Cost to create an llc in texas

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.

On this page, you’ll learn about the following:

• Texas LLC Cost of Filing
  • Cost of Filing Formation Certificates
  • Texas LLC Formation Service or Registered Agent Fee
  • Business Permits and Licenses 
• Taxes Payable to Texas Comptroller sales and Franchise
  • State Income Tax
  • State Sales & Use Tax 
  • State Franchise Tax
  • Federal Self-Employment Tax
  • Federal Income Tax
  • Employee & Employer Taxes
• Cost Comparison between states
• Other Costs
• F.A.Qs

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	Our Rating & Pricing	Top Features	Learn More
#1 TOP PICK	$49 + State Fees	Set up LLC without hassle Take you through all steps Start your LLC worry-free	Learn More
	$299 + State Fees	Turnaround in a few days EIN & Website Included Operating Agreement Included	Learn More

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.

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

• Texas Name Reservation: $40 for fillings by mail
• Doing Business As (DBA):  $25 for online filling or if filing by mail
• Certified Document Copies: $30
• Certified of Good Standing: $15
• Business Domain Name and Website: depend on your preference, but domain name could be as low as $2.99/yr at NameCheap, and web hosting is at least $30/mo at Kinsta. 
• Online workspace: at least $4.20/mo for GSuite. 
• Business Insurance: would vary depending on insurance type–whether general liability insurance or professional liability insurance–and coverage. 
• Dissolution of Texas LLC: $40

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.

If you want to establish a company in Texas, you need to know the rules and regulations that govern the formation and operation of an LLC. If you don’t know these rules, then you should consult with a professional who does. State workers are knowledgeable about business formation laws, and they follow these laws for a living. However, it is recommended that you hire an accountant for your business, and the costs of such services can vary greatly. Typically, an accountant will charge between $2,000 and $3,000 per year.

There are two types of LLCs in Texas: foreign and domestic. The former has a principal place of business in Texas while the latter has its headquarters in another state. Foreign LLCs must file an Application for Registration of a Foreign Limited Liability Company (Form 304) with the Texas Secretary of State. In addition to filing the application, LLCs also need to file a Certificate of Authority and a Foreign Qualification. These documents must be completed in duplicate and sent to the Texas Secretary of State’s office.

The biggest expense associated with Texas LLCs is the filing of the Certification of Formation. This process takes about two to three days, but you can choose to expedite the filing for an additional $25. Additionally, every Texas LLC needs to hire a registered agent, which can cost anywhere from $100 to $300 per year. Another big expense associated with forming an LLC in Texas is the annual franchise tax.

Depending on the type of business that you wish to conduct, you may also need professional licenses in order to legally operate. The costs associated with these licenses will depend on where you live and what type of business you plan to run. Certain professions require state licensure, and other cities and local governments may have their own licensing laws.

The state of Texas requires that every LLC designate a registered agent, which acts as the company’s designee. This person will receive legal documents in the name of the business and serve as its representative. While it’s possible to serve as your own registered agent, it’s more advisable to hire an experienced service to take care of this task for you. This will give you peace of mind and allow you to concentrate on your business.

In addition to the legal costs associated with forming an LLC, you’ll also need to budget for the other costs related to the operation of the business. For example, you’ll need a registered agent for the business, who will receive service documents from the state. Using a registered agent service costs about $80-$120 per year.

You may want to reserve a name to prevent other companies from using the same name as your LLC. You can also choose to use a trade name or a fictitious business name if the legal name is too formal or descriptive. To reserve a name, you’ll need to file the proper paperwork with the Secretary of State office.

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.

How long does it take to get an LLC in Texas?

How much is a single member LLC in Texas?

Can I set up my own LLC in Texas?

Is LLC worth it in Texas?