Texas LLC Fees

Everything is bigger in Texas! Is that saying true when talking about business expenses like LLC fees? Yes and no.

The Lone Star State is an economic powerhouse with one of the strongest and fastest growing economies in the country. Texas has one of the largest volumes of LLCs because it gives business owners freedom to customize their LLC dwellings. It’s reported that Texas has over 250,000 active LLCs!

With so many LLCs being formed, the state definitely has some major advantages for business owners, but are the LLC fees worth it? Let’s take a deeper look!

What is an LLC?

A limited liability company (LLC) is a business structure in the United States whereby the owners are not personally liable for the company's debts or liabilities. Limited liability companies are hybrid entities that combine the characteristics of a corporation with those of a partnership or sole proprietorship.

LLCs are an entity type to protect business owners. Whether you’re a one-man business owner, have a few employees, or hundreds of employees, establishing an LLC protects you while your business continues to grow and expand. With no formalities such as requirements for special meetings or substantial corporate records, LLCs are one of the most popular types of business legal structures – especially for startup businesses and small companies.

How Much Does it Cost to Start an LLC in Texas?

Starting an LLC will cost different amounts depending on the state in which you choose to register and operate. To form an LLC in Texas, members need the following:

  • A unique name not currently used by another Texas company
  • A street address
  • A registered agent
  • Each member’s name and address
  • A completed Certificate of Formation
  • The one-time state filing fee of $300

LLC state filing fees range between $40 and $500. As of 2020, the average filing fee for an LLC in the United States is $132. For a list of LLC state filing fees, please click here: LLC filing fees by state. Beside the state's filing fees, there are other costs to consider when setting up your LLC.

What are LLC Expenses and Fees?

If you plan to establish an LLC in Texas, it’s important to know all of the expenses and LLC fees. There are startup costs that are one-time fees and annual fees associated with an LLC.

Startup Costs

A new LLC formed in Texas must file a Certificate of Formation—Limited Liability Company (Form 205) with the Texas Secretary of State and pay a one-time $300 filing fee.

Depending on your business needs, your startup fees could increase from $300 to $375. For example, if you need a certified copy of the Certificate of Formation, there is a $30 fee. If you need a Certificate of Status, there is a $5 fee. If you want to file an Application for Reservation or Renewal of Reservation of an Entity Name (Form 501), you’ll pay a $40 fee.

In a nutshell, these are the startup fees to consider when forming an LLC:

  • Company Name
  • Filing Articles of Organization
  • Publication (if required)
  • Operating Agreement
  • EIN (Employer Identification Number)

Annual Costs

The LLC annual fee is an ongoing fee paid to the state to keep your LLC in compliance and in good standing. It’s usually paid every 1 or 2 years. In Texas, there are no annual registration fees for LLCs. There are optional fees for certain changes such as amending the articles of organization or changing the registered agent (each $15 in Texas).

Reporting Fees and Taxes

Although LLCs in Texas are not required to file annual reports with the Secretary of State, they’re still required to file annual franchise tax reports.

State Business Tax – This is a tax based on your LLC’s net surplus. If you do not have a franchise tax due, fill out a No Tax Due Information Report (Form 05-163). If there is a tax due, there are several different report forms to choose from depending on your LLC’s unique details.

State Employer Taxes – If your LLC has employees, this is an LLC fee that you need to evaluate based on your situation. Some of your employer taxes are paid to the IRS and not covered by the state.

Sales and Use Taxes – If your LLC in Texas sells merchandise or goods, you must collect and pay sales tax. This needs to be established as you’re forming the LLC so that you can register with the Comptroller of Public Accounts. Once registered, you receive a sales and use tax permit, and then must submit a sales tax return to the CPA (usually quarterly).

It’s important to remember that LLC fees vary depending on the state in which you register and operate your business.

The total basic cost of forming an LLC in Texas is $300. However, there are optional costs and annual fees, taxes, and reports to take into consideration as well. Check the Comptroller of Public Accounts website for more information.

Is Texas a Good State to Form an LLC?

Texas business owners and entrepreneurs choose to form a Limited Liability Company due to the protection they provide, the ease of operation, and tax flexibility. The cost to form an LLC varies by state and may include the state formation fee, name reservation fee, and publication fee in addition to ongoing annual state fees.

Texas is one of the states with a higher one-time start up fee, but lower annual fee based on preferences. The Texas LLC formation cost is $300 – the same as for a corporation, but less than the cost of registering a limited partnership ($750). For federal tax purposes, an LLC in Texas has options as to how it will be taxed.

Because of all of the advantages of forming an LLC in Texas, it’s reported that over 60,000 new LLCs are formed in the state each year! For a one-time fee of $300 and no required annual fees (except taxes), how could your business grow and expand in the Lone Star State?