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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.
LLC Service | Our Rating & Pricing | Top Features | Learn More |
#1 TOP PICK  | $0 + State Fees |
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 | $0 + State Fees |
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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.
| 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 factor that must be considered when calculating the cost of maintaining an LLC in Texas is the initial formation fees. When setting up an LLC, owners must file Articles of Organization with the Texas Secretary of State and pay a filing fee. This fee can vary depending on the method of submission and any additional services requested, so it is essential for entrepreneurs to research and budget for this expense accordingly.
In addition to the initial formation fees, LLC owners in Texas must also consider ongoing costs related to compliance and administration. One critical aspect of maintaining an LLC is fulfilling annual reporting requirements. In Texas, LLCs are required to file an Annual Report with the Secretary of State by May 15th of each year. Failure to file this report on time can result in penalties and potential loss of good standing status.
Another ongoing cost to consider is the annual franchise tax. Texas is one of the few states that impose a franchise tax on LLCs, which is based on the entity’s gross receipts or margin. This tax must be filed with the Texas Comptroller’s Office each year and failure to do so can result in steep penalties and interest charges.
Aside from governmental fees, LLC owners should also budget for other expenses such as registered agent fees, business licenses, and professional services. Many LLCs opt to hire a registered agent to receive legal notifications on their behalf, which typically entails an annual fee. Additionally, depending on the nature of the business, owners may need to obtain specific licenses or permits to operate legally in Texas.
Professional services such as legal counsel, accounting, and tax preparation are also common expenses that LLC owners may incur. While these services may not be required, they can provide invaluable guidance and expertise in managing the complexities of business ownership.
While the costs of maintaining an LLC in Texas can add up, it is crucial for business owners to view them as necessary investments in the success and longevity of their enterprise. By understanding and budgeting for these expenses, LLC owners can ensure that their business remains compliant with state regulations and operating smoothly.
In conclusion, running an LLC in Texas comes with a financial commitment that must be carefully managed and planned for. By considering and budgeting for the various costs associated with maintaining an LLC, business owners can ensure that their entity remains in good standing with state regulations and positioned for 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.