LLC Cost in Texas: Everything You Need to Know
The LLC cost in Texas is the cost of forming and maintaining an LLC in Texas and it includes filing fees, taxes, and permit and registration fees.4 min read
2. LLC Tax Costs in Texas
Many aspiring business owners are attracted to Texas for its large land area, large population, and large amount of natural resources. If you choose to form an LLC in Texas, you will find that the process for this is very similar to that of any other state, as are the costs. In order to form an LLC in Texas, the following steps must be followed:
*Choose an LLC name ($0—$40).* This can be done by checking the Texas LLC name search tool. Texas LLC names must not be duplicates of another LLC name, must have the phrase “Limited Liability Company” appearing in them in some form, and must not have forbidden or restricted terms, like “FBI” or “Bank,” unless authorized to do so. The Texas LLC name search will tell you if your name is allowable. There is no fee for using it, although if you wish to reserve a name for 120 days, the filing fee will be $40.
*File a Certificate of Formation ($300).* The Certificate of Formation provides basic information about your LLC to the state, including your LLC’s address and name, your registered agent’s address and name, your LLC members’ addresses and names, your LLC’s management preference (member-managed or manager-managed), and your LLC’s purpose (business pursuit). The filing fee for this certificate is $300. In Texas, LLCs are not required to file an annual report after this, so there is no fee related to that.
*Obtain an EIN ($0).* An EIN is an Employer Identification Number, and it is used by the IRS to identify your LLC for tax purposes. It is also required by most banks to open up a business bank account, which is recommended to help keep your personal and business assets separate, thereby maintaining your limited liability. An EIN must be obtained unless your LLC is single-member with no employees. There is no fee to obtain an EIN.
*Establish an Operating Agreement ($0).* An Operating Agreement is not required, but is recommended. It establishes how your LLC will be run, laying out such information as how profits will be distributed among members, what voting rights members will have, what responsibilities members will have, and how the departure of a member will be handled. operating agreements do not need to be filed with any government office and there is no fee for them.
*Get a registered agent ($15).* A registered agent is a person or business that serves and accepts legal papers for your LLC. This agent must be a resident of Texas or a business in Texas that has a physical address in the state. To have your registered agent officially registered as operating on your behalf, Form 401-A must be signed by the agent and filed with the Secretary of State. The filing fee for this is $15.
*Obtain the proper permits and licenses ($0—$?).* Technically, once the above steps are completed, your LLC will be established. However, you will still have to comply with all local, state, and federal regulations, and depending on what business you are in, permits and licenses may have to be obtained. The Texas Department of Licensing and Regulation can offer more information on this.
Foreign LLC Formation Costs in Texas
If you desire to set up a foreign LLC (an LLC based in another state) in Texas, there will be some additional costs:
The Application for Registration of Foreign Limited Liability Company fee. This is $750.
The Assumed Name Certificate fee (if your current LLC name is already taken in Texas). This is $25.
LLC Tax Costs in Texas
Operating an LLC in Texas will come with some tax costs, though in all likelihood less than it would be in most states. The Texas taxes are as follows:
- Income tax: 0%
- Corporate tax: 0%
- Sales tax: 6.25% (+ average of 2% for local municipality, city, and transit taxes)
LLCs may also be subject to the Texas Franchise Tax. This is a tax based on the total gross revenue of a business. For retailers and wholesalers it is 0.375%; for all other businesses it is 0.75%. There is a $50 late fee plus 5% if under 30 days late and 10% if over 30 days late. If your gross revenue is less than $1,130,000, you will not owe this tax, although you will still have to file an informational return.
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