Ensure the current standing of your business in Texas by understanding the significance of a Certificate of Fact – Status, a vital document that goes beyond compliance; explore our guide below for seamless navigation and to secure the active status of your entity in the Lone Star State.
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Each state uses different legal terms to mean essentially the same thing. Texas is no different in that respect. However, the State of Texas is unique in that it uses two different forms to convey the same information, while most states use only one.
Texas no longer uses the phrase “Certificate of Good Standing.” Instead, Texas uses the phrase “Certificate of Fact – Status” (CFS) to refer to a document evidencing the existence of a business operating in the state. It’s important to note that some people still refer to the Certificate of Fact – Status as a Certificate of Good Standing in Texas.
As a business owner in Texas, you should be aware of another important document that you might need for business transactions. The Texas Comptroller of Public Accounts (Comptroller) maintains a franchise tax database. Businesses must file a franchise tax return each year in Texas with the Comptroller’s Office. The Comptroller’s Office can provide you with a Certificate of Account Status for your business verifying that your business has complied with tax requirements. If your company fails to pay the franchise tax or file the franchise tax report, you may lose the right to conduct business in Texas.
ZenBusiness helps small businesses like yours remain in compliance with Texas business laws. If you own a registered business in Texas, you may benefit from our Worry Free Compliance service to help keep your business in good standing in Texas.
A Texas Certificate of Fact – Status is a legal document issued by the Secretary of State’s office. It confirms that a registered entity is either in business, or has been either voluntarily or administratively dissolved.
On the other hand, a Texas Certificate of Account Status confirms that the company has paid its franchise taxes. If your company has not paid taxes, then the state’s Comptroller may initiate tax forfeiture proceedings. Additionally, according to the Texas Comptroller, your company will lose the right to sue or defend against lawsuits in a Texas court, and the directors or officers of the registered entity become personally liable for the debts of their business.
A Texas Certificate of Fact – Status contains vital information about the legal status of your registered business, such as:
Texas’s Certificate of Account Status signifies the current tax status of the company. Additionally, a Certificate of Account Status indicates that the registered entity filed its most recent annual franchise tax report, which is due on May 15 of every year.
Both forms, when properly certified by their respective agencies, serve as conclusive evidence of the facts stated. But if anyone ever questions the validity of the forms you provide, you could refer them to the Texas Secretary of State to verify the documents as being authentic.
You do not have to have a Texas CFS to run your business daily. Circumstances will arise during the course of operations when you might need to show that your registered entity can lawfully do business in Texas. You may need to order a Texas Certificate of Account Status or Certificate of Fact – Status if you are:
These are the most common examples of when you might need Texas Certificate of Account Status or Certificate of Fact – Status documents.
Only businesses registered in Texas can obtain a Texas Certificate of Fact – Status or Certificate of Account Status. The following business organizations must register with the Secretary of State and the Comptroller of Public Accounts:
All these entities must file a Certificate of Formation with the Texas Secretary of State and file franchise tax reports with the Texas Comptroller of Public Accounts. Sole proprietors and general partnerships do not need to register with the Secretary of State or file annual franchise tax reports with the Comptroller of Public Accounts.
Determining the proper form for your company requires a substantial amount of planning and analysis. If you decide to form a corporation or LLC, ZenBusiness can help make the process quicker and more efficient.
Your business must comply with Texas state law to get Texas Certificate of Account Status or Certificate of Fact – Status documents. You should check with the Comptroller of Public Accounts to confirm that your company filed its annual franchise tax report and paid any taxes due. Also, check with the Secretary of State’s office to confirm that it has all the required documentation. For example, if your corporation changed directors or added directors, you need to file the required Certificate of Amendment with the Secretary of State. Additionally, you need to file the proper Certificate of Amendment with the Secretary of State if you changed the name of your business.
Missing the deadline to file your franchise taxes and annual franchise tax report, or failing to file your Certificate of Amendment for a name change, could have devastating consequences for your business. You could lose the legal protections registered entities enjoy if your business does not comply with Texas law.
ZenBusiness can take the stress out of compliance. With ZenBusiness’s Worry Free Compliance service, you will have the tools you need to meet the requirements under Texas law. ZenBusiness can also help you file the appropriate documentation in the event that you alter the name of the business or change the management of your registered entity.
Businesses can order a Certificate of Fact – Status via email, fax, phone, mail, or in person. Just be aware that the Secretary of State charges an additional fee to use a credit card to purchase the certificate. If someone is in a time rush, the state also has expedited delivery for an additional fee.
You will also need to pay an additional fee for certified copies.
You can order a Certificate of Account Status through the Comptroller of Public Accounts Office.
Be certain that the information you requested satisfies the needs of the party who requested a Certificate of Account Status or Certificate of Fact – Status. Review the documents you receive carefully before forwarding them to the requesting party. You can forward the documents to the requesting party once you confirm their accuracy.
Usually, the party requesting the certificate will want one that’s relatively recent, perhaps no more than 30 days old, depending on the requester.
The importance of staying in compliance with Texas state law cannot be underestimated. If your registered business does not comply with Texas law, your company will suffer. You might lose out on financing, investors, or a new state contract if you cannot obtain a Texas CFS. ZenBusiness is a partner you can trust to help you stay in compliance with Texas state law. Check out our Worry Free Compliance service for more information. With a little help from your friends from ZenBusiness, you can concern yourself with running a profitable business rather than spending too much time worrying about legal compliance.
You can get a Texas Certificate of Fact – Status for a low fee. Check out sos.state.texas.us for current fees. The Texas Secretary of State imposes additional costs for certified copies or expedited service.
At this time, expedited requests take four to five business days to complete. Also, document requests made through SOSDirect will take four or five business days to complete. Documents requested by mail or fax might take up to one month.
Having a current Texas CFS is not necessary. You may not need one until you apply for financing, negotiate with investors, or bid on a state contract, among other circumstances.
Disclaimer: The content on this page is for information purposes only and does not constitute legal, tax, or accounting advice. If you have specific questions about any of these topics, seek the counsel of a licensed professional.
Written by Team ZenBusiness
ZenBusiness has helped people start, run, and grow over 700,000 dream companies. The editorial team at ZenBusiness has over 20 years of collective small business publishing experience and is composed of business formation experts who are dedicated to empowering and educating entrepreneurs about owning a company.
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