LLC Cost in Texas

Texas LLC Formation Costs - Everything You Need to Know
Denise Elizabeth P
Senior Financial Editor & Contributor
Last Updated: April 28, 2021
Date Published: February 24, 2021

If you have plans to start a Texas LLC, then you may have started to look into what it will take to get your business established and going.

But before renting an office space, hiring employees, or selling any products or services, you need to actually form your LLC and the LLC Cost in Texas.

Most likely you have come to this page because you are needing to form your LLC in Texas and get your business going and you aren’t quite sure how much it will cost to form your LLC.

Today we are going to review the LLC cost Texas so that you make sure you know how much it costs and what it will entail.

Note to LLC Owners: If you need help starting your LLC and want to make sure it is done correctly, you will want to consider using an LLC formation service.

Some of them are free + state fee while others cost a little more and take care of all of your legal paperwork and annual filings so you don’t have to miss a deadline.

Here are the top two LLC Formation Services that we recommend:

ZenBusiness$39 + State fee

They charge one of the lowest rates and are an overall best value. Their formation packages are loaded with features for a great price!

IncFile$0 + State fee

For those on a strict budget, this is your cheapest LLC service. You can add on features as needed.

Bare Minimum Cost to Start a Limited Liability Company in Texas

In this section we are going to talk about the bare minimum costs to get your Limited Liability formed in the state of Texas.

We will also include some optional (but recommended) costs as well.

Required Costs:

  • Certificate of Formation Fee: $300 for online or hard copy submissions plus a $24 fee to expedite
  • Business license in Texas: $50 – $150 and most companies are required to obtain a business license in Texas and the cost varies depending on the city in which the company is based.

Optional Costs:

  • LLC Name Reservation Fee: $40 for online or paper handling
  • LLC Formation Service: These range from $0 + State Fee and go up from there

Texas LLC Formation Costs – Everything You Need to Know

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Limited Liability Company Name Reservation Fee

If you are already set on a name for your business, we highly recommend that you apply for a name reservation.

Texas does not require you to reserve a name before starting your business, but if you are afraid someone else might use the name, then you may want to consider paying the $40 fee.

The $40 fee gives you name exclusivity for 120 days.

This gives you peace of mind that your perfect business name won’t be taken by someone else.

However, if you are ready to start your LLC now and create your Texas Certificate of Formation, then there is no need to reserve the name.

Texas Certificate of Formation Fee

This is going to be perhaps one of the most important parts of forming your business – the Certificate of Formation, also often called Articles of Organization.

Once accepted, the Certificate of Formation is what officially registers your LLC and locks in your business name.

In the State of Texas, the Certificate of Formation fee is $300 for online and paper applications.

You only register your business once, so this is not a fee that you will have to pay annually.

You will recieve a Texas Certificate stating that you are allowed to do business in the state and are a registered business entity.

Business License Fee

Not all types of businesses require a license, but many of them do, and each license has its own set of filing fee or fees.

Your LLC may require one license or multiple licenses depending on the type of business you will be running.

Furthermore, depending on the type of business, your LLC may require licenses at both the local and federal levels.

To find out which licenses and/or permits you will need, checkout the Texas Department of Licensing and Regulation site.

LLC Formation Service

Whether you like it or not, there are fees to form an LLC.

Each state has their own LLC formation Fee, even if you go the DIY route and file your own documents directly with the IRS, you still have to pay the state fee.

The most affordable option is to figure out the formation process on your own and just pay the state fee.

However, missing a step or doing something incorrectly could end up costing much more.

If you are a small business owner and the DIY route doesn’t sound like the route you want to take, you may want to hire an LLC formation service.

These services take care of the registration process for you, so you don’t have to spend the time on research, paperwork, and filings.

Most of these services (like LegalZoom or ZenBusiness) offer basic LLC formation service like Articles of Organization filing, tax consultations, LLC operating agreement, and phone/email support for a flat rate, with options to pay more for premium packages with premium services like Employer Identification Numbers, and expedited filing.

They form every type of business entity: traditional LLC (Limited Liability Company, Limited Partnership, Sole Proprietorship, Corporation, S Corporation, Partnership, and Non profit.

Registered Agent

A registered agent is simply a person or entity appointed to accept service of process and official mail on your business’ behalf.

You can appoint yourself, or in many states, you can appoint your business to be its own registered agent.

In texas you can appoint a Texas Registered Agent.

While you can serve as an agent for service of process for your own LLC, this puts pressure on you to keep up with business filings and potential legal disputes.

Sometimes it’s better to hand off that responsibility to a professional.

A Registered Agent service ensures that your annual reports and other forms are filed efficiently and on-time, saving you from the penalties of delinquent filings and the stress of having to do it yourself.

There are a lot of Registered Agent services out there but we always like to recommend Northwest Registered Agent.

They handle everything you need to form your LLC and they include a free registered agent for a year!

Attorney Fees

If you have questions or concerns about the LLC formation process or if it’s the best business structure for you, sometimes it’s best not to take chances and consult an attorney.

They’re not cheap, but they can provide essential business advice, professional filing assistance, and peace of mind.

Attorneys fees can range anywhere from $150 – $350 per hour or more while others might offer flat rate from $500 – $2000 to form you LLC and answer questions.

Of course, this all depends on the experience and location of the attorney as well as their specialties.

Foreign Qualification Fee

If you already formed your LLC in another state and are now expanding to Texas, then you will be completing an “Application to Register” rather than a Certificate of Formation.

This will register you as a foreign llc.

This requires a $750 payment which isn’t cheap!

Thankfully, this is only a filing fee that you have to pay once.

Annual LLC Fees

Texas doesn’t require LLC’s to submit annual or biennial reports like many other states do.

Taxes

LLC’s are “pass-through” entities, meaning that the business itself doesn’t need to file federal or state tax returns (read more about that here).

In otherwords, they are not taxable entities under certain circumstances.

However, Texas LLC’s must file and pay an annual Texas franchise tax with the Texas Comptroller of Public Accounts before May 15 every year.

The amount your Texas Limited Liability Company will owe depends on its revenue and margin.

Furthermore, if your business sells merchandise it will be subject to a Sales and Use Tax and/or Unemployment Insurance Tax if you have employees.

You will have to apply for a sales tax permit.

If your LLC is set up as a Corporation, you won’t have to pay the Franchise Tax, but you will have to file a separate corporate tax return and pay the corresponding corporate tax rate.

If you have a multiple member LLC or a limited liability partnership, each LLC member will have to file a personal income tax return.

A Texas corporation will have other tax laws and requirements.

For more information on the types of taxes, take a look at the Texas Comptroller of Public Accounts website.

Should I use an LLC Formation Service?

As you can see, there are several steps required to make sure that your LLC is formed correctly.

Hopefully this article helped you better understand what it takes to form and LLC in Texas as well as understand the associated costs.

If this all still seems overwhelming, then this is where using a formation service comes in handy.

If you have a little bit of flexibility in your budget or you know that the DIY route is not for you, then we strongly recommend hiring an LLC Formation Service.

An LLC formation service will make sure everything gets filed properly and expediently and they will make sure that all of your annual maintenance deadlines are not missed.

LLC formation services specialize in just that, forming businesses.

They streamline the process for you and are there to answer questions, fix mistakes, and help with legal advice and needs.

Many of them even take care of your yearly maintenance and filings for you and offer registered agent service as well.

You can add on services such as a company agreement, llc agreement, or board member fiduciary duties documents.

They do it all so you don’t have to.

Here are three popular LLC formation service options to give you an idea of what they offer:

ZenBusiness

$39

ZenBusiness is one of the most affordable options and a great value.

They are a little smaller and newer than the other two mentioned below, but have excellent customer reviews and overall features.

Northwest Registered Agent

$225

Northwest Registered Agent also included a year of registered agent service with any LLC formation package. They also offer premium customer support that is unmatched to their competitors.

If you anticipate questions or more complex LLC formation, they are the top choice. You definitely get what you pay for and more with Northwest.

Northwest is our best overall value option.

Incfile

incfile-logo

$0 + State Fee

IncFile will form your LLC for free and include a full year of registered agent service with any LLC formation package.

IncFile is at the top of our list of the best LLC formation services, year after year.

If you decide to go the DIY route and form your own LLC but need help with the Annual Reporting, checkout the following services:

MyCompany Works

For $49, MyCompanyWorks will make sure you don’t miss a deadline. They are the most affordable annual report service out there and they offer a 100% satisfaction guarantee.

Harbor Compliance

Their price varies depending on the service package that you choose, but their fully-managed services take care of everything so you don’t have to.

And if you want it all done for you, LLC formation and Annual Reporintg, then you may want to look into MyCorporation:

MyCorporation

For $99 MyCorporation will form your LLC and also include a full year of their managed annual report service.

Conclusion

Forming your business correctly is going to be your first step to success and now that you know the LLC Cost in Texas you are one step closer.

Under Texas law, if you don’t file a Texas LLC certificate or Application for Registration, you’ll be prohibited from doing business in the state until you do.

It is also important to stay on top of your Statement of Information reports and Franchise Tax payments.

If you fail to file and pay them on time, your LLC will be deemed “delinquent” and required to make outstanding payments within 60 days.

The same goes for the Sales and Use Tax.

The state has the right to suspend a delinquent LLC’s powers, rights, and privileges until it has filed its missing documents and made its overdue payments.

Late franchise tax payments will also incur a penalty amounting to 5% of the unpaid tax per month, up to 25% of the total tax.

This might all seem like a-lot, but many of these charges are one time fees and the annual maintenance fees are much smaller.

So it is in your best interest to setup your LLC correctly and stay on top of any due taxes and fees.

 

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  1. sos.texas.gov "Formation of Texas Entities" Page 1 . April 7, 2021

  2. sos.texas.gov "Business Filings & Trademarks Fee Schedule" Page 1 . April 7, 2021

  3. sos.texas.gov "Texas Secretary of State Small Business Resources" Page 1. April 7, 2021

  4. IRS.gov "Limited Liability Company (LLC)" Page 1 . April 7, 2021