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.

LLC Service

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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

The most important question to ask when setting up a business is “How much does it cost to maintain an LLC in Texas?” The answer to this question varies depending on the type of business and the state that you’re in. In general, LLCs are free to set up, but they must file annual reports with the state and pay a privilege tax. Although these fees may seem high, they are actually one-time and can save you a lot of money in the long run.

As with any business, there are some fees associated with LLC maintenance. First of all, a Texas LLC requires the payment of franchise taxes and annual reports. These fees are different for different types of businesses, so you need to contact the Texas Department of Licensing & Regulation for more information. In addition, you’ll need to pay a fee for the renewal of your business license and permits. These fees can vary from $100 to $101.

Once your business is registered in Texas, you’ll need to pay fees to maintain it. These fees can range anywhere from $50 to $300 depending on the type of business. A registered agent is essential for maintaining an LLC in Texas. If you’re an investor, you’ll need a certified copy of your LLC Certificate of Formation, which can cost you as little as $30. Lastly, you’ll need to pay the franchise tax, which is a required part of forming an LLC in Texas.

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.

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