Key Takeaways

  • The cost to register a business in Texas depends on the business structure, with LLCs requiring a $300 Certificate of Formation and corporations costing the same.
  • Other fees include name reservations ($40), DBA filings ($25), and franchise tax filings.
  • Additional costs may apply for registered agents, business licenses, and professional permits.
  • Texas does not require LLCs to file annual reports but does require an annual franchise tax report.
  • Foreign LLCs registering in Texas must file a $750 application.
  • Some business types may qualify for tax exemptions or incentives.
  • Hiring an attorney can help ensure compliance with state regulations.

You may be wondering, "How much to register a business in Texas?" There are a lot of costs associated with starting a business, and the total will depend on which business structure you choose.

  • A DBA (Doing Business As) name is not necessarily a separate structure, but an alternative name for your business.
  • A corporation is a separate structure with shareholders, directors, and officers and provides liability protection to owners.
  • A Limited Liability Company (LLC) is a newer structure that is less complex, easier to manage, and less taxed than a corporation.

Starting a Business in Texas

Once you have chosen a structure, you can decide on a business name. Make sure your name is unique, easy to read and say, and able to age well. Running your name through a trademark search with the U.S. Patent and Trademark Office is an effective way to look for conflicts, but a competent Google search can work well too.

To check if your company name is available, search Texas's Department of State: Division of Corporations business name database. Also search for misspellings, plurals, variations, sound-alikes, etc. in case your name is rejected for being too similar to another company's.

Get a Federal Employer Identification Number (FEIN or EIN), which is like a social security number but for the company. DBAs don't need an EIN, but without one, you'll have to use your own SSN, so it's recommended to get one anyway. You can get an EIN online or fill out the IRS Form SS-4.

DBAs need to be renewed every 5 years, unless you change the name before that.

Texas doesn't require annual reports from LLCs, but the Texas Comptroller of Public Accounts (CPA) does require an annual tax franchise report. Corporations must file a “Statement of Information” or basic updates, like change in address, every year. If you miss the May 1st deadline, you'll be charged a $400 late fee.

In Texas, corporations must file their annual reports with the CPA every May 15th or the next business day. If you're late to file a franchise tax, which is a percentage of what the company made that year, you'll be charged a $50 late fee.

Understanding Business Costs in Texas

When planning to start a business in Texas, entrepreneurs must budget for various costs beyond registration fees. These may include:

  • Business formation costs such as state filing fees and registered agent services.
  • Operational expenses like leasing office space, utilities, and payroll.
  • Legal and tax compliance including professional licenses and tax filings.
  • Marketing and branding for website creation, advertising, and logo design.

Proper financial planning ensures a smooth business launch and ongoing compliance with Texas regulations.

Registering a Business in Texas

You can search for your business name on SOS Direct, which charges $1 and takes you through the whole process of registration.

You should discuss cost, liabilities, and pros and cons with a CPA or attorney before filing.

To set up a corporation, there is a fee of $300. For an LLC, it's $200 per partner. DBAs cost $25 to file.

SOS Direct is up 24/7 and may charge a credit card fee, or you can file in person at the office in Austin.

An LLC can file an Application for Reservation or Renewal of Reservation of an Entity Name (Form 501) to reserve their name for 120 days with the Texas SOS. You can do this online or through the mail for $40.

Cost Breakdown of Business Structures in Texas

The cost to register a business in Texas varies depending on the type of entity:

  • Limited Liability Company (LLC): $300 for the Certificate of Formation.
  • Corporation: $300 for Articles of Incorporation.
  • Limited Partnership: $750 for registration.
  • DBA (Doing Business As): $25 filing fee.
  • Nonprofit Organization: $25 to register.

Additionally, foreign LLCs or corporations registering to do business in Texas must file an Application for Registration with a fee of $750.

Creating an LLC in Texas

In Texas, LLCs are created by filing a Certificate of Formation (Form 205) with the SOS, containing the following information:

  • The LLC's name
  • The name and address of the registered agent
  • Whether it will be managed by members of managers
  • The governing person's name and address
  • The organizer's name and address
  • The purpose for forming the LLC
  • The effective date of the certificate
  • The termination date, if applicable

You can file the certificate online, through the SOS Direct website, or by mail for a fee of $300. Along with the certificate should be:

  • The registered agent's written or electronically signed consent form
  • Names, addresses, and initials of members and managers

An LLC outside of Texas that wants to business within the state must register with the Texas SOS. You register by filling out an Application for Registration of Foreign Limited Liability Company (Form 304). It can also be filed online or by mail for a fee of $750.

If the LLC's name is not available in Texas, it must get an Assumed Business Name. To do this, file online or by mail with an Assumed Business Name Certificate (Form 503) with the SOS for $25.

It costs $300 to file for a Certificate of Formation for a Texas for-profit corporation. Nonprofits only need to pay $25.

Additional Costs for LLC Owners

Beyond the registration fee, LLC owners in Texas should consider these additional costs:

  • Registered Agent Service: If you don’t serve as your own agent, third-party services charge around $100-$300 per year.
  • Operating Agreement: While not required by law, drafting one may cost between $100-$500 if done professionally.
  • Business Licenses and Permits: Costs vary by industry and location.
  • Annual Franchise Tax: LLCs must file a franchise tax report annually. Businesses with revenue under $1.23 million owe no tax, while those above that threshold pay a rate based on their earnings.

Proper budgeting for these costs will help avoid compliance issues.

Industry-Specific Fees and Compliance Costs

Some industries in Texas require specialized permits and licenses:

  • Restaurants and Food Services: Health permits ($250+), food handler training ($10-$50).
  • Retail Businesses: Sales tax permit (free), signage permits ($20-$200).
  • Construction and Contracting: Licensing fees ($115-$400) depending on trade.
  • Professional Services (Law, Medicine, etc.): Licensure fees range from $200-$800.

Check with the Texas Department of Licensing and Regulation to determine applicable fees for your industry.

Licenses and Permits

Texas's official government website has all the information about permits, licenses, registration, etc. Your city or county might also require that you file for specific permits and licenses, such as:

  • Alarm Permit
  • Building Permit
  • Business License and/or Tax Permit
  • Health Permit
  • Occupational Permit
  • Signage Permit
  • Zoning Permit.

Frequently Asked Questions

  1. How much does it cost to form an LLC in Texas?
    The state fee for filing a Certificate of Formation for an LLC in Texas is $300.
  2. Do I need a registered agent in Texas?
    Yes, all Texas businesses must have a registered agent to receive legal documents. You can serve as your own or hire a third-party service.
  3. Are there any annual fees for maintaining a business in Texas?
    LLCs and corporations must file an annual franchise tax report. Businesses earning under $1.23 million in revenue may not owe taxes but still must file.
  4. How do I register a DBA in Texas?
    You can file a DBA (Assumed Name Certificate) with the county clerk’s office or the Texas Secretary of State for a $25 fee.
  5. Are there tax incentives for Texas businesses?
    Yes, Texas offers incentives such as the Texas Enterprise Fund and tax exemptions for certain industries. Check with the Texas Comptroller for eligibility.

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