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Last Updated on October 3, 2024 by Dr. Gabriel O’Neill, Esq.
Starting the journey to form a Limited Liability Company (LLC) in Texas isn’t just about filling out paperwork—it’s about diving into the financial complexities that come with it. From initial filing fees to ongoing costs, each step shapes the financial future of your LLC.
In this article, we explore the various costs tied to both forming and maintaining an LLC in Texas. We’ll cover everything, from the foundational filing fees to choosing a registered agent and the often-overlooked importance of operating agreements.
Throughout this process, LLC services like ZenBusiness become invaluable partners, making the LLC formation easier and guiding entrepreneurs through the financial intricacies of building an LLC in Texas’s thriving business landscape.
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What Is the Cost of Forming an LLC in Texas?
When considering the cost of forming an LLC in Texas, it’s important to note that the process involves filing a Certificate of Formation – Limited Liability Company (Form 205) with the Texas Secretary of State. Wondering about the Texas LLC cost? The filing fee for this form is $300. If you find yourself in need of an authorized duplicate of the Certificate of Formation, there’s an extra charge of $30.
Moreover, if you require a Certificate of Status, the fee is $5. For those who wish to reserve a specific LLC name in Texas before their official registration, the option involves submitting an Application for Reservation or Renewal of Reservation of an Entity Name (Form 501) with a fee of $40. So, how much does an LLC cost in Texas? The total expenses involve these outlined fees.
Here’s the LLC Cost Guide for all US States:
Texas Foreign LLC Formation Costs
If you’ve already established an LLC in another state and plan to conduct business activities within Texas, the process of registering your LLC as a foreign entity with the Texas Secretary of State is essential. Curious about the cost of forming a foreign LLC in Texas? This entails submitting an Application for Registration of a Foreign Limited Liability Company (Form 304) and submitting a filing fee of $750.
If you require an official copy of this application, an additional fee of $30 applies. Likewise, obtaining a Certificate of Status carries a fee of $5. If you’re considering reserving your LLC’s name for up to one year before completing the registration, you have the option to file an Application for Registration of an Entity Name (Form 502) with a fee of $40.
Annual Cost for LLCs in Texas
There are no yearly registration charges levied on LLCs operating in Texas. Nevertheless, your LLC might be required to submit an annual franchise tax statement to the Texas Comptroller. To acquire more details about the Texas franchise tax, please refer to the official website of the Comptroller.
In instances where specific alterations are introduced by the LLC, like amending the articles of organization or changing the registered agent, it is imperative to notify the Texas Secretary of State through the designated form and submit an associated fee. The standard fee for most changes is $15, although switching the registered agent entails an additional $15 for a consent form endorsed by the said agent.
The potential supplementary expenses linked to obtaining a certified duplicate of the filing document, securing a certificate of status, or engaging an external registered agent could potentially elevate this total expenditure anywhere from $85 to $535.
How Much Does It Cost to Start an LLC in Texas With the Best LLC Service?
ZenBusiness LLC Formation Cost
Establishing an LLC in Texas incurs an initial basic fee of $300, which serves as the starting point for costs. The standard processing duration for this procedure is approximately 2 to 3 weeks. Alternatively, there are options to expedite the processing period: for an additional $50, the timeline can be reduced to 10 to 12 days, while a $100 fee enables a rush processing speed of 7 to 8 days.
ZenBusiness presents a range of pricing packages for their business formation services, namely: Starter, Pro, and Premium.
- Optimal for fundamental business formation requirements, the Starter plan comes at a cost of $0, alongside state fees.
- For enhanced features such as expedited filing and registered agent service, the Pro plan is available at $199, in addition to state fees.
- The most comprehensive offering, the Premium plan, encompasses all Pro plan features while adding unlimited Worry-Free Compliance assistance, aiding businesses in adhering to state and federal regulations. The Premium plan is priced at $349, along with state fees.
Furthermore, ZenBusiness includes a complimentary year of Worry-Free Compliance with the purchase of any plan.
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Additional Costs When Starting an LLC in Texas
Texas LLC Name Costs
Selecting an appropriate name for your Texas LLC is a crucial step in the formation process. The good news is that Texas LLC’s cost regarding name selection does not involve any fees. Texas Secretary of State doesn’t mandate a fee for reserving a name or for similar processes.
Prior to submitting your Certificate of Formation, it’s recommended to verify the availability of your chosen name by reaching out to the state via phone or email, especially if you’re concerned about how much an LLC costs in Texas for name selection. This ensures that your preferred name is accessible and can be included in your Certificate of Formation without incurring any extra charges.
Texas Registered Agent Costs
When establishing your LLC in Texas, individuals often inquire about the Texas LLC cost for a Registered Agent. Appointing a Registered Agent is a requirement, but the process itself doesn’t involve any direct charges if you or someone you know takes up this role.
However, if you opt for a Commercial Registered Agent, an annual fee of approximately $125 might apply, impacting the overall Texas LLC cost. This is particularly relevant if you lack a physical address within the state or if you wish to maintain your privacy by keeping your address confidential from public records.
Texas Operating Agreement Costs
Provided at no cost, the Texas LLC Operating Agreement serves as a written agreement among the LLC Members. This comprehensive document outlines intricate details concerning ownership, the management structure of the LLC, and the allocation of profits.
Both Single-Member LLCs and Multi-Member LLCs are advised to create an Operating Agreement, retaining it within their business records while furnishing each Member with a copy.
While numerous websites typically demand between $50 to $200 for LLC Operating Agreements, this document is available free of charge.
Texas EIN Cost
An EIN Number, also known as an Employer Identification Number or Federal Tax ID Number, serves as a unique identifier for your Texas LLC. Despite some websites charging fees for assistance, acquiring an EIN for your LLC is free through the IRS. It’s important to distinguish your EIN from the 11-digit Texas “Taxpayer Number” mandated by the Texas Comptroller for business entities.
Texas LLC Taxes
Texas LLC owners are responsible for various taxes like federal and state income tax, payroll tax for employees, etc. Consulting a skilled Texas accountant can help determine tax types and amounts. Accountant fees differ, with most small business owners paying around $400 to $900 annually.
Here are some key points related to Texas LLC taxes:
Federal Income Taxes
The tax treatment of a Texas LLC by the IRS varies based on ownership structure.
- Single-member LLCs are treated as disregarded entities, where the owner files and pays federal income taxes personally. If owned by an individual, it’s taxed like a sole proprietorship; if by another company, as a division of the parent company.
- Multi-member LLCs are treated like partnerships, filing a 1065 Partnership Return and issuing Schedule K-1 to owners, who report their share of profits on personal returns (Form 1040).
Husband and Wife LLC Taxes
In community property states like Texas, a husband and wife LLC can opt for Single-Member LLC (Qualified Joint Venture) taxation instead of Multi-Member LLC. The choice is made during the EIN Application or by requesting an IRS change. Otherwise, the default status is as a partnership.
Electing to Be Taxed as a Corporation
An LLC can choose corporate taxation instead of default options. Two types of corporate elections exist:
- S-Corporation
- C-Corporation
LLC, as an S-Corp, allows potential self-employment tax savings for established profitable businesses. LLC as a C-Corp might suit larger employers seeking healthcare benefit savings, though it’s less common.
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Texas State Income Tax for Texas LLCs
Texas lacks a state-level income tax, so Texas LLCs don’t file state income tax returns. Industry-specific and business-related taxes apply instead, with the recommendation to consult an accountant for filing assistance.
Local Income Tax for Texas LLCs
Texas municipalities might require income tax filing and payment from both individuals and LLCs. Consulting an accountant and checking with the local municipality ensures compliance with their specific requirements.
Texas Sales Tax
Texas-based LLCs selling products to consumers in the state may need to collect sales tax using a Seller’s Permit obtained from the Texas Comptroller. This permit grants the authority to collect sales tax on retail sales. Various terms like “resale license,” “wholesale license,” etc., refer to the same permit.
Texas LLC Payroll Taxes
Texas LLCs with employees must handle payroll taxes encompassing federal and state income tax withholding, Social Security and Medicare taxes, federal and state unemployment taxes, and other deductions. Employers need to establish payroll systems, handle calculations, and submit taxes properly to avoid penalties. Professional assistance, like payroll companies or accountants, is often recommended.
Texas LLC Cost FAQs
How Much Does It Cost to Open an LLC in Texas?
When it comes to forming an LLC in Texas, the typical LLC cost in Texas is around $300, which includes the initial filing fee for the LLC Certificate of Formation. However, it’s crucial to inquire about additional charges that may arise based on your business’s nature, location, and potential licensing or permitting requirements.
These expenses are subject to variation, particularly in industries where specialized licenses are obligatory. Depending on the activities of your LLC, acquiring business insurance might also be a consideration regarding how much is an LLC in Texas.
How Much Does an LLC in Texas Cost Per Year?
Texas LLCs have annual obligations that encompass filing an Annual Franchise Tax and a Public Information Report. Fortunately, these filings are usually affordable in terms of Texas LLC cost per year. The Public Information Report incurs no charges, while the Franchise Tax is contingent upon your business’s income.
For those who opt for a Registered Agent service, there’s typically an annual subscription fee of approximately $125. This subscription fee is a component of Texas LLC’s cost on an ongoing basis.
Depending on the specific industry and location of your LLC, a business license might be necessary for Texas. To determine whether there are any annual renewal fees associated with the business permit, it’s advisable to consult with the local municipality regarding LLCs in Texas costs.
Should I Hire an LLC Formation Service?
When establishing your Texas LLC, there is no mandatory need to enlist the help of a professional formation service. Entrepreneurs retain the option to personally navigate the LLC formation process. Nevertheless, for those seeking a smooth and accurate filing journey, enlisting the aid of ZenBusiness is a valuable consideration.
ZenBusiness is renowned for its outstanding customer assistance and extends the perk of free Registered Agent services for the initial year. Furthermore, they offer supplementary advantages such as an Operating Agreement and expert support for Annual Report submissions, making the overall LLC setup experience more seamless.
Conclusion
In summary, forming an LLC in Texas goes beyond just paying the filing fee. You’ll need to consider costs like securing essential documents, hiring registered agents, and handling key components such as operating agreements and obtaining an EIN. Managing these financial details is essential, and services like ZenBusiness can offer valuable support to simplify the process.
By understanding these costs and leveraging the expertise of ZenBusiness, entrepreneurs can confidently start their Texas LLC journey, fully prepared with the guidance and tools needed to build a strong foundation for their business.
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About the author
Dr. Gabriel O'Neill, Esq., a distinguished legal scholar with a business law degree and a Doctor of Juridical Science, is a leading expert in business registration and diverse business departments. Renowned for his academic excellence and practical insights, Dr. O'Neill guides businesses through legal complexities, offering invaluable expertise in compliance, corporate governance, and registration processes.
As an accomplished author, his forthcoming book is anticipated to be a comprehensive guide for navigating the dynamic intersection of law and business, providing clarity and practical wisdom for entrepreneurs and legal professionals alike. With a commitment to legal excellence, Dr. Gabriel O'Neill, Esq., is a trusted authority dedicated to empowering businesses within the ever-evolving legal landscape.