Texas has historically been one of the most business-friendly states in the country, drawing in entrepreneurs from across the nation and even the world. The Lone Star State offers unparalleled opportunities in business expansion and tourism, with no state income tax, a flourishing economy, and a wide array of industries, including energy and technology.
However, one crucial step to establish a company in Texas is ensuring the selected business name is distinctive and eligible for registration. The Texas Business Entity Search is vital in such scenarios.
The Texas Secretary of State’s search system is vital for entrepreneurs to verify name registrations, ensure compliance, and carryout due diligence for registered businesses. If you are planning to incorporate, form a new LLC, or even research an existing company, this tool is invaluable.
This guide will explain what the Texas Business Entity Search is, why it’s important, how to effectively use it, and what actions to take post search completion.
What is the Texas Business Entity Search?
The Texas Business Entity Search is offered by the Texas Secretary of State’s office as an online search tool to access records of various business types registered in Texas such as Limited Liability Companies (LLCs), Corporations, Limited Partnerships (LPs), Nonprofits, and other business entities.
Through this tool, you can access important details such as:
- Business name and filing number: The official identifiers of a company.
- Entity type: Whether it’s an LLC, Corporation, LP, or other structure.
- Current status: Active, inactive, dissolved, or forfeited.
- Registered agent: The person or business who receives legal documents on behalf of the company.
- Filing history: A chronological record of documents submitted or lodged with the filing office, at the state office.
Unlike some states, which allow performing basic business searches at no charge, Texas has such services accessible through a paid system, SOSDirect. Limited information can be accessed free of charge. However, for complete access to records, certificates, copies of documents, and other information, a small fee is charged.
In short, this tool acts as a central database of all legally registered entities operating businesses in Texas.
What is the Significance of the Texas Business Entity Search?
Executing a Texas business search is not a mere administrative chore, but an important activity that can support smooth legal groundwork for your business. Below are the reasons it is important:
1. Prevents Name Conflicts
Every business is required to have a unique name which is not “deceptively similar” to a name that is already registered. Texas name regulations are stringent, and if your business name is close to an existing business, your application will be denied. Performing a search early can save a lot of time.
2. Confirms Legal Compliance
When formation documents are submitted to the Secretary of State, they perform a name-check with the registry and verify if the name is already in use. Doing the search yourself can save you time and help ensure legal compliance for your business and make necessary adjustments to the name if needed.
3. Verifies Legitimacy of Other Businesses
For vendors, clients, or business partners based in Texas, the search tool can confirm if they are active or registered businesses. You can also verify if they are in good standing, suspended, or dissolved, which can help make an informed decision towards the partnership.
4. Safeguards Legal and Financial Interests
When it comes to loans, contracts, or any legal documentation, institutions and banks typically require verification of good standing and registration. Legal verification checks enable access to such records.
5. Conducts Market Studies
Aside from the legal application, the database can offer a glimpse of the competition. You may access the number of businesses within the same industry and operating with identical names.
Steps for Conducting a Business entity search in Texas
Accessing the SOSDirect system is a prerequisite to conducting a Texas Business Entity Search. The process is simple, but it must be broken down into clear steps:
Step 1 Search for the SOSDirect Portal
Visit the Texas SOSDirect page. You can register for a new account or log in as a guest. Make sure to have a credit card on hand as searches and documents incur a small fee.
Step 2 Choose Your Search Method
Records can be looked up in a number of ways:
- By Entity Name: Type in the business’s name in whole or in part, this is the most common method to check for name availability.
- By Filing Number or Tax ID: For those that have the unique number, this method is the quickest way to obtain results.
- By Registered Agent Name: This is especially useful for attorneys, accountants, or individuals who handle numerous businesses.
Step 3: Review the Results
The system provides a list of entities that correspond with your search criteria. For each business, you would generally find:
- Official name
- Filing number
- Entity type
- Registered agent name
- Business status (active, inactive, dissolved, forfeited, etc.)
Step 4: Order Records (Optional)
For users with SOSDirect accounts, the system provides the option to buy official documents considering additional documents are not basic details. Business documents that can be ordered include:
- Certificate of Formation: Document evidencing the business’s formation.
- Certificate of Fact: Status (Good Standing Certificate) – Document affirming that the company is not only active, but also compliant with requirements.
- Certified Copies: Copies of legal filings which hold legal status for legal and financial transactions.
Common Uses of the Texas Business Entity Search
The business entity search serves numerous functions for different users:
For Entrepreneurs Starting a New Business
Prior to creating your LLC or Corporation, it’s essential to check that the name you would want to use as a business is not and has not been in use by any other business.
For Existing Business Owners
Business owners may want to check their business to verify filing history, or to check for pending information updates, or to obtain certificates for banking and compliance.
For Investors and Lenders
Before making an investment, most investors check an organization’s eligibility and standing status to ensure proper registration and to mitigate risks.
For Lawyers and Accountants
Entity records are important to ensure clients are set up and compliant with relevant state regulations, which is why professionals check them frequently.
For Market Research
You can find information on other competitors in the niche or industry you are looking to enter and find out what the key companies are to understand the market better.
What to Do After Performing the Texas Business Entity Search
Your situation dictates the steps you can take after the search, so here are some examples:
If You’re Starting a New Business
- Reserve your business name with the Secretary of State. This offers protection for the name for up to 120 days.
- Submit your Certificate of Formation for your structures which can be an LLC, Corporation, or LP.
- Designate a registered agent residing in Texas.
- For tax and banking needs, apply for an EIN with the IRS.
- Establish your processes for compliance on franchise tax and annual submissions.
If You’re Verifying Another Business
- Issue a Certificate of Fact, Status to confirm they are in good standing.
- Use their filing history to determine their length of business and compliance maintenance.
If You Already Own a Business
- Check your entity is active and compliant with any relevant regulations.
- Acquire the necessary orders concerning documents such as contracts, loans, or licenses.
- Make necessary changes or renew documents that are outdated.
How Bizstartz Can Assist
At Bizstartz, we aid business owners in dealing with the compliance and legal requirements for business formation in the U.S. For individuals looking to form a business in Texas, we have an all-inclusive approach to assist you.
Here are some of the services we offer:
- Formation of Texas LLC and Corporations
- Assistance with Business name availability and reservation
- Providing Registered Agent services in Texas
- Assistance with EIN applications for both domestic and foreign founders
- Compliance for BOI (Beneficial Ownership Information) filing
- Assist with bookkeeping and tax filing
- Trademark registration to guard your business name
As an international business owner looking to expand into the US, or a Texas resident, you can rest assured knowing at Bizstartz your company will receive proper formation and compliance for company laws so that it can grow at a healthy pace.
In Conclusion
Having access to the Texas Business Entity Search can greatly benefit business owners, investors and business associates in Texas. Apart from name availability, it offers important insight into existing companies and the level of competition in the market.
Conducting these searches before registration can not only help save businesses from legal disputes but aid in compliance with state laws, ensuring a smooth start to a new business.
And if you would like to save time and avoid blunders that would lead to unnecessary expenses, you can hire professionals who will help you from the beginning to the end, and that’s where Bizstartz comes to the picture. Whether it’s registering your Texas LLC or handling tax and compliance work, we’re there for you.
