Perhaps you are hoping to form an LLC in Texas. People assume that starting an LLC is difficult and costly. However, it’s generally not difficult, and the cost would vary across states. We have all the info you need to know about the cost of forming an LLC, particularly the LLC cost in Texas.
On this page, you’ll learn about the following:
Texas LLC Cost of Filing
Here are the costs involved in forming an LLC in Texas.
Cost of Filing Formation Certificates
The Texas Certificate of Formation is responsible for the majority of the cost, which could also vary depending on whether you’re forming a domestic LLC or a foreign LLC. Still, you can file both at the Texas Secretary of State.
Texas Domestic LLC
- Online Filing costs $300.
- Annual Report filing is free
- Name Reservation fee costs $25
- By Mail: Fill out the application form, and send it to Secretary of State P.O. Box 13697 Austin, TX 78711. Costs $300.
Texas Foreign LLC
- Online Filing costs $750.
- Annual Report filing is free
- Name Reservation fee costs $25
- By Mail: Fill out the application form, and send it to Secretary of State P.O. Box 13697 Austin, TX 78711. Costs $750.
Note that filing online is ideal, not only because you need to go to the Secretary of State office, but also it would be faster. You won’t have to wait in a queue in doing so.
Texas LLC Formation Service or Registered Agent Fee
You need a registered agent to form an LLC in Texas, hence, added costs for service fees. Here are three of the best LLC services on our list that will provide you with registered agents to ease your worries.
Business Permits and Licenses
The business licenses depend on your business’s activity and location and are renewed yearly. As such, the cost will vary. Check the Texas Department of Revenue for regulatory boards or agencies requiring licensing.
Taxes Payable to Texas Comptroller sales and Franchise
At the stage of its formation, an LLC has to pay certain taxes to the Federal & State Governments. This article lists all such important taxes that are to be paid by LLCs in Texas. The state taxes are to be paid to the Texas Comptroller sales and franchise. The main state and federal taxes that an LLC has to pay are:
State Income Tax
The state of Texas is among the nine states in the USA, which do not levy any state income tax.
State Sales & Use Tax
If your LLC is a seller of physical goods or a service provider providing services, it has to collect sales & use taxes & then pay them to the Texas Comptroller sales and franchise. The Sales & Use Tax varies in different regions, counties, & cities. The current state sales & use tax rate on LLC in Texas is 6.25%
State Franchise Tax
The state of Texas levies this essential tax on LLC called the State Franchise tax. This tax is for enabling the LLC to be legally valid & to be able to do business in the State. The STate Franchise Tax is also called a transaction tax or a privilege tax.
Federal Self-Employment Tax
Federal Self Employment Tax is to be paid by all the LLC Business members or managers. This kind of tax applies to all the earnings you withdraw from your business.
The Federal self-employment tax rate in Texas is 15.3 percent.
Federal Income Tax
The Federal Income Tax is levied on the Income & the amount of the Federal Income Tax depends upon your earnings, the income tax bracket your LLC falls, the deductions, & the manner/ mode of filing.
You pay Federal Income Tax on all the profits your LLC makes after calculating the deductions & allowances such as Healthcare or Retirement Plans.
Employee & Employer Taxes
An LLC with several employees drawing monthly salaries will have to bear some added Employee-Employer taxes. These tax implications vary, depending on various factors, e.g., the amount, number of employees, etc.
Cost Comparison between states
Texas is surrounded by many states, namely Louisiana, New Mexico, Oklahoma, Arkansas, etc. Each of these states has a different rate of taxes levied on LLCs. Let us take a look at this comparative chart.
States | Filing Fee | Annual/Biennial Fee | Sales Tax |
Texas | $300 | Free | 6.25% |
Louisiana | $100 | $30 | 4.45% |
New Mexico | $50 | Free | 5.125% |
Oklahoma | $100 | $25 | 4.5% |
Arkansas | $50 | $150 | 6.5% |
Based on the kind of industry you LLC operated in, your LLC will be liable to some other taxes & duties. For Example, if your LLC is in the sector of import & export, you have to pay the import-export duty. You should consult with a professional to verify the tax rates or business costs of registering an LLC in Texas.
Other Costs
- Texas Name Reservation: $40 for fillings by mail
- Doing Business As (DBA): $25 for online filling or if filing by mail
- Certified Document Copies: $30
- Certified of Good Standing: $15
- Business Domain Name and Website: depend on your preference, but domain name could be as low as $2.99/yr at NameCheap, and web hosting is at least $30/mo at Kinsta.
- Online workspace: at least $4.20/mo for GSuite.
- Business Insurance: would vary depending on insurance type–whether general liability insurance or professional liability insurance–and coverage.
- Dissolution of Texas LLC: $40
F.A.Qs
It is possible to form an LLC without professional help, but forms still have associated costs, regardless of where your LLC is formed.
It is difficult to say whether forming an LLC is expensive. Nevertheless, the cost could be anywhere from $40 to $500. If you refuse to hire professionals, you’ll still have expenses like form fees to cover.
The need to separate personal money from business funds, thus necessitating the creation of a business bank account for your LLC.
How Much Does It Cost to Maintain an LLC in Texas
To maintain an LLC in Texas you do not need to pay an annual fee. However, sales & use tax at 6.25%, state franchise tax and federal taxes are levied.
One of the main costs associated with maintaining an LLC in Texas is the initial filing fee required to establish the company. The fee will vary depending on whether the filing is done online or by mail, and whether expedited processing is requested. Additionally, there are annual filing fees that must be paid to keep the LLC in good standing with the state.
In addition to filing fees, LLCs in Texas are also required to pay franchise taxes each year. The franchise tax is based on the LLC’s annual revenue or its net surplus. Business owners must calculate their franchise tax liability accurately to avoid penalties or double taxation.
Furthermore, LLC owners in Texas must also consider the cost of maintaining a Registered Agent in the state. A Registered Agent is an individual or entity responsible for receiving legal documents and official communication on behalf of the LLC. Hiring a Registered Agent ensures that the company remains compliant with state law and avoids missing important deadlines or notifications.
Other costs associated with maintaining an LLC in Texas may include professional fees for services like legal counsel, accounting, and tax preparation. These professionals can help business owners navigate complex legal requirements and financial regulations, ultimately safeguarding the company’s success and longevity.
Another important cost to consider is the cost of insurance. Depending on the nature of the business, LLC owners in Texas may need to purchase liability insurance, workers’ compensation insurance, or other types of coverage to protect the company and its assets.
Lastly, maintaining an LLC in Texas may involve miscellaneous costs such as office rent, utilities, and other operational expenses. Business owners should account for these costs in their budgeting to ensure the smooth operation of their company.
In conclusion, the cost of maintaining an LLC in Texas can vary depending on various factors such as the size and nature of the business, as well as its annual revenue and operational needs. Understanding the expenses associated with running an LLC in Texas is essential for business owners to budget effectively and ensure compliance with state regulations. By planning for and addressing these costs proactively, entrepreneurs can position their companies for long-term success and growth in the competitive business landscape of Texas.
In Conclusion
The cost of Texas is much lower compared to other forms of business. Apart from the state filing fees and annual taxes, you might bear the cost of the registered agent. Compare the price of professional LLC services and choose the most affordable one.
Hello,
I am Salvadorean. I live in El Salvador.
My son live and work in Texas (work permit).
I would like to start a real state LLC in Texas together. The idea would be to buy a house to rent it and in the future make a bank loan to buy another one.
Is that possible considering that I do not live in the USA?
Best regards,