Cost of Starting an LLC in Texas 2024: A Comprehensive Guide

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Cost of Starting an LLC in Texas

Embark on your exciting entrepreneurial journey in Texas with confidence, as our comprehensive guide helps you navigate the LLC world. Discover the costs of starting an LLC in Texas, and determine if this flexible business structure aligns with your company’s goals and needs.

LLCBase supports you every step of the way, covering everything from initial setup fees to ongoing expenses. Dive into the dynamic world of Texas LLCs and make informed decisions that make your business successful. Unleash the full potential of your Texas LLC and soar to new heights!

Let’s explore the costs of starting an LLC in Texas together! We’ve broken them down into initial costs, annual costs, and any extra expenses you may need to consider. Happy planning!

Initial Costs of Forming an LLC in Texas

Are you curious about the initial costs of forming an LLC in Texas? Check out the list below for a breakdown of expenses to get your business up and running!

1. Secretary of State Filing Fee

To form an LLC in Texas, you must file Certificate of Formation with the Texas Secretary of State. The regular filing fee is $300; if you need expedited processing, it will cost an additional fee.

Texas Domestic LLC
  • Online Filing: $300 + $400 minimum Franchise Tax.
  • Filing Statement of Information within 1 year of registration: $0 because it is not mandatory.
  • By Mail: Complete the application form and mail it to Secretary of State, P.O. Box 13697, Austin, TX 78711-3697. This costs $300 + $25 for counter drop off (non-refundable).
Texas Foreign LLC
  • Online Filing: $300 + $400 minimum Franchise Tax.
  • Filing Statement of Information within 1 year of registration: $0 because it is not mandatory.
  • By Mail: Complete the application form and mail it to Secretary of State, P.O. Box 13697, Austin, TX 78711-3697. This costs $300.

2. Name Reservation Fee

If you want to reserve your desired LLC name before filing the Certificate of Formation, you can do so for a $40 (online) and $40 (offline) fee. The name reservation is valid for 120 days, giving you ample time to prepare and submit your Certificate of Formation. To reserve a name, you must submit a Name Reservation Request form to the Secretary of State by mail or in person, along with the required fee.

3. Registered Agent Fee

Texas requires all LLCs to have Registered Agent for the service of process. Registered Agent services typically cost between $50 – $200 per year, depending on the provider. Some popular Registered Agent service providers in Texas include Northwest Registered Agent, LegalZoom, and Incfile. Besides the annual fee, these providers offer additional services such as mail forwarding and compliance notifications.

4. Business Licenses and Permits

Depending on your business type and location, you may need to obtain various licenses and permits in Texas. The costs for these can vary widely, so it’s essential to research your specific business requirements. To identify the licenses and permits applicable to your business, you can use the Texas Occupational & Professional Licenses (https://www.texas.gov/business/) website.

5. Operating Agreement

Although not required by law, having an operating agreement for your Texas LLC is a good idea. You can draft one yourself or enlist the help of an attorney, which can cost anywhere from $1,000 or more. The operating agreement outlines your LLC’s ownership structure, management, and procedures. It can help prevent member disputes and provide clear decision-making and profit distribution guidelines.

6. Employer Identification Number (EIN)

Most LLCs need an EIN for tax purposes, bank account opening, and hiring employees. You can obtain an EIN in Texas for free from the Internal Revenue Service (IRS) by submitting an online application or mailing Form SS-4. The online application is the fastest method; you will receive your EIN immediately upon completion. If you choose to mail the form, the processing time can take up to four weeks.

Starting an LLC in Texas involves certain costs, making selecting the right support for a smooth experience crucial. The best LLC formation services in Texas offer expert assistance in comprehending, managing, and reducing expenses. Not only do these services simplify the setup process, but they also help identify solutions tailored to your unique needs. Consequently, your new LLC builds a solid foundation, optimally utilizing available resources and budget in Texas.

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Annual Costs of Maintaining an LLC in Texas

Wondering about the yearly expenses for sustaining an LLC in Texas? Peruse the list below to discover the costs of keeping your business compliant and thriving!

1. Annual Franchise Tax

All Texas LLCs are required to pay an annual franchise tax of $400 minimum, regardless of income or activity. This tax is due on the May 15. It’s important to note that newly formed LLCs are not exempt from this tax and must pay the $400 minimum fee for their first year of operation. You can pay the franchise tax online through the Texas Comptroller of Public Accounts website or by mailing a payment voucher.

2. Annual Report

Texas LLCs must file an annual report with the Texas Secretary of State every May 15 the year following formation. The filing fee is $0 because it is not mandatory. The Statement of Information is due within 1 year of the initial filing of the Certificate of Formation and then every May 15 the year following formation during the anniversary month. The Statement of Information form can be submitted online or by mail.

3. Registered Agent Fee

As mentioned earlier, LLCs in Texas must maintain Registered Agent with an annual fee. This fee typically ranges from $50 – $200 per year, depending on the provider. When choosing Registered Agent, consider additional services offered, reputation, and customer support.

4. Business License and Permit Renewals

Depending on your business and location, you may need to renew licenses and permits periodically, which can incur additional fees. It’s essential to stay up-to-date on the renewal requirements and fees for your specific business licenses and permits to maintain compliance and avoid penalties. You can use resources like the Texas Occupational & Professional Licenses (https://www.texas.gov/business/) website and your local city or county government websites for information on renewal requirements and fees.

Recommended: Effortlessly manage your LLC’s annual expenses and obligations in Texas – choose a reliable LLC Formation Service to simplify the maintenance process. Focus on growing your business today! We recommend –

Our #1 Pick: LegalZoom – ($0 + State Fees) Online LLC Setup

Additional Costs to Consider for Your Texas LLC

Ready to explore the extra expenses you may encounter with your Texas LLC? Browse the list below to be well-prepared, ensuring your business flourishes without surprises!

1. Tax Preparation and Accounting Services

Depending on the complexity of your business finances, you may need to hire a tax professional or accountant, which can cost anywhere from $100 to $1,000 or more per year. The cost of these services typically depends on factors such as the accountant’s experience, the size of your business, and the level of service required. To find a suitable tax professional or accountant, consider seeking recommendations from other business owners or using professional organization directories, such as the American Institute of Certified Public Accountants (AICPA).

2. Legal Services

Enlisting the help of an attorney for legal advice or to draft contracts can add to your LLC’s expenses. Attorney fees can range from $150 to $500 per hour or more, depending on the attorney’s experience and location. To save on legal costs, consider using online legal services, which offer legal document templates and attorney consultations at a fraction of the cost of traditional legal services.

3. Business Insurance

Depending on your industry and business activities, you may need various types of insurance, such as general liability, professional liability, or workers’ compensation. The insurance cost can vary widely based on factors like the size of your business, the amount of coverage needed, and the level of risk associated with your industry. For example, a small consulting business may pay around $500 annually for general liability insurance, while a construction company may pay several thousand dollars annually. To find the best insurance rates, consider getting quotes from multiple insurance providers and working with an insurance agent specializing in your industry.

4. Office Space and Utilities

Depending on your business, you may need to rent office space, which can add to your monthly expenses. The cost of office space in Texas can vary greatly depending on location, size, and amenities. Remember that in addition to rent, you’ll also need to cover utilities, such as electricity, water, and internet service, which can add several hundred dollars per month to your expenses.

5. Marketing and Advertising

To grow your business, you’ll likely need to invest in marketing and advertising, which can vary widely in cost depending on your strategy. Other marketing expenses may include social media advertising, email marketing, and print materials like business cards and brochures. To maximize your marketing budget, consider researching low-cost or free marketing strategies, such as social media engagement, content marketing, and networking events.

How to Save on Texas LLC Costs

Looking for ways to save on your Texas LLC costs? Check out the strategies below to keep expenses in check and ensure your business thrives!

1. Do-It-Yourself (DIY) Formation

You can save on professional fees by handling the LLC formation process yourself. You can file the Certificate of Formation, obtain an EIN, and draft an operating agreement by researching the necessary steps and required documents. The Texas Secretary of State‘s website provides detailed information on forming an LLC, and the IRS website allows you to apply for an EIN online at no cost.

2. Utilize Online Resources

Many free or low-cost resources are available online to help with various aspects of your business, such as drafting an operating agreement or creating a marketing plan. For example, websites like SCORE and the U.S. Small Business Administration (SBA) offer free business templates, guides, and resources. Additionally, you can find low-cost marketing tools and platforms like Canva for designing marketing materials or Mailchimp for email marketing campaigns.

3. Shop For Professional Services

We recommend exploring various providers, including LegalZoom, for services such as Registered Agents and legal assistance to find the best value. By comparing rates and service offerings, you can ensure you obtain the most cost-effective solution for your business needs. Don’t hesitate to negotiate prices or inquire about discounts, as numerous providers are often willing to work with you to win your business.

4. Bundle Services

Some companies offer packages for LLC formation, Registered Agent services, and other business essentials, potentially saving you money. By bundling these services, you may save on individual service costs and streamline setting up and maintaining your Texas LLC. However, carefully compare bundled packages to ensure they include the services you need and offer true cost savings compared to purchasing services individually.

FAQs

What is the cost of starting an LLC in Texas?
The cost of starting an LLC in Texas is $300.
What is the annual fee for an LLC in Texas?
The annual fee for an LLC in Texas is $0.
Do I need an attorney to start an LLC in Texas?
You do not need an attorney to start an LLC in Texas.
Can I have a single-member LLC in Texas?
Yes, you can have a single-member LLC in Texas.
Are there any residency requirements for forming an LLC in Texas?
No, there are no residency requirements for forming an LLC in Texas.
How long does it take to form an LLC in Texas?
It takes about 1-2 weeks to form an LLC in Texas.
Can I file my Texas LLC formation online?
Yes, you can file your Texas LLC formation online.
What is a Certificate of Formation and do I need one for my LLC in Texas?
A Certificate of Formation is a document that establishes the existence of an LLC in Texas. Yes, you need one for your Texas LLC.
What is a Registered Agent and do I need one for my LLC in Texas?
A Registered Agent is a person or entity that receives legal documents for your LLC in Texas. Yes, you need one for your Texas LLC.
Can I be my own Registered Agent for my LLC in Texas?
Yes, you can be your own Registered Agent for your LLC in Texas.
What are the requirements for a Texas LLC Operating Agreement?
There are no state-required provisions for a Texas LLC Operating Agreement, but it’s recommended to have one.
How many people are needed to start an LLC in Texas?
You can start an LLC in Texas with just one person.
Do I need a business license to start an LLC in Texas?
Depending on your specific business, you may need to obtain certain licenses or permits from state or local authorities in Texas.
Is there a publication requirement for Texas LLCs?
No, there is no publication requirement for Texas LLCs.
Can my LLC name be the same as another LLC in Texas?
No, your LLC name cannot be identical to another LLC in Texas.
How do I know if my desired LLC name is available in Texas?
You can search for available LLC names in Texas on the Secretary of State’s website.
Can I change my LLC name in Texas after I’ve already formed it?
Yes, you can change your LLC name in Texas by filing a Certificate of Amendment.
What is the tax structure for an LLC in Texas?
An LLC in Texas is typically treated as a pass-through entity for tax purposes.
What is the Texas franchise tax for an LLC?
The Texas franchise tax for an LLC is 1% of the entity’s margin or 0.375% for qualified passive entities.
Are there any other taxes or fees I need to pay as an LLC in Texas?
Depending on your specific business, you may need to pay other state or local taxes in Texas.
Do I need to file an annual report for my Texas LLC?
No, you do not need to file an annual report for your Texas LLC.
Is Texas a good state to form an LLC in?
Texas is a popular state for forming an LLC due to its business-friendly environment and lack of state income tax.
Is it easy to manage or dissolve an LLC in Texas?
Yes, managing or dissolving an LLC in Texas is typically easy and straightforward.
Can I transfer my Texas LLC to another state?
Yes, you can transfer your Texas LLC to another state by registering it as a foreign LLC in the new state.
What happens if I don’t follow Texas LLC laws?
You may face penalties or legal consequences if you do not follow Texas LLC laws.
Where can I find resources to start and manage my Texas LLC?
You can find resources for starting and managing a Texas LLC on the Secretary of State’s website or by consulting with professionals such as lawyers or accountants.
Can I have foreign members in my Texas LLC?
Yes, you can have foreign members in your Texas LLC.
What is a Texas Series LLC?
A Texas Series LLC is a type of LLC that allows for separate lines of business or assets to be held under one entity.
What do I need to know about Texas LLC formation as a non-US citizen?
As a non-US citizen, you may face additional requirements or restrictions when forming a Texas LLC. It’s recommended to consult with a professional for guidance.
What is an LLC?
An LLC stands for Limited Liability Company, which is a type of business structure that provides limited liability protection to its owners.
Do I need an attorney to form an LLC in Texas?
No, it’s not required to hire an attorney to form an LLC in Texas. However, it’s recommended to consult one for legal advice specific to your situation.
How much does it cost to form an LLC in Texas?
The filing fee to start an LLC in Texas is $300.
Is it necessary to have a Texas address to start an LLC in Texas?
No, it’s not required to have a Texas address to start an LLC in Texas, but you will need to provide a physical address in Texas where the company’s records are held.
Will I need to register my LLC with the Texas Secretary of State?
Yes, you must file your LLC with the Texas Secretary of State as a part of the initial formation process.
Can I form an LLC in Texas with a single member?
Yes, Texas allows for single-member LLCs.
What is a registered agent, and do I need one for my Texas LLC?
A registered agent is someone who is authorized to receive legal notices and other important documents on behalf of your LLC. Texas requires all LLCs to have a registered agent with a physical address in Texas.
Is there a certain type of liability protection offered from forming an LLC in Texas?
Yes, the limited liability protection granted by a Texas LLC protects the owner(s) personal assets from any judgments against the business.
Can an LLC apply for any business-related licenses or permits?
Yes, an LLC can apply for any business-related licenses or permits in Texas whether the LLC is owned by a professional or not.
Can I form an LLC in Texas online?
Yes, Texas offers online filing for LLC formation.
What types of taxes are LLCs required to pay to Texas?
LLCs in Texas are required to pay a state franchise tax.
What is the state franchise tax rate in Texas?
The 2021 franchise tax rate in Texas is 0.375% of net surplus.
Do all Texas LLCs pay franchise tax?
Yes, all Texas LLCs are subject to pay franchise tax.
Are there any fees that Texas LLCs are required to pay annually?
Texas LLCs are required to file a public information report every year and pay a $1 exchange fee.
Does Texas require any specific recordkeeping for LLCs?
Yes, Texas requires all LLCs to maintain books and records in accordance with Generally Accepted Accounting Principles (GAAP).
Can a foreign LLC operate in Texas?
Yes, a foreign LLC can do business in Texas but it must register with the Secretary of State.
What are the penalties for failing to register a foreign LLC in Texas?
Failing to register a foreign LLC in Texas carries penalties including fines and legal consequences if the business gets sued in Texas.
Can I register an LLC in Texas if I already have a business in another state?
Yes. If you have an existing business in another state and wish to expand into Texas, you can register to do business in Texas as a Foreign LLC.
Can a convicted felon own an LLC in Texas?
Yes, a convicted felon can legally start and own an LLC in Texas.
Can I change the name of my LLC after formation?
Yes, the name of an LLC can be changed anytime after formation if needed.
Does Texas have an age requirement for someone to form an LLC?
No, there is no age requirement for someone to form an LLC in Texas.
Can I form a nonprofit LLC in Texas?
No, Texas state law does not allow for nonprofit LLCs.
Will changing physical addresses in Texas after formation affect my LLC’s formation requirements?
Yes, if you make changes to the physical address listed on your initial Formation Articles filing, you will need to file an amendment.
Can an LLC’s profits or losses be assigned to specific owners?
Yes, profits or losses from an LLC’s business activities can be distributed proportionately according to each member’s percentage of ownership in the LLC.
Can I run a rental property business with an LLC in Texas?
Yes, you can operate a rental property business with an LLC.
Can a professional, such as a lawyer or doctor, operate an LLC in Texas?
Yes, Texas allows for professionals such as lawyers, doctors, and accountants to register as an LLC for their business activities.
What is a Series LLC, and does Texas recognize this type of LLC formation?
A Series LLC is a type of LLC where individual LLCs can be formed under the master LLC, each having its own liability structure relating specifically to a rental property handled by a main managerial entity. Texas does recognize this type of formation.

Also Read

How to Save Money While Starting Your Business LLC in Texas

First and foremost, it’s crucial to create a detailed business plan that outlines your goals, strategies, and financial projections. By having a clear roadmap for your business, you can identify areas where you can cut costs and allocate your resources wisely. This will not only help you stay on track but also prevent unnecessary spending on items or services that may not be essential for your business at this stage.

One of the key ways to save money while starting your business LLC in Texas is to take advantage of the various resources and support available to entrepreneurs. There are numerous organizations, such as the Small Business Administration (SBA) and local chambers of commerce, that offer valuable guidance, mentorship, and networking opportunities for new business owners. By tapping into these resources, you can gain invaluable insights, access to capital, and professional advice without having to pay hefty consulting fees.

In addition, consider utilizing free or low-cost business tools and software to streamline your operations and improve efficiency. From accounting and invoicing software to project management tools and social media platforms, there is a wide range of resources available online that can help you run your business more effectively and save money on expensive overhead costs.

Another way to save money while starting your business in Texas is to negotiate with suppliers and vendors for better pricing and discounts. By building strong relationships with your suppliers, you may be able to secure lower prices, bulk discounts, or extended payment terms, which can significantly impact your bottom line. Remember, it never hurts to ask for a better deal, especially when you are a new and growing business.

Furthermore, consider partnering with other businesses or professionals to share resources, overhead costs, and marketing efforts. By collaborating with like-minded entrepreneurs or businesses, you can tap into new networks, reach a wider audience, and pool your resources to save money on marketing, advertising, and administrative expenses. In today’s competitive business landscape, collaboration and strategic partnerships can be valuable assets for new entrepreneurs looking to establish a foothold in the market.

Ultimately, saving money while starting your business LLC in Texas requires a combination of careful planning, resourcefulness, and creativity. By being proactive, resourceful, and strategic in how you manage your finances and operations, you can set a solid foundation for your business to succeed and thrive in the long run. Remember, every dollar saved is a dollar earned, so be mindful of your expenses and invest wisely in the growth and sustainability of your business.

Conclusion

Forming and maintaining an LLC in Texas comes with various costs, from initial filing fees to ongoing franchise taxes and Registered Agent fees. However, you can successfully establish and operate your Texas LLC by understanding these expenses and finding ways to save on costs. We hope this guide has provided you with the information you need to decide to form an LLC in Texas. Visit LLCBase for more information about starting an LLC in Texas. We wish you the best of luck on your entrepreneurial journey.

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