Key Takeaways

  • Forming an LLC in Texas requires a one-time $300 filing fee.
  • Texas does not require a separate annual report filing fee, but businesses must file a Franchise Tax Report and Public Information Report annually.
  • The franchise tax may be zero if revenue is below the no-tax-due threshold ($2.47 million for 2024).
  • Additional optional and ongoing costs can include registered agent services, business licenses, name reservations, and certified copies.
  • Veterans may be eligible for a filing fee waiver under the Texas Veteran LLC program.

Understanding Texas LLC annual fees is important when establishing and maintaining your business. In addition to the one-time fee paid to the Texas Secretary of State for registering your business, you may have to pay ongoing franchise taxes. There's also an annual fee to keep your LLC in good standing.

An Overview of Texas LLCs

Limited liability companies are regulated by Title 3, Chapter 101 of the Texas Business Organizations Code. To establish a Texas LLC, you must file the formation document referred to as the Certificate of Formation to the Texas Secretary of State.

When filing the document online, the Secretary of State's office will send you a zip file confirming your LLC has been created within one to two business days. After receiving confirmation, you can then:

  • Obtain an employer identification number (EIN)
  • Draft your LLCs Operating Agreement
  • Open a business bank account
  • Obtain your Texas Sales Tax Permit from the Comptroller's office

Filing Your Certificate of Formation

To file your Certificate of Formation in Texas, you must:

  • Select your LLC name
    • The business name must contain the words Limited Company, Limited Liability Company, or an abbreviation (i.e., LLC, L.L.C., etc.)
  • Secure a registered agent
    • A registered agent is a person or business qualified to receive legal documents on your behalf
    • Registered agents are required to operate an LLC in Texas
    • You must obtain your registered agent's consent
    • List your registered agent on your Certificate of Formation and maintain this listing on company records at all times
    • The registered agent must have a physical address in Texas where they can receive documents during normal business hours
  • Decide whether your LLC is manager-managed or member-managed
    • LLC members, or owners, can choose to manage the company's daily operations themselves
    • Your LLC can be governed by all members as a whole, meaning that every member has management responsibilities and authority
    • If you prefer, you can hire outside managers who are nonmembers to run the business
    • With a manager-managed LLC, members still have the ultimate authority to make business decisions
    • List the person in charge and their address in your Certificate of Formation document
    • There are no age requirements on officers, directors, or owners
  • List your LLCs purpose
    • In Texas, you can form a business for any lawful reason, but you must include your LLCs purpose in the Certificate of Formation
    • You may alter the purpose as needed, although doing so isn't required
  • List the LLC organizer's information
    • The LLC organizer is the person completing and filing the Certificate of Formation
    • You can choose to hire a service to complete the paperwork and serve as organizer if you don't want your own name listed
  • Other provisions
    • You may have additional provisions you'd like to include in your formation documents, such as how long the company will exist
    • If there are no special conditions, leave this field blank
    • By default, LLCs are established when the Texas Secretary of State approves your documents, but you can specify a later date in this section
  • Signature
    • When finished, be sure to sign and date your Certificate of Formation
    • Submit the document either electronically online or via mail
  • Pay the fee
    • Establishing an LLC in Texas requires a one-time $300 filing fee

Ongoing Texas LLC Requirements

Forming your LLC is just the beginning. You must also take steps to maintain the business and keep it in compliance with the state.

For starters, you must file a franchise tax and public information report with the Comptroller's office. This report is due between January 1 and May 15 and must list the names and contact information of your managers, officers, and directors. The required fee is calculated according to a taxable margin, but the average cost is about $101.

Most states refer to this fee as an Annual Report, but its other names include:

  • Annual List of Members
  • Annual Certificate
  • Biennial Report
  • Annual Registration Fee
  • Biennial Statement
  • Periodic Report
  • Decennial Report
  • Business Privilege Tax Return
  • Franchise Tax Report

Failing to pay your annual LLC fees can result in your business being dissolved. When you calculate all required fees and formation costs, you can spend anywhere from $1,000 to $3,000 on your business. Aside from the franchise tax, however, Texas imposes no additional annual fees on LLCs.

Veteran LLC Fee Waiver Program

Texas offers a unique benefit for qualifying military veterans through the Texas Veteran LLC program. Eligible veterans forming a new LLC may receive a waiver for the $300 Certificate of Formation filing fee. To qualify, the veteran must:

  • Be honorably discharged
  • Submit Form 05-904 (Verification of Veteran’s Honorable Discharge)
  • Ensure all members are eligible veterans if it's a multi-member LLC

This incentive helps reduce startup barriers for veterans entering entrepreneurship.

Optional and Additional LLC Costs

Beyond mandatory filings, your LLC may incur optional or incidental costs. These can include:

  • Registered Agent Service: If you hire a professional registered agent instead of serving as your own, expect to pay $100–$300 per year.
  • Business Licenses & Permits: Depending on your industry and location, licenses may be required at the local, county, or state level.
  • Name Reservation (optional): Reserving your LLC name before filing costs $40.
  • Certified Copies: These cost $15 for the certificate and $1 per page of additional documents.
  • Certificate of Good Standing: Useful for loans or out-of-state registration, this document costs $15.

Planning for these costs can help avoid delays or compliance issues down the road.

Franchise Tax Thresholds and Exemptions

Most Texas LLCs must file a Franchise Tax Report annually with the Texas Comptroller’s office, but not all are required to pay the tax. As of 2024, LLCs with total annual revenue under $2.47 million qualify for the “no tax due” threshold and are exempt from paying the tax, although they must still file the report.

LLCs with revenue above this threshold pay a tax based on a margin calculation. The tax rate varies:

  • 0.375% for retail or wholesale businesses
  • 0.75% for other business types

Failing to file can result in late penalties, interest, and forfeiture of the LLC’s right to transact business in Texas.

Frequently Asked Questions

1. How much does it cost to form an LLC in Texas? The one-time filing fee for a Certificate of Formation is $300.

2. Does Texas charge an annual LLC fee? Texas does not charge a separate annual report fee, but most LLCs must file a Franchise Tax Report. The tax may be $0 if revenue is under the no-tax-due threshold.

3. What happens if I don’t file the Franchise Tax Report? Your LLC may face penalties, late fees, interest, and even forfeiture of its right to conduct business.

4. Can I reserve a business name before filing? Yes. Texas allows name reservations for $40, which holds the name for 120 days.

5. Are veterans exempt from Texas LLC filing fees? Yes, eligible veterans can have the $300 filing fee waived through the Texas Veteran LLC program by submitting proof of honorable discharge.

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