It cost $300 to create an LLC (limited liability company) in Texas. The LLC’s Certificate of Formation is filed with the Texas Secretary of State.
Many factors affect the cost of an LLC. Non-profit and for-profit organizations have different rates. You must also pay proper licenses, permits, or other documentation fees. You must understand the costs associated with starting and maintaining an LLC within Texas.
Texas Limited Liability Company
To form a limited liability company (LLC), you must file a Certificate Of Formation (Form 205) with the Texas Secretary of State.
You must do these things before you file your Certificate of Formation.
- Choose a name that suits your company and is not associated with any other entity.
- The Internal Revenue Service will issue a federal employee identification number, EIN
- Make a Texas LLC operating contract.
- You can decide whether you want to be your own registered agent or hire a service.
- For the LLC, open a bank account.
- Get the proper business license and permit.
- The Texas comptroller’s Office will accept a Texas sales tax permit.
- Find out the bylaws of your organization.
- You will need to decide whether or not the LLC will be managed jointly by members.
Filing fees
Most LLCs pay $300 to file a Certificate Of Formation. Non-profit organizations pay $25. Some services may require additional fees. These are just a few examples.
- $15 to process a certificate of withdrawal
- $15 to file an acceptance of appointment (Form 401A) and consent (Form 412-A).
- $25 rush orders
You can pay the state using money orders and personal checks. Any major credit card can be used to pay. For using a credit card, however, an additional 2.7 percent will be charged for filing fees.
Texas Annual Report Fee: No Charge
Texas requires LLCs to file annual reports with the Secretary of State.
This form can be submitted through the Texas Comptroller of Public Accounts website. This form is due May 15. Failure to file within the deadline period in Texas carries a $50 late penalty
Registered Agent Fee
You can be your registered agents in Texas, but a registered agent service will help you keep your company compliant and remind you of important filing deadlines to avoid paying late fees.
If you want to use an LLC service, visit our list of the best LLC services in Texas.
The Cost to Form a Foreign LLC in Texas
If your LLC is already registered in another state and you want to expand your business in Texas, you will need to register as a foreign LLC.
$750 is the cost to register a Texas foreign LLC. A Foreign Limited Liability Application can be filed in Texas to register a foreign LLC.
Texas LLC taxes
An LLC’s federal income tax requirements depend on whether it is a corporation, single member LLC, or limited liability partner.
Texas requires LLCs to pay a franchise fee. An LLC’s tax liability is determined by the total revenue of the business. Most businesses pay 0.75 percent tax. Wholesalers and retailers, however, pay 0.375 percent.
Since Texas doesn’t have a personal income tax, most LLCs don’t need to pay state income taxes. Even though LLCs with less than $1.13 million in gross revenue are not required to pay state income taxes, they still need to file a report. Texas has a 6.25 percent sales and uses tax. Many cities and municipalities add a 2 percent tax to their sales tax.
Each year, LLCs must submit a public and tax report to the Texas comptroller before May 15. This process can be complicated and requires the help of a certified public accountant. Before it can file the Texas franchise tax, the LLC must first file its federal taxes.
Late fees of $50 must be paid by LLCs if they miss the deadline for filing their franchise tax reports. An additional 5 percent must be paid if the LLC is more than 30 calendar days late and 10 percent if it is more than 30 calendar days late.
Texas Business Tips
If you’re looking to form an LLC in Texas, conducting a Texas LLC name search is crucial to ensure that your desired business name is available and compliant with the state’s requirements. Once you’ve confirmed name availability, you can proceed with the formation process and get your Texas business name registered.
Drafting a Texas LLC operating agreement is highly recommended to establish the internal rules and regulations of your LLC. You have the option to act as your own registered agent in Texas, handling the receipt of important legal and tax documents on behalf of your LLC.
The length of time to get an LLC in Texas may vary based on several factors, including the filing method and the workload of the Texas Secretary of State. It typically takes around 2-3 weeks for the formation documents to be processed and the LLC to be officially recognized. As part of the process, you will need to obtain an Employer Identification Number (EIN) for your TExas business from the Internal Revenue Service (IRS). This unique identifier is necessary for tax purposes, opening bank accounts, and hiring employees.
Several online platforms and registered agents offer comprehensive LLC services, including name availability searches, document preparation, and filing assistance. Researching and selecting the best LLC services and registered agents in Texas can help streamline the formation process and ensure compliance with state regulations. Additionally, depending on the nature of your business activities, you may need to acquire specific Texas business licenses at the state or local level. The cost to form an LLC in Texas typically includes filing fees and any additional expenses related to name reservation, certified copies, or expedited processing. The cost is the same even for a single-member LLC in Texas.
Lastly, if you ever decide to change your registered agent or dissolve and close your LLC in Texas, there are specific legal requirements and procedures that must be followed to formally terminate the entity.
What is the average time it takes to start an LLC?
After all paperwork has been completed, LLCs may file the Certificate Of Formation via the Texas Secretary of State’s website. You will receive an email confirmation that your LLC was formed when you submit your online application. This usually takes between 24 and 48 hours. This process can take between two and five days via the mail.
You can also file your paperwork in person at the Secretary-of-State building in Austin for faster service. The Secretary of State building in Austin can confirm that your LLC is formed. You can also have confirmation by mail.
Is a Texas LLC required to obtain a business license?
Although Texas does not have a state-level business license, it is important to be aware of small business licenses that may be available for your industry. Certain professions require occupational licenses. The following information must be included when applying for a business license:
- Tax ID number
- Information about insurance
- Articles of organization or incorporation
- Your mission
Many factors affect the cost of an LLC in Texas. It is important to know what you can expect. This will ensure that your application process goes smoothly.
FAQs
What Are the Costs Involved in the Formation of a Texas LLC?
The formation of an LLC in Texas comes with a variety of associated costs. The primary cost you should be aware of is the filing fee for the Certificate of Formation, which is $300 in Texas. This state fee can be paid online, through mail, or in person. Expedited filing is available for an additional charge.
You’ll also need a registered agent for your LLC for compliance purposes. Costs for this service can range widely, usually between $100 to $300 per year.
Texas imposes a franchise tax on LLCs, but the rate can vary depending on the revenue of your business entity. Additionally, you may need a business license, whose cost can range from $25 to $500, depending on the type of business and municipality.
Professional licensing may be required for certain professions, necessitating additional services, exams, and specialized training for applicants.
Optional services include name reservation, DBA (Doing Business As), and a Certificate of Good Standing, adding another potential $50 to $100 in government fees.
What Are the Ongoing Costs for Maintaining a Texas LLC?
Once you’ve completed the formation process, it’s crucial to understand the ongoing costs for maintaining your legal entity. Texas doesn’t require an annual report, but you will have annual renewal requirements like the franchise tax, which has its own due date. If missed, your LLC will become delinquent, incurring penalties and interest.
Taxation in Texas depends on your revenue, and you should always be aware of any state regulations that could affect your tax obligations.
Maintaining any professional licenses involves its own set of charges and compliance requirements, often requiring specialized training and exams.
Also, remember to renew your business license. Failing to do so can result in an unregistered status and possible penalties.
For those who have foreign LLCs, registering in Texas requires an extra form and filing fee of $750.
Last but not least, if you have employees, you must have workers’ compensation insurance. The rate for this will depend on various factors such as the number of employees and the nature of the work.
To give you a rundown, the cost of starting and maintaining an LLC in Texas involves several government fees and compliance mandates. Register in the appropriate jurisdiction and stay current with all due dates to avoid complications.
