HOW TO CONVERT YOUR BUSINESS INTO A TEXAS ENTITY
Texas has emerged as a leading destination for companies looking to relocate. From favorable tax policies to a strong business climate, it’s no surprise that entrepreneurs from California, Delaware, and other high-regulation states are establishing a new base in the Lone Star State. But moving your company involves more than shifting your operations or updating your business address—it often means formally converting or domesticating your business entity into a Texas entity.
If you’re considering making Texas your company’s legal home, understanding how entity conversion works is essential. Below, we break down what the process involves, the statutory framework in Texas, and the steps required to successfully transition your business entity into its Texas equivalent.
Understanding Domestication vs. Conversion
Business owners often encounter terms like “domestication” and “conversion” when researching how to change their company’s state of formation. While both relate to changing a business’s legal jurisdiction, the terminology and processes vary by state.
In Texas, the term “conversion” is used for the legal process of transforming a business entity formed under the laws of another state into the same entity type under Texas law. This is governed by the Texas Business Organizations Code (BOC), primarily Chapter 10.
The conversion process allows your company to retain its continuity—preserving contracts, EIN, bank accounts, and internal structure—while formally adopting Texas as its new legal home.
Why Companies Are Converting to Texas
In recent years, Texas has attracted companies from high-cost jurisdictions for a number of reasons:
For companies formed in states like Delaware or California, converting into a Texas entity can align your business’s legal structure with its physical and operational reality— simplifying compliance and improving efficiency.
Legal Authority: Chapter 10 of the Texas Business Organizations Code
The Texas BOC provides clear statutory authority for converting a foreign (out-of-state) entity into a Texas entity of the same type. Specifically:
The conversion must comply with all procedural requirements in both the originating state and in Texas.
Key Steps to Convert Your Company to Texas
Whether you’re converting into a corporation or an LLC, the general steps below apply to both. Entity-specific differences—such as corporate shareholder approvals or LLC member resolutions—will be discussed in separate, detailed articles.
1. Check Your Origin State’s Laws
Before initiating a conversion, confirm that the laws of your current formation state allow outbound conversions. Some states, such as California, place limitations on domesticating entities into other jurisdictions.
If your state does not allow conversions, alternative options—such as forming a new Texas entity and merging the old entity into it—may be necessary.
2. Draft a Plan of Conversion
Texas law requires a Plan of Conversion, which outlines:
This plan must be approved according to your current entity’s governing documents and applicable state law.
3. File a Certificate of Conversion and Certificate of Formation
Texas requires two key filings with the Secretary of State:
Both forms must be submitted together. The Certificate of Conversion confirms that the entity is authorized to convert and has followed the legal process. The Certificate of Formation officially registers your business as a Texas entity.
4. Pay State Filing Fees
As of this writing, the combined filing fee for conversion into Texas is approximately $300. Fees are subject to change and should be verified by the Texas Secretary of State at the time of filing.
5. Update Your Internal and External Records
After conversion, it’s important to update:
6. Close Out Foreign Registrations (If Applicable)
If your former entity was registered to do business in Texas as a foreign entity prior to conversion, you may need to file a termination or withdrawal of that foreign registration to avoid duplicate compliance obligations.
Converting your business into a Texas entity provides continuity and strategic alignment with your new operational base. But the legal and procedural requirements can be nuanced, especially when dealing with multi-jurisdictional filings and regulatory compliance. Preparing the proper documentation and meeting each jurisdiction’s requirements is essential to ensure a smooth transition and maintain your business’s legal standing.
GNS Law advises businesses on conversions and multi-state compliance, guiding entrepreneurs and business owners through each phase of relocation and reorganization. Our experience spans jurisdictions and entity types, enabling you to approach the process with clarity and confidence. If you’re planning to make Texas your company’s legal home, we’re here to support your next step. Contact us to discuss your company conversion.
Please note that this article is for informational purposes only and should not be relied on without a consultation with us where we can review your unique situation.
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