours

Texas also requires registered offices to be maintained, where a registered agent can be available during business hours. The registered office must be in Texas, but it can also be the same address where your Texas S corp conducts business. The Secretary of State will send mail to this address for correspondence.

Step 4: File Form 201 (Certificate of Formation)

You'll then complete Form 201, known as the certificate of formation. You’ll need the following information: 

• Business name and address

• Registered agent information

• Number of authorized shares

• Organizer information

Once ready, you’ll need to submit Form 201 to the Texas Secretary of State. You can submit Form 201 in several ways: by fax, hand delivery, or by mail. There’s a $300 filing fee. 

Step 5: Create Corporate Bylaws

One of the last steps to starting an S corporation in Texas is to organize your bylaws and regulations. Your bylaws will outline: 

• Officer roles

• Director terms

• Voting procedures

After creating your bylaws and regulations, you’ll want to keep them on file for internal purposes. There’s no requirement to submit your S corp bylaws to the Texas Secretary of State, but they help establish legitimacy and encourage compliance. 

Step 6: Obtain an EIN

Filing IRS Form 2553, Election by a Small Business Corporation, is the final step to forming your S corp in Texas. Before you do, you must obtain an employer identification number (EIN).

Obtain your EIN by completing and submitting Form SS-4 via fax, by mail, or online. The fastest method is filing online, while fax and mail options take longer.

Save yourself the hassle and headaches of filing by working with 1-800Accountant's EIN experts. We'll file Form SS-4 and work with the government on your behalf to ensure the process is as efficient as possible.

Step 7: File IRS Form 2553

File Form 2553 to elect S corporation status and complete the process. To complete Form 2553, you’ll need: 

• The address and business name  

• The date of incorporation

• Your EIN

• Your company’s state of incorporation (Texas) 

You’ll also need to include the address, name, and signature of each shareholder, with the signature and title of a company officer. After completing Form 2553 Texas, you can fax or mail your completed Form 2553 to the IRS. This form must be filed:

• Within 75 days of incorporation, or

• By March 15 for existing corporations.

It can take up to 60 days to receive IRS approval. 

How Long Does It Take to Start an S Corp in Texas?

It's important to understand how long it can take to start an S corporation in Texas. 

• Texas formation: a few business days for online filings. 

• IRS Form 2553 approval: up to 60 days.

Form Your Texas S Corp the Right Way

Starting an S corporation in Texas involves more than filing forms — it requires careful planning to ensure maximum tax savings and ongoing compliance. When you trust 1-800Accountant, America's leading virtual accounting firm, with your S corp work, our experts can handle every step, from formation to S corp election, so you can focus on growing your business.

Don't delay: Talk to an S corp expert today at 1-800Accountant to start your Texas S corp the right way.