Texas LLC Annual Fees and Formation Costs [2024] (2024)

Calculating monetary expenses is among the crucial steps before incorporating your limited liability company. With complex business filings and legal documents to maintain good standing, losing track of your incurred costs is very likely. In this step-by-step guide, our business experts will show how to handle your Texas LLC annual fees properly to avoid non-compliance risks.

To form a Texas business, you’re obliged to choose a distinct trade name not similar to other companies operating within the state. So if you’re still in the middle of planning and taking your time in handling formation documents for your limited liability company, our team’s advice is to reserve your business name for the Texas Secretary of State. It costs only around $40.

Although it’s not a mandatory requirement, going through this process will lessen the chances of your Texas LLC being involved in trademark issues. Should disputes occur, your business could suffer additional expenses like fees for legal advice and other law firm services.

As you may already know, there are several requirements that any Texas LLC must accomplish before its business structure gets legally formed. Among all of them, the initial formation document that you need to secure is the Certificate of Formation (Form 205), which includes your company’s contact information and elected registered agent service or individual.

After submitting your Certificate of Formation to the Texas Secretary of State, you probably think you’re done with all the legal documents needed to run your LLC — but let us stop you there. Despite not being a mandatory requirement, curating operating agreements could save you pennies and time when faced with internal disputes when you form an LLC.

Any LLC in Texas with the intention to hire employees or open a business bank account will find the need to acquire an employer identification number. The federal government also requires employer identification numbers for tax purposes.

Although some formation companies include EIN in their service packages, you can obtain it at no cost at IRS. Keep in mind that this registration isn’t the same as your business Taxpayer Number (for Franchise Tax) from Texas Comptroller.

Aside from the state filing fee, any LLC in Texas must pay local, state, or federal taxes. However, federal income taxes for a Texas LLC aren’t filed to the company itself. Instead, all losses and profits flow through the personal income tax return of LLC members. If an LLC only has one member, it’ll be taxed as a sole proprietorship.

Under the Texas law or most commonly known as Texas Business Organizations Code (“BOC”) regulations, any business operating within the state must maintain a registered agent with a physical address available to receive documents during normal business hours [1].

Some Texas LLCs opted to sign up for professional companies to handle all their filings, such as submitting the Certificate of Formation and other needed documents to make your business legal. These service providers also allow you to execute your LLC formation online through their navigational platform.

As an out-of-state business, you’re not exempted from any TexasLLC fees or formation requirements. In fact, filing an Application of Registration to the Secretary of State costs around $750.

To form your LLC and operate legally in Texas, you need to file a formation certificate to the state’s office along with a processing fee. This procedure can be accomplished online, through mailing services, or personal appointments. On top of that, you must create an operating agreement.

We also suggest acquiring EIN right away if you’re hiring employees and opening a bank account for your business finances.

Although most small LLCs aren’t obliged to pay franchise tax fees, filing an annual report to the office of Texas Comptroller is a must. For this case, you can submit a No Tax Due Report if your revenue didn’t exceed set limits.

However, if your LLC reaches revenue requirements, the taxes you’ll pay varies from certain taxable margins and total profits.

While paying annual fees allows you to maintain your liability protection privileges, it also saves your LLC from additional expenses from penalties and administrative disputes that could lead to forced dissolution. Filing a periodic report also makes it easier for an entity to wind up in case LLC members agree to do so.

No, there’s no annual fee to form an LLC in Texas. However, the Texas Comptroller obliges any business operating in its jurisdiction to file a yearly franchise tax report. The filing and processing of these annual reports will also cost your LLC nothing. On the other hand, the franchise tax rates of an LLC in Texas vary depending on the nature of your business and revenues.

Yes, you have to renew your LLC business license every year in Texas, depending on the date of issuance. To renew the application for registration of your entity, you must submit the form to the Texas Business Organization Code (BOC) office, along with the filing fee amounting to $40. The payments may be settled through checks, debit cards, and money orders.

The only LLC renewal fee in Texas is the yearly taxes from your business revenues. Despite not having annual registration fees, you are obliged as an entity to submit franchise tax reports and public information reports to the Texas Comptroller. These filings also cost nothing and could be filed through the state’s website platform.

As you may already have noticed, Texas LLC annual fees offer a bit of an advantage to small businesses. However, this leverage doesn’t exclude you from filing an annual report. Should you find yourself overwhelmed with all the legal requirements, we highly recommend seeking professional services like formation companies and registered agent providers.