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

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.

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.

States	Filing Fee	Annual/Biennial Fee	Sales Tax
Texas	$300	Free	6.25%
Louisiana	$100	$30	4.45%
New Mexico	$50	Free	5.125%
Oklahoma	$100	$25	4.5%
Arkansas	$50	$150	6.5%

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

• 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

F.A.Qs

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.

One of the initial costs associated with forming an LLC in Texas is the filing fee, which can vary depending on the complexity of the business and the method of filing. This one-time expense is a necessary investment in establishing legal recognition and protection for the business entity. Additionally, there may be additional fees for name reservation, registered agent service, or expedited processing, which should be considered when budgeting for the formation of an LLC.

Once the LLC is formed, there are annual maintenance requirements that business owners must fulfill to keep the entity in good standing with the state of Texas. This includes filing an annual report and paying the associated fee, which varies depending on the size and type of the business. Failure to meet these requirements can result in penalties or even dissolution of the LLC.

Aside from the mandatory state filings, there are other ongoing expenses associated with maintaining an LLC in Texas. These may include accounting and legal fees for tax compliance, contract review, and other professional services. Additionally, there are costs for business licenses, permits, insurance, and other operational expenses that may vary depending on the industry and location of the business.

It’s important for business owners to factor in these costs when budgeting for the financial management of their LLC. While the initial investment in forming an LLC can be substantial, the long-term benefits of liability protection and operational flexibility often outweigh the expenses associated with maintenance.

Business owners should also be aware of any changes in state regulations or tax laws that may impact the cost of maintaining an LLC. Staying informed and seeking professional advice can help ensure compliance and minimize the risk of financial penalties.

Overall, the cost of maintaining an LLC in Texas can vary depending on the size and type of the business as well as the level of professional services required. By carefully planning and budgeting for these expenses, business owners can ensure the continued success and growth of their 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.