Whether it’s hats, highways, or hair, everything is bigger in Texas. The same can be said for starting your own business. The state filing fee for a Texas LLC is $300, which is more expensive than in most other states. But, Texas balances it out by not charging businesses an annual renewal fee. So, other than regular operating costs and service add-ons, that initial $300 fee is the LLC cost in Texas.
A limited liability company (LLC) can provide liability protection and lend credibility to your business. It may even save you money on taxes. But before you start an LLC, it's important to understand LLC startup costs and the LLC formation process.
LLC costs begin with state filing fees, but they can also include fees for professional services, fictitious name registrations, and business licenses. These fees can add up to anywhere from a few hundred to a few thousand dollars, depending on the licenses and services you need.
The sections below will discuss each of these costs in detail.
Fast facts about Texas LLCs
A few quick facts and numbers about the cost of starting Texas LLCs:
- The Texas LLC filing fee is $300
- The business name reservation fee is $40
- The assumed name or DBA fee is $25
- Registered agent fees will vary depending on who you choose as your registered agent and the types of services your LLC needs.
- All Texas LLCs must have a registered agent
- An LLC cannot be its own registered agent
- An LLC member/owner or an LLC employee can be named as a registered agent as long as they are a Texas resident
- Registered agent services can run from $35-$300 per year, but that can vary depending on who you use as your registered agent and the services you need
Why is 2024 the year to start an LLC in Texas?
If you haven’t yet, it’s time to set up your LLC. An LLC provides many benefitswhen compared with other entity types, such as liability protection, simple set-up, and low costs.
An LLC is a type of business entity that's popular with small businesses because of its unique combination of protection and flexible management and taxation. One of the main reasons for setting up an LLC is that owners (known as members) generally aren't personally liable for LLC debts. While an LLC can continue to be taxed in the same way as a sole proprietorship or partnership, it also has the option to be taxed like a corporation. Corporations, meanwhile, have a more rigid management structure, and they must be taxed as corporations.
To form an LLC in Texas, you'll file paperwork with the Texas Secretary of State and pay a state fee. Every LLC should also have an operating agreement. While the formation process is relatively straightforward, many people use an online formation service to ensure the paperwork is completed and submitted properly.
What is the total cost to start an LLC in Texas?
The total cost to start an LLC will depend on whether you choose to add on additional services and fees.
At the most basic, starting an LLC in Texas will cost $300. This is the filing fee that must be paid to the Secretary of State.
You might also pay for:
- Expedited service: $25
- Registered agent services: $35-$300 per year
- Searching for a business name: $1 per search
- Reserving the business name: $40 for 120 days
- Opening a business bank account: depends on the bank
- Registering for a doing business as or DBA name: $25
- Requesting help from a lawyer or accountant: Charged at an hourly rate
How much is the Texas LLC formation filing fee?
Texas’LLC formation filing fee is $300.
If you’re starting a non-profit LLC, the fee is $25. Veteran-owned businesses also qualify for a reduced filing fee.
If you’re not a Texas resident and plan to start an LLC in the state, you’ll need to register for a foreign entity. The cost to start a foreign LLC is $750.
For expedited service, you can pay $25 per document that needs to be processed quickly. Certified copies of your LLC formation documents will cost $1 per page.
You can file online or in person in Texas. The cost is the same, but you’ll receive faster processing by filing online. The general processing time is 2-3 weeks, and expedited processing is 1-2 days.
How much do LLC articles of organization cost in Texas?
In Texas, you file your articles of organization at the time you file for your LLC. There is no additional cost to creating or submitting your articles of organization. The only cost is the $300 Texas LLC filing fee that all applicants must pay.
How much does a registered agent cost in Texas?
Every business entity in Texas must have a registered agent. A registered agent is the official point of contact for the business and must be available to receive legal documents.
You or another member of your LLC can act as your LLC’s registered agent. The registered agent must be a Texas resident.
You also have the option to hire a professional registered agent service. A professional service can cost between $35 and $300 per year.
How much does a Texas seller’s permit cost?
If your business will sell taxable goods or services, you’re required to get a seller’s permit. The permit is issued by the Texas Comptroller of Public Accounts.
There is no fee associated with a seller’s permit.
While applying for the permit is free, you will need to collect sales tax from customers and transfer it to the state of Texas. Sales tax is submitted on a quarterly or annual basis. Not collecting or submitting sales tax can result in fines and penalties.
How much do local business licenses cost in Texas?
There is no required statewide Texas business license.
Some industries in the state of Texas must apply for and pay for a state license. Industries that require licenses to operate include auto mechanics, salons, and alcohol sellers.
Industry-specific licenses vary in cost, starting around $15 and going up to several hundred dollars. You can find specific information in theTexas License and Permits Guide, which is updated annually.
How much is the annual LLC fee in Texas?
Texas has no annual fee for LLCs.
Your only costs will be for filing taxes, keeping your information up to date, and any additional services you hire and pay for.
How much does business insurance cost in Texas?
Business insurance is not required in the state of Texas.
Many business owners choose to get general liability insurance and workers’ compensation insurance to offer additional liability protection to their business. Depending on your industry and the risks of your specific work, you may want additional types of insurance.
An insurance agent can provide you with an estimate for the cost of insurance. General liability insurance can be quite affordable and worth the protection it offers.
What is the Texas franchise tax?
The Texas franchise tax is based on revenue and industry. In general, it falls between 0.375% and 0.75% of the taxable margin.
As of 2024, the franchise tax only applies to businesses that earn over $2.47 million in revenue. Any business that falls below that revenue rate is exempt from paying any franchise tax. No franchise tax report is required if you fall below the threshold.
If you need to pay franchise tax and don’t, you’ll incur penalties and interest and may forfeit the business’s right to operate in Texas.
How much does a DBA cost in Texas?
The filing fee for an assumed name certificate or doing business as (DBA) is $25. If your business uses more than one assumed name, you must file a separate certificate for each. Fictitious name filings last for up to 10 years.
If an LLC regularly does business under a name other than its official business name, it must file an Assumed Name Certificate with the Texas Secretary of State. The certificate lists the fictitious name and the identity of the entity that registered the name. A fictitious business name filing notifies the public that the LLC is doing business under a different name, but it does not give the LLC any exclusive rights to use the fictitious name.
A foreign LLC whose official LLC name isn't available for use in Texas can register a fictitious business name and use that name to register the LLC to do business in Texas.
Consult with an attorney if you aren't sure whether you need to file an assumed name certificate.
What are annual taxes for a Texas LLC?
LLCs may have ongoing costs, such as local, state, and federal taxes.
State taxes
At the state level, Texas does not have a personal income tax. It also does not levy a corporate income tax apart from the annual franchise tax.
Federal taxes
An LLC's profits are subject to federal income tax. However, the way they're taxed can vary because the IRS doesn't have a tax category specifically for LLCs.
Instead, the IRS automatically treats single-member LLCs as though they were sole proprietorships and multimember LLCs as partnerships. The owners of LLCs taxed in this way have the same tax obligations they would have if they were doing business without an LLC—they'll pay income tax and self-employment taxes.
Some LLCs can instead elect to be taxed as an S corporation by filing a form with the IRS. An S corp is a pass-through tax entity, meaning that LLC profits pass through to the owners, who pay taxes on them at their personal tax rates. This can save some LLC owners money on their taxes.
A small business accountant can go over these options with you and help you determine how your LLC should be taxed and what you might expect to pay based on your revenue and expenses.
Other Texas fees and business costs you might encounter
There are a number ofadd-ons and fees you can choose to pay when starting your LLC. These include:
- Texas certificate of amendment: $150; $25 for nonprofits
- Certificate of correction: $15
- Certificate of merger: $300
- Change of Texas registered agent: $15; $5 for nonprofits
- Search for business name availability: $1 per search
- Business name reservation: $40
How to start your Texas LLC with LegalZoom
If starting your LLC on your own seems like an overwhelming or confusing process, you don’t have to do it alone.
LegalZoom offers an LLC service that helps you form your LLC from start to finish. While LegalZoom charges a fee for this convenient service, all you have to do is provide the required information, and we’ll file the paperwork for you.
FAQs
How long does an LLC last in Texas?
When filing a certificate of formation for an LLC, you can specify a specific duration for the business. Otherwise, a Texas LLC continues to exist until it is terminated.
An LLC can be terminated voluntarily by first following the procedures outlined in the operating agreement or state law for winding down the company's business. Next, you must obtain a Certificate of Account Status for Dissolution/Termination from the Comptroller's Office, verifying that all taxes have been paid. Finally, you must file a Certificate of Termination of a Domestic Entity with the Secretary of State. The fee for filing the certificate is $40.
The state may also involuntarily terminate an LLC's registration. For example, state law requires LLCs to maintain a registered agent within the state. If an LLC doesn't do this, the Texas Secretary of State may involuntarily terminate a domestic LLC or revoke the registration of a foreign LLC.
Is an LLC worth it in Texas?
LLC formation in Texas provides asset protection for its owners, making it a great way to keep your personal assets secure. It also offers other financial and tax benefits, making it a worthwhile option to consider.
Does it cost more to register a foreign LLC in Texas?
Yes. Registering a foreign LLC in Texas costs $750, while a domestic LLC registration costs $300.
Can you get grants to help cover the cost of starting a business in Texas?
Yes, you can find grants to help cover the costs of starting a business in Texas. Many grants are offered at the local and county level in Texas, so it’s important to reach out to your county government and local chamber of commerce.
What’s the cheapest way to start an LLC in Texas?
The most cost-effective way to start an LLC in Texas is to do it yourself. At a minimum, the cost of starting an LLC in Texas will require you to pay the $300 filing fee to the Texas Secretary of State. There is no less expensive way to legally register an LLC in Texas.
Jane Haskins, Esq., contributed to this article.
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