LLC Cost in Texas – How Much to Pay for an LLC


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Perhaps you are hoping to form an LLC in Texas. People assume that starting an LLC is difficult and costly. However, it’s generally not difficult, and the cost would vary across states. We have all the info you need to know about the cost of forming an LLC, particularly the LLC cost in Texas.

Texas LLC Cost of Filing

Here are the costs involved in forming an LLC in Texas.

Cost of Filing Formation Certificates

The Texas Certificate of Formation is responsible for the majority of the cost, which could also vary depending on whether you’re forming a domestic LLC or a foreign LLC. Still, you can file both at the Texas Secretary of State

Texas Domestic LLC

  • Online Filing costs $300. 
  • Annual Report filing is free
  • Name Reservation fee costs $25
  • By Mail: Fill out the application form, and send it to Secretary of State P.O. Box 13697 Austin, TX 78711. Costs $300.

Texas Foreign LLC

  • Online Filing costs $750.
  • Annual Report filing is free
  • Name Reservation fee costs $25
  • By Mail: Fill out the application form, and send it to Secretary of State P.O. Box 13697 Austin, TX 78711. Costs $750.

Note that filing online is ideal, not only because you need to go to the Secretary of State office, but also it would be faster. You won’t have to wait in a queue in doing so.

Texas LLC Formation Service or Registered Agent Fee

You need a registered agent to form an LLC in Texas, hence, added costs for service fees. Here are three of the best LLC services on our list that will provide you with registered agents to ease your worries.

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Business Permits and Licenses 

The business licenses depend on your business’s activity and location and are renewed yearly. As such, the cost will vary. Check the Texas Department of Revenue for regulatory boards or agencies requiring licensing. 

Taxes Payable to Texas Comptroller sales and Franchise

At the stage of its formation, an LLC has to pay certain taxes to the Federal & State Governments. This article lists all such important taxes that are to be paid by LLCs in Texas. The state taxes are to be paid to the Texas Comptroller sales and franchise. The main state and federal taxes that an LLC has to pay are:

State Income Tax

The state of Texas is among the nine states in the USA, which do not levy any state income tax.

State Sales & Use Tax 

If your LLC is a  seller of physical goods or a service provider providing services, it has to collect sales & use taxes & then pay them to the Texas Comptroller sales and franchise. The Sales & Use Tax varies in different regions, counties, & cities. The current state sales & use tax rate on LLC in Texas  is 6.25%

State Franchise Tax

The state of Texas levies this essential tax on LLC called the State Franchise tax. This tax is for enabling the LLC to be legally valid & to be able to do business in the State. The STate Franchise Tax is also called a transaction tax or a privilege tax.

Federal Self-Employment Tax

Federal Self Employment Tax is to be paid by all the LLC Business members or managers.  This kind of tax applies to all the earnings you withdraw from your business. 

The Federal self-employment tax rate in Texas is 15.3 percent. 

Federal Income Tax

The Federal Income Tax is levied on the Income &  the amount of the Federal Income Tax depends upon your earnings, the income tax bracket your LLC falls, the deductions, & the manner/ mode of filing.

You pay Federal Income Tax on all the profits your LLC makes after calculating the deductions & allowances such as Healthcare or Retirement Plans.

Employee & Employer Taxes

An LLC with several employees drawing monthly salaries will have to bear some added Employee-Employer taxes. These tax implications vary, depending on various factors, e.g., the amount, number of employees, etc.

Cost Comparison between states

Texas is surrounded by many states, namely Louisiana, New Mexico, Oklahoma, Arkansas, etc. Each of these states has a different rate of taxes levied on LLCs. Let us take a look at this comparative chart.

StatesFiling FeeAnnual/Biennial FeeSales Tax
Texas $300Free6.25%
Louisiana$100$304.45%
New Mexico$50Free5.125%
Oklahoma$100$254.5%
Arkansas$50$1506.5%

Based on the kind of industry you LLC operated in, your LLC will be liable to some other taxes & duties. For Example, if your LLC is in the sector of import & export, you have to pay the import-export duty. You should consult with a professional to verify the tax rates or business costs of registering an LLC in Texas.

Other Costs

How Much Does It Cost to Maintain an LLC in Texas

To maintain an LLC in Texas you do not need to pay an annual fee. However, sales & use tax at 6.25%, state franchise tax and federal taxes are levied.

When forming an LLC, there are a few costs that must be covered. In Texas, these are paid when the company files its annual reports with the state. These are filed through the e-service portal at the Secretary of State’s website. These reports are necessary for the LLC to stay in good standing. They include the franchise tax report and the public information report. If you fail to file them, penalties and interest will be incurred.

The initial set-up fee for a standard Texas LLC is around $1,000 to $3,000. In addition to that, Texas LLCs must pay franchise tax and business licenses and permits. They must also pay federal, state, and payroll taxes. More information on these fees can be found on the Texas Business Tax page.

Depending on the type of business and location, Texas LLCs may need certain professional licenses before they can begin doing business. The costs of these licenses will vary. However, they are usually not very expensive and may save you a significant amount of time. Another Texas LLC expense is time. The time you spend forming the LLC may be better spent launching your business or running it. There are services that can help you save money and time by forming your LLC online.

Another fee that you need to consider when forming an LLC in Texas is the cost of a registered agent. This fee varies from state to state. In Texas, the average fee for registering an LLC is about $100. Some businesses require special licenses that may cost more than that. You should contact the Texas Department of Licensing and Regulation for more information.

During the formation process, you must designate a registered agent. This person will be the primary point of contact between the state and the LLC and will accept service of process if a lawsuit is filed against the business. The agent must be willing to accept the appointment.

The Secretary of State will also require you to file your certificate of formation with the state. The process will take about five to seven days, and you will need to pay around $30. In addition to the certificate of formation, you’ll need to file an operating agreement with the state. This legally binding document spells out ownership terms and management decisions.

Every LLC in Texas must appoint a registered agent. This agent can be an individual or a company registered in the state. The registered agent should have a physical address in Texas. The registered agent can be free or can cost around $50. To avoid such a costly process, you should hire a registered agent service to serve as your registered agent.

While there are several required expenses for operating an LLC in Texas, some are optional. These expenses vary according to the type of business. For example, if you plan to provide professional services, you might need to hire a lawyer to draft your operating agreement. These expenses can add up if you don’t have the experience in this area. You can also use an operating agreement template to create a legally binding document.

F.A.Qs

Can I start an LLC for free?

It is possible to form an LLC without professional help, but forms still have associated costs, regardless of where your LLC is formed.

Is an LLC expensive?

It is difficult to say whether forming an LLC is expensive. Nevertheless, the cost could be anywhere from $40 to $500. If you refuse to hire professionals, you’ll still have expenses like form fees to cover.

Does an LLC need a bank account?

The need to separate personal money from business funds, thus necessitating the creation of a business bank account for your LLC.

In Conclusion

The cost of Texas is much lower compared to other forms of business. Apart from the state filing fees and annual taxes, you might bear the cost of the registered agent. Compare the price of professional LLC services and choose the most affordable one.

1 thought on “LLC Cost in Texas – How Much to Pay for an LLC”

  1. Hello,

    I am Salvadorean. I live in El Salvador.

    My son live and work in Texas (work permit).

    I would like to start a real state LLC in Texas together. The idea would be to buy a house to rent it and in the future make a bank loan to buy another one.

    Is that possible considering that I do not live in the USA?

    Best regards,

    Reply

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