Cost to File LLC in Texas: Everything You Need to Know
The cost of filing for an LLC in Texas includes $40 for name reservation, $300 for obtaining a Certificate of Formation, and other fees.4 min read
The cost of filing for an LLC in Texas includes $40 for name reservation, $300 for obtaining a Certificate of Formation, and other fees. The fees vary depending on whether the desired LLC is a for-profit or non-profit organization, and whether it is foreign or local. LLC costs can be grouped into fees incurred in getting a name, those for getting a Certificate of Formation, those for taxes, and fees for licenses and permits.
Fees Incurred in Name Registration
The first step in forming an LLC in Texas is obtaining a name. The name you choose must meet all Texas regulations and be distinguishable from other registered organizations.
You can check any name's availability online. Once you verify that the name is available, you can reserve it for up to 120 days. File an Application for Reservation Form, Form 501, with the Secretary of State. Here are the fees involved in name reservation:
- Filing for name reservation costs $40.
- Foreign LLCs whose names are not available for use in Texas can file for an Assumed Name Certificate. This can be done using Form 503 at a cost of $25.
Fees Incurred in Filing Certificate of Formation Documents
An LLC in Texas is created when the Texas Secretary of State issues a certificate of formation. To obtain the certificate, you need to file the Certificate of Formation form, Form 204. The fees include the following:
- $300 filing fee to file the Certificate of Formation.
- Non-profits are only required to pay $25.
- Filing the Acceptance of Appointment and Consent form for a registered agent, Form 401-A, costs $15 for for-profit LLCs and $5 for nonprofits.
You might pay extra for other services from the Secretary of State's Office.
- Withdrawal from a foreign organization incurs a Certificate of Withdrawal of Registration fee of $15.
- Expedited processing will cost you an extra $25.
Note that the fastest way to file is online. The payment can be made using a credit card, but you will be charged an extra 2.7 percent convenience fee. Otherwise, you can mail the check and the printed documents or deliver them physically.
LLCs organized from out of state should file an Application for Registration of Foreign LLC form, Form 304, online or by mail.
- The filing fee is $750.
Obtaining a Certificate of Formation signals the formation of an LLC. For the company to function, however, you will also need to file for taxes, licenses, and permits.
Costs Incurred for Taxes
1. Federal Taxes
2. State Taxes
The State of Texas requires LLCs to file the Texas Franchise Tax. Your new LLC should submit an initial franchise tax report to the Texas Comptroller and then file every year. LLCs must file the tax whether they qualify to pay or not. The tax is levied according to the business's gross revenue and applies to all businesses whose gross revenue is $1,130,000 or more.
- The franchise tax is 0.375 percent for wholesale and retail businesses.
- It is 0.75 percent for other businesses.
Note that filing the franchise tax is a complex affair likely necessitating the aid of a financial specialist or CPA. You are required to first file federal taxes before filing the Texas franchise tax.
Fees and Penalties
The franchise tax is due annually by May 15th. Penalties for late payment are as follows:
- $50 + 5 percent of the tax amount if you are less than 30 days late.
- $50 + 10 percent of the tax amount if you go beyond 30 days late.
3. Sales Tax
If your LLC will be involved with selling goods or services, you'll need to get a Texas Sales Tax Permit. File a Texas Sales Tax Permit Application with the Comptroller's office either online or by mail.
- Filing is free.
- There is a 6.25 percent sales tax.
- Local authorities like cities and municipalities usually levy their own sales tax, typically at a rate of about 2 percent.
- The effective sales tax in many parts of Texas is therefore about 8.25 percent.
Costs Related to Business Permits and Licenses
There is no state-level business license in Texas, but your LLC will probably need a small business license to function. Licenses vary according to the nature and location of your business. Professions and occupations such as architects and dentists are required to obtain special state occupational licenses.
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