How much does an LLC cost in Texas? (details)
Forming a Texas LLC entails more than just paying the first filing fee; it doesn't have to be extremely expensive.
We outline all up-front and continuing costs for a Texas LLC and advise how to successfully cut these out of the budget.
How Much Does It Cost to Start an LLC in Texas?
There is a $300 filing fee for the Certificate of Formation with the Secretary of State when forming an LLC in Texas.
This is important in creating your LLC's legal standing, allowing it to function under Texas regulations if approved.
Apart from the LLC filing fee mentioned above, additional expenses are associated with establishing a Texas LLC (Limited Liability Company).
Costs of Forming a Texas LLC
Forming an LLC includes a one-time state filing fee of $300.
There are also ongoing fees, which we discuss below.
LLC Costs in Texas
| Requirement | Cost |
|---|---|
| LLC Name | $0 |
| Registered Agent | $0 or $125 per year |
| Certificate of Formation | $300 |
| Operating Agreement | $0 (free on our site) |
| EIN Number | $0 (free to the IRS) |
| Franchise Tax Reports | $0 |
| Taxes | varies (filed and/or paid every year) |
The filing fee for a Texas LLC Certificate of Formation is $300
In Texas, forming an LLC requires paying the Secretary of State a $300 filing fee for the Certificate of Formation. This paper creates your LLC legally if it is accepted.
After formation, you only need to pay the $300 one-time charge; after that, you won't need to pay any more monthly or yearly fees to keep your Texas LLC active.
✎ Note:
LLCs represent the predominant business structure in Texas, chosen for their robust liability protection afforded to owners, making them highly favored among business entities.
The form used to establish an LLC can vary by state; it may be called the Certificate of Formation.
In Texas, it is specifically known as the Certificate of Formation. Despite these variations in naming, they all serve the same purpose to create your LLC legally.
Reserving a business name in Texas entails a fee of $0
The creation of your Texas LLC Name Reservation is completed simultaneously if you want to file online. An additional $0 filing fee is required for an online name reservation when filing online.
Remember to include the Name Reservation with your application if you want to file by mail.
But before forming your LLC, you have to wait for the Name Reservation to be approved. Even though filing by mail can save you a few bucks, it can take longer to form your LLC.
Texas Registered Agent Fee ($0 to $125/ annually)
Under Texas law, every LLC formation requires the appointment of a Registered Agent.
Your Texas Registered Agent acts as the liaison for legal documents and state notifications on behalf of your LLC, necessitating a physical address within the state and availability during regular business hours.
You can appoint yourself, a trusted associate, or a family member as your Registered Agent without incurring additional expenses.
Alternatively, hiring a Registered Agent service costs between $100 and $300 per year. These services offer additional business support and safeguard your privacy.
Hiring a Registered Agent service is a good idea if:
- You lack a physical address in the state (Texas law mandates Registered Agents to have an address within the state).
- You prefer to keep your address private (some companies allow you to use their address for confidentiality).
Exclusive Offer!
Hire a Northwest Registered Agent to form your LLC for just $39 plus the state fee and receive a free year of Registered Agent service.
(Why is Northwest the best? Read our Northwest Registered Agent review)
LLC Operating Agreement Fee ($0)
A Texas LLC Operating Agreement functions as a written contract among the LLC's members. It outlines specific details regarding ownership, how the LLC is managed, and the distribution of profits.
Both Single-Member and Multi-Member LLCs should create an Operating Agreement, maintain it within their business records, and provide each member with a copy.
Online services generally charge between $50 to $200 for crafting an LLC Operating Agreement.
LLC EIN Number Fee ($0)
An EIN, also referred to as an Employer Identification Number or FEIN (Federal Employer Identification Number), is essential for handling tax filings, setting up an LLC bank account, and potentially facilitating employee hiring.
While some platforms may charge a fee, you can obtain an EIN for your LLC free of charge directly from the IRS. The process to apply online is simple and typically takes only a few minutes to complete.
Texas LLC Franchise Tax Report (usually $0)
Over 90% of Texas LLCs don’t have to pay a franchise tax to the Texas Comptroller’s Office, but they still need to file the necessary paperwork.
Most of our readers simply file a No Tax Due Report (if total revenue is below the threshold) along with a Public Information Report (PIR). Filing these reports is free of charge.
For established businesses in the state that have to pay franchise tax, the rates are as follows:
- 0.375% of an LLC’s taxable margin (for retailers and wholesalers)
- 0.75% of an LLC’s taxable margin (for all other businesses and those not using the EZ computation method)
- 0.331% of total revenue (if the LLC is eligible for and elects the EZ computation method)
Texas LLC Public Information Report ($0)
In addition to filing a franchise tax report, all LLCs in Texas must file a Public Information Report (PIR) annually.
There is no cost (no filing fees) for submitting the PIR to the Secretary of State.
The PIR is due at the same time as your LLC’s franchise tax reports: by May 15th. The first PIR is not due until the year after your Limited Liability Company is formed.
LLC Taxes
Some of the taxes LLC owners pay include:
- Federal taxes
- State income tax
- Local income tax
- Business taxes
- Self-employment taxes
- Sales and use tax
- Payroll tax (if you have employees)
- Property tax (if the LLC owns property)
The Taxes of Your Texas LLC taxes are affected by your industry and business activities, making it difficult to predict. Every business is different, and the taxes your LLC owes depend on your specific situation.
✎ Note:
Typically, a Single-Member LLC is taxed similarly to a Sole Proprietorship, while a Multi-Member LLC is taxed similarly to a Partnership.
Hiring an Accountant
Accounting fees can vary, but in general, expect to pay about $300 a year for basic tax returns and up to $900 for more comprehensive filings.
The best person to help you determine your small business tax liability in Texas is a certified accountant.
While accounting costs can vary, you should generally budget $300 for simple tax returns and up to $900 for more complicated filings annually.
Need to save time?
Consider hiring a professional to set up your LLC: Northwest Registered Agent offers LLC formation services starting at $39 plus the state fee.
(Find out why Northwest is the top choice for LLC formation)
Texas Secretary of State
If you're curious about the expenses involved in starting a Texas LLC, feel free to contact the Texas Secretary of State for detailed information.
Texas LLC Costs FAQs
How much does it cost to open an LLC in Texas?
It costs $300 to start a Texas LLC. This is a one-time filing fee for the LLC Certificate of Formation.
Some LLCs may need a business license in Texas. This depends on your industry and where your LLC is located. The cost of local business permits varies. Depending on what your LLC does, you may need to obtain business insurance.
How much does an LLC in Texas cost per year?
All Texas LLCs need to file an Annual Franchise Tax and Public Information Report every year. Most LLCs don’t pay anything to file these (the PIR is always free, and the Franchise Tax is based on business income).
If you hired a Registered Agent service, you’ll have an annual subscription fee to pay each year. This is usually about $125 per year.
Some LLCs may need a business license in Texas. This depends on your industry and where your LLC is located. You’ll need to check with your municipality to see if there are any annual renewal fees for the business permit.
Should I hire an LLC formation service?
You aren’t required to hire a Texas LLC formation service company to form your Texas LLC. You’re allowed to form your LLC yourself if you’d like. If you do it yourself, you’ll only pay the Texas LLC filing fee, not any service fees to a filing company.
Do I need to hire an attorney to form an LLC?
No, you aren’t required to hire an attorney to form your Texas LLC. You’re allowed to complete the LLC formation process yourself if you’d like.
However, some people may want to hire an attorney if their LLC has a complex ownership or management structure, has investors, or requires industry-specific documentation.
A business attorney usually charges between $800 and $2,500 to form an LLC.
How do I start an LLC in Texas?
Here are the steps to starting an LLC in Texas:
- Choose an LLC business name and make sure it’s available
- Choose who will be your Texas Registered Agent
- File the Texas Certificate of Formation
- Complete and sign an Operating Agreement
- Get a Tax ID Number (EIN) from the IRS
- Open an LLC bank account
- Check whether you need a business or sales tax license in Texas
What’s the cheapest way to start a Texas LLC?
You can get an LLC cheaply by filing your formation documents yourself. You’ll also save money by being your Registered Agent and using our free LLC Operating Agreement template.
By forming your LLC yourself, being your Registered Agent, and using our Operating Agreement template you can save over $400.
How long does it take to get an LLC in Texas?
How long it takes to get an LLC in Texas depends on how you file your Articles of Organization.
You can get an LLC in Texas approved in 13-15 business days if you file online using SOS Upload.
If you file online using SOS Direct, your LLC will be approved in 10-12 business days.
On the other hand, filing by mail takes about 4-8 weeks (plus mail time).
How much does a Texas business bank account cost?
It varies. Some banks charge monthly fees ($10 to $20 per month), but these can sometimes be avoided by meeting certain requirements. For example, if you make a certain number of direct deposits or maintain a specified minimum balance, then they’ll waive the monthly fees.
And you might be able to find a bank that doesn’t charge any monthly fees.
Before you open your LLC business bank account, we recommend calling and asking if there are ways to avoid the monthly maintenance fees.
How much is a Foreign LLC in Texas?
A Foreign LLC is an LLC formed in another state that must register (aka Foreign Qualify) in Texas. This is because the LLC is doing business in both states.
The Texas Foreign LLC cost is $750. This is the fee to register an LLC in Texas after it was first formed in another state.
If you form an LLC in Texas, it is called a “Domestic LLC”. If you formed your LLC in another state, it would be a Foreign LLC once you register it in Texas.
Is Texas a good state for an LLC?
Yes, Texas is a great state to start a business. Texas doesn’t charge a state business license fee, has simple LLC requirements; and the state has quick approval times and helpful representatives at the Secretary of State if you have questions.
However, the most important factors in deciding where to start a business are where you live and where you’re doing business.
Meaning, if you live in or do business in Texas, then you should start your business in Texas. While many websites talk about tax rates and the advantages of certain states, none of that applies if it’s not the state where you live and do business. And just because a certain state has cheaper LLC fees doesn’t mean it’s a good idea to form your LLC there.
For example, if you form an LLC in Wyoming, but live in and conduct business in Texas, you’ll also need to register your Wyoming LLC in Texas (and pay a much higher registration fee than if you had formed a domestic Texas LLC). And you’ll end up paying Texas taxes anyway. This ends up leading to more costs and more headaches with no advantages.
In summary, if you are a Texas resident, then yes, Texas is the best state to form an LLC. If you don’t live in and do business in Texas, then no, Texas probably isn’t a good state to start an LLC.
(And don’t forget, an LLC is the best business structure for protecting personal assets)