LLC Cost in Texas – How Much to Pay for an LLC


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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.

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.

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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.

StatesFiling FeeAnnual/Biennial FeeSales Tax
Texas $300Free6.25%
Louisiana$100$304.45%
New Mexico$50Free5.125%
Oklahoma$100$254.5%
Arkansas$50$1506.5%

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

F.A.Qs

Can I start an LLC for free?

It is possible to form an LLC without professional help, but forms still have associated costs, regardless of where your LLC is formed.

Is an LLC expensive?

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.

Does an LLC need a bank account?

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.

Title: The Price of Sustaining an LLC in Texas: Weighing the Costs

Many prospective entrepreneurs are attracted to the Limited Liability Company (LLC) structure for its flexible structure and legal safeguards. In order to ensure the continued operations of an LLC, particularly in the bustling economy of Texas, owners must be aware of its associated costs. Establishing and maintaining an LLC demands financial responsibility, with expenses ranging from initial formation fees to a variety of ongoing state requirements and other professional services necessary for smooth business operations.

Starting with the establishment of an LLC in Texas, one must budget for various fees. To properly initiate an LLC, business owners frequently enlist the assistance of attorneys or third-party service providers to navigate the registration process. While the state filing fee typically remains minimal, available support can vary in cost. These fees often include necessary services such as document preparation, administrative work, and legal advice to ensure thorough compliance with local regulations.

Alongside the registration expenses, LLC owners must bear in mind the annual franchise tax imposed by the state of Texas. This tax is levied on LLCs, ensuring equitable contributions towards government functions and public services. The franchise tax calculation is generally based on the revenue earned by the LLC, but there are alternative calculation methods available. It becomes crucial to consider this tax as an annual fixed expense that needs to be factored into the overall LLC maintenance budget.

In addition to the state’s financial obligations, LLCs must maintain accurate records and follow procedural requirements to maintain their legal status. While these ongoing obligations do not specifically incur monetary fees directly, the efforts and resources required to meet them should not be underestimated. Permitting valuable time and expertise to address recordkeeping, maintaining a proper operational framework, providing necessary public disclosures, and compliance with annual reporting can contribute to the indirect costs of maintaining an LLC in Texas.

Covering the diversity of responsibilities, LLC owners may choose to consult legal support or certified professionals well-versed in corporate strategies. These experts can offer valuable advice on mitigating risks, stretching the limitations of available tax benefits and credits, and navigating through complex regulatory environments. The enlistment of external expertise positively impacts financial decisions and long-term planning, leading to potential cost savings through avoided penalties, efficient tax management, and streamlined operations.

Furthermore, entrepreneurs must recognize that maintaining an LLC doesn’t solely pertain to financial investments. Committed involvement, managerial decision making, and a proactive approach toward compliance contribute significantly to preserving the credibility and functionality of an LLC. Naturally, these non-tangible aspects demand time, energy, and dedication, elevating the overall effort needed to sustain a flourishing limited liability company in the Lone Star state.

Understanding the costs associated with maintaining an LLC in Texas is essential for aspiring entrepreneurs and current business owners alike. It is imperative to consider multiple variables in establishing realistic budgets and ensuring compliance with state regulations, while also balancing professional advice costs and the non-monetary inputs needed for a prosperous LLC. Through thorough planning and thoughtful allocation of resources, entrepreneurs in Texas can establish a foundation for continued growth, adaptability, and long-term success.

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.


About Author & Editorial Staff

Steve Goldstein, founder of LLCBuddy, is a specialist in corporate formations, dedicated to guiding entrepreneurs and small business owners through the LLC process. LLCBuddy provides a wealth of streamlined resources such as guides, articles, and FAQs, making LLC establishment seamless. The diligent editorial staff makes sure content is accurate, up-to-date information on topics like state-specific requirements, registered agents, and compliance. Steve's enthusiasm for entrepreneurship makes LLCBuddy an essential and trustworthy resource for launching and running an LLC.

1 thought on “LLC Cost in Texas – How Much to Pay for an LLC”

  1. 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,

    Reply

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