Texas LLC Costs
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The limited liability company (LLC) business structure provides business owners with liability protection, special tax breaks, and a flexible management structure. A common misconception is that forming a limited liability company is a complicated and costly process in Texas. But, it is actually a pretty straightforward process, and the Texas LLC costs are cost-effective over time.
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Costs to start an LLC in Texas
1
LLC Certificate of Formation ($300)
- You will file the Certificate of Formation.
- The filing fee for your Certificate of Formation is $150.
- Texas offers expedited services for mail filings for an additional $25.
2
Texas annual report fee ($50)
- An LLC must file an annual report with the Texas Comptroller of Public Accounts.
- You will use the Texas Comptroller of Public Accounts website to file your Annual Report. You must submit it by May 15th every year.
- Missing the deadline will result in a $50 late fee.
3
Registered agent fee (varies between $50 to $300)
- In Texas, you can appoint yourself as a registered agent. The Texas Business Organizations Code (BOC) allows companies to pretty much select anyone as a registered agent as long as they live in Texas and have a physical address.
- Professionals do recommend choosing an experienced registered agent service to avoid late fees and missed deadlines.
4
Fees to form a foreign LLC in Texas ($750)
- In Texas, you must register your LLC as a foreign LLC if you have an existing LLC registered in a different state.
- The fee for registering a limited liability company as a Texas foreign LLC is $750.
- You must complete and submit the Application for Registration of a Foreign Limited Liability (Form 304) online to the Texas Secretary of State.
5
DBA filing fees in Texas ($25)
- The business term DBA is an abbreviation for doing business as.’ A DBA is any registered company name a person or company uses to conduct business that is not the legal name.
- In Texas, LLC owners must complete and submit the Assumed Name Certificate along with the $25 DBA filing fee.
6
Cost of certified document copies ($30)
- You can order certified copies of your Texas LLC documents using the Texas Secretary of State website.
- The cost for certified copies of the Certificate of Formation in Texas is $6.
7
Certificate of Status ($15)
- The Texas Certificate of Status is also known as a Certificate of Good Standing and is often required by financial institutions and banks.
- You will order the certificate through the Texas Secretary of State using the SOSdirect website.
- The cost for a Certificate of Status is $15.
Steps to start an LLC in Texas
1
Choose a business name in Texas
When choosing a Texas LLC name, you will need to consider a few things.
- In Texas, your LLC name must be unique.
- It must meet the state naming requirements and must include the phrase limited liability company, or a version of the acronym (LLC, L.L.C.)
- Check the availability of a web domain using that name.
You will use the Texas Comptroller of Public Accounts Taxable Entity Search to conduct an entity name search and check for LLC name availability.
You can find a full list of Texas DBA name restrictions.
LLC name reservation fee in Texas
Texas does not require that you reserve a name, only that it is available when you begin the LLC formation process. However, it is always a good idea to reserve a name.
The cost to reserve a Texas LLC name with the Texas Comptroller of Public Accounts is $10. You must renew the name registration every 120 days to avoid losing the name to someone else.
2
Appoint a Texas registered agent
Texas state law that an LLC chooses and maintains a registered agent.
The cost for a registered agent varies depending on the route you choose to take.
A registered agent in Texas is an individual or business entity that receives tax forms, legal documents, lawsuit notices, service of process, and other official government communications on behalf of a sole proprietorship, corporation, or LLC.
Any registered agent you choose must be a Texas resident or a registered agent service authorized to conduct business in the state.
In the state of Texas, you can be your own registered agent.
ZenBusiness
- Starter Plan – $39 a year plus Texas State Fees
- Pro Plan – $149 a year plus Texas State Fees
- Premium Plan – $249 a year plus Texas State Fees
ZenBusiness offers a stand-along registered agent service. The price is $99 per year.
Northwest
- Total Out The Door Texas LLC Formation Package – $67 a month and includes:
- Texas State Fee
- Texas Filing Service Fee
- Registered Agent
- Tax ID
- Annual Plan – $225 plus State Fees a year
LegalZoom
- Economy – $79 plus $153 Texas filing fees
- Standard – $329 plus $153 Texas filing fees
- Express Gold – $349 plus $255 Texas filing fees
3
File Certificate of Formation in Texas
You will submit your LLC’s Certificate of Formation to the Texas Secretary of State.
You will file online using the Texas Secretary of State’s website.
Or, you can complete the Certificate of Formation form (Form 205) and submit it by mail.
The state filing fee for your Certificate of Formation is $150.
Form 205 will ask for specific information about your LLC.
- LLC name.
- Registered agent information.
- LLC member’s name and contact information.
- LLC’s purpose for being organized.
Office (in-person) address:
James Earl Rudder Office Building
1019 Brazos
Austin, TX 78701
Mailing address:
Secretary of State
P.O. Box 13697
Austin, TX 78711
Once your LLC is approved, you will receive a Certificate of Filing, a Welcome letter, and a stamped certified copy of the Formation certificate.
4
Get your Texas LLC EIN
An Employer Identification Number, or EIN, is also called a Federal Employer Identification Number (FEIN) or Federal Tax ID Number (FTIN).
An is a nine-digit number the Internal Revenue Service (IRS) gives for free. The number helps identify companies for income tax purposes and acts as a Social Security number for a company.
If you convert a sole proprietorship into an LLC in Texas, the IRS mandates that you obtain an LLC.
The process is simple and can be done online using the IRS website.
Business banking for a Texas LLC
It is best to keep your personal and business bank accounts separate to protect your personal assets and credit scores no matter what your business structure is.
You will need a copy of your Texas Certificate of Formation, your LLC’s operating agreement, and the assigned EIN to open a new business bank account in Texas.
Most business banking accounts are free and do not come with any additional costs and fees.
Business attorney fees in Texas
Most LLCs decide to hire a business attorney to assist with the formation process and assist with any other LLC-related business.
Many business lawyers offer free first-time consultations.
Professional services such as LegalZoom and Rocket Lawyer offer LLC formation packages that include comprehensive legal services.
On average, a professional business attorney will cost $300 per hour.
LLC taxes in Texas
LLCs are pass-through entities. It means that the LLC members must report income and losses on their personal taxes rather than the LLC state filing a tax return with the Texas Comptroller.
- Texas is one of 7 states that do not have a corporate income tax.
- Only companies that have $1.18 million to $10 million in annual receipts file an annual franchise tax report. The Texas franchise tax is 0.375%.
- A Texas LLC will also have various taxes, such as incoming withholding tax.
- You will submit a sales tax return every year in Texas. It is a best business practice to consult a business attorney or a tax accountant due to expensive tax penalties and deadlines.
- For companies that sell physical products in Texas, use the Online Sales Tax Registration Application System or print and complete the application and submit it by mail.
- You‘ll typically need to register for a seller’s permit through the Texas State Tax Department when you sell a physical product.
- You must create an account with the Texas Workforce Commission if you have employees. It is where you register an unemployment tax account.
State tax and federal taxes are complicated and might be worth the hourly consultation fee.
Business licenses and permits in Texas
Permits and business licenses will depend on the location and type of business you own.
Every city, county, or town in Texas has different rules for licenses and permits.
You will want to contact your local Chamber of Commerce to ask about the process, price, and business hours.
You can review the US Small Business Administration website for federal license information.
Notary public
You may find that a Texas document or form requires a notarization by a notary public.
In Texas, a notary public can charge $6 for the first notarization and $1 for each one after.
Benefits of a Texas LLC
- Business banking is easier when you form an LLC. Most money lenders and banks require a business owner to open a business account that is separate from their personal one. LLC formation reduces personal liability for business debts and potential lawsuits.
- In Texas, compliance requirements for LLCs are different for corporations. Corporations have shareholders and stock owners that they must answer to.
- Forming an LLC means that you will not be subject to double taxation. Every business entity is taxed differently. A C-corporation is a business entity that is double-taxed in Texas.
- When you form an LLC in Texas, you can choose to be taxed as a pass-through entity. LLC formation ensures that company earnings are taxed only once through members’ personal tax forms.
FAQs
How long does it take to register an LLC in Texas?
For LLCs that file online, it takes 2 to 3 business days to process the Certificate of Formation.
If you submit the certificate by mail, it will take 7 to 10 days. You can expedite the process by mail for an additional $25.
Do I have to have an operating agreement for my Texas LLC?
Texas law does not require an LLC operating agreement.
But, many companies choose to get one because it outlines the management structure and sets up rules that all members agree to. However, even a single-member LLC and entrepreneurs should form an operating agreement to avoid future confusion.
Can one individual act as the director, sole shareholder, and member of a Texas LLC?
For limited companies in Texas, one person can be the president, the sole director, and the only shareholder.
Non-profits must have a minimum of three directors and are not automatically exempt from state taxes or federal taxes.
Are there publication requirements in Texas?
Texas does not mandate that you publish a notice when you form a Texas business.
However, sending out a press release is a good idea because it is free publicity and establishes you as a company and brand. LLC formation services offer publication services in their LLC formation packages.
How do I dissolve my Texas LLC?
You will complete the Certificate of Termination of Domestic Entity (Form 651) form and file it with the Texas Secretary of State. An authorized manager or member-manager must sign Form 651, and the Certificate of Account Status must be attached.
The cost of dissolving your LLC in Texas is $40.
Why should I form a Texas LLC?
LLC formation is good for corporations, small businesses, and single-owner and multi-owner LLCs. When you form an LLC, it limits personal liability regarding business debt and potential lawsuits.
Forming a Texas Limited Liability Company gives you flexibility when it comes to management and unique tax breaks.
Can I take money out of my LLC in Texas?
If you’re a single-member LLC, you do not get a salary or wage. Rather, you will pay yourself from the profits of your LLC. It is called an owner’s draw. The owner’s draw is legal in the state of Florida.
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