The TRUE Cost to Form an LLC in Texas

Are you an entrepreneur starting your new business in Texas? Before you can get started officially, you have to form your LLC.

One of the first questions you’ll probably have is about the Texas LLC costs. In this comprehensive guide, we’ll cover exactly how much it costs to form an LLC in Texas to help you on your entrepreneurship journey.

Quick Summary

When it comes to forming an LLC in Texas, there are specific requirements that applicants need to meet. If you are in a hurry and don’t want to read through all the details that we have provided below, we will make it easier for you!

To start an LLC in Texas costs $300. This fee is paid to the Secretary of State of Texas when you file the certification of formation of your LLC.

Form Your Texas LLC Quickly

Forming an LLC yourself is a long process full of paperwork! To make sure you get it right, you should hire an LLC service to do it for you. Here are our top two picks to get all of the legal requirements taken care of.

Texas LLC Costs

Requirements Cost
LLC Name $0-40
Registered Agent $0-$125 (per year)
Certificate of Formation $300
Operating Agreement $0 (free templates available)
EIN Number $0 (free on IRS site)
Franchise Tax Reports $0 (for most LLCs)
Taxes Varies

Apart from the Certification of formation, there are several other costs that you need to consider when you form an LLC in Texas. Let’s take a look at them one by one.

Certification of Formation Filing Fee

The first thing that you need is to file the Certification of Formation. This is the largest of the Texas LLC costs and the filing fee for this is $300. If you file the Certificate online, it will take 2 to 3 business days. If you file it by mail, it will take 7 to 10 business days.

Whether you file the certificate of formation online or send a hard copy, the cost is the same. For expediting the filing process, you can pay an extra $25 fee as well. The good news is that you have to pay the filing fee only once. To maintain your LLC, you don’t have to keep paying monthly or annual subscriptions.

Once your LLC gets approved, the Secretary of State will send you a Certificate of Filing, a Welcome Letter, along with a stamped copy of the Formation certificate.

Texas LLC Name

For starting an LLC in Texas, you don’t have to reserve a name as an obligatory step. However, it can be helpful if you reserve a name for your LLC. For example, if you are working out some business details and have a perfect name for your company in mind, then it is a good choice to apply for a name reservation.

For $40, you will get exclusive rights to the name for 120 days. If you want to renew your subscription after that, you can do so as well. You can reserve the name either online or by filling a paper form. However, if you have worked all the details and are prepared to file your LLC, then you can get the Certificate of Formation instead of reserving a name.

Simply call the state or email them before you file the Certificate of Formation in order to check if the name you want for your LLC is available. Registering your company name in this scenario will not cost you any money.

Texas Registered Agent

If you are forming an LLC in Texas, you are obligated by the law to nominate a registered agent for your company. Are you asking what a registered agent is? Well, let us explain. Your state needs a reliable and credible way of communicating with you and your business.

An individual or a professional service must be there during regular business hours to receive legal documentation from the state. This person or service is the registered agent for your business. Therefore, it is very important to designate a registered agent for your LLC.

Your registered agent will not only handle the sensitive tax and legal documents but will also keep your business compliant with state law.  You can become your own registered agent or you can hire a professional to do so for you.

If you become your own registered agent, it will not cost you anything. However, you will have to be available during the working hours, in case the state contacts your business. Furthermore, your address will become a part of the public records and you don’t want people to violate your privacy, now do you?

Moreover, it will be an added responsibility and as humans, we are likely to make mistakes and miss deadlines on important legal documents.

Therefore, we recommend that you hire a professional registered agent like Northwest or ZenBusiness to take care of your needs. With affordable prices and discounts for the first year of usage, you will be in very safe hands.

Texas Operating Agreement

You would need an LLC operating agreement as well. There are several websites that will help you get an LLC operating agreement as a part of their LLC formation packages, or as a standalone feature as well. The operating agreement outlines the hierarchy of the company as well as the operating rules of the company.

It doesn’t matter whether you are forming a multi-member LLC or a single-member company. There are a few things that every operating agreement should have such as naming the organizational members, their role and positions, etc.

The rules should shed light on important matters such as management and voting, capital contributions, distribution of profits, dissolution rules, etc.

Texas EIN Number

Once your business is formed, you will need a federal tax ID known as the EIN (Employer ID Number). There are plenty of incorporation services out there that will get your EIN for nominal charges. However, you can get an EIN from the IRS for your newly registered LLC free of cost.

To hire employees for your business, you will have to create an account with the Texas Workforce Commission. Here, you can register an unemployment tax account, learn about the employment law, and file unemployment taxes.

Texas LLC Bank Account

Every company needs a business bank account to manage its finances. If you keep your personal account separate from the business account, it will help a lot when you will file your tax returns. It doesn’t cost any money to open a business bank account.

Once you get your EIN, you can go to the local bank, and get in touch with them to create a bank account for your business.

Texas Franchise Tax Reports

Depending on the size of your business, and the revenue you generate, you don’t pay the franchise tax to the Texas Comptroller’s office. However, you do have to file the report for the franchise tax even though your total revenue is below the threshold.

Moreover, you also have to file a PIR i.e. Public Information Report. To file both of them, you don’t have to pay anything. Usually, you have to file the first PIR a year after your LLC has been formed.

Texas Business Attorney Fees

Do you have any questions regarding the LLC incorporation process? Do you have any concerns that you want to address? You can get in touch with a business attorney to alleviate your fears. Even though business attorneys are not cheap, they do provide professional business advice that can help you in the long run.

Moreover, you can also contact the customer services of reputed incorporation services like ZenBusiness or Northwest Registered Agent and get your queries answered.

Foreign Qualification Fees

If your LLC was formed in some other state, and now you are expanding into the state of Texas, you will have to pay the foreign qualification fee. Instead of the Certificate of Formation, you will have to get the Application for Registration.

You will have to pay a steep price of $750 for your application. You can apply for registration online or through a paper form.

Business Licenses

You need a few more licenses apart from the Certificate of formation to do business in the state of Texas. The type of license and the cost will depend on the type of business you are doing as well as the location of your business. Your LLC might require state, federal, or local permits to legally operate.

Contact the Texas Department of Licensing & regulation to see if your LLC needs any permits or licenses. Moreover, you need to contact the local chamber of commerce in your area to learn about any licensing requirements.

Once you have created your Texas LLC, you will require a sales tax permit to do business in the state. You can apply for the permit online. There are going to be a few other business licenses that your city or county might require, so it is always a good idea to do your homework first.

How to form a Texas LLC Yourself

Now that you know the costs of creating an LLC in Texas, is time for the big question: how to register a Texas LLC yourself? Well, don’t worry – with the help of a few tips and tricks, you will be able to form your LLC in no time!

Before you file your paperwork, you need to plan out your business details, hierarchical structure, business operating rules, etc. This will be helpful when you actually file your articles of organization with the state and you are required to provide the information.

It’s worth noting here that one of the Texas LLC costs if you form the company yourself is simply your time. There is a process and paperwork involved that is not a financial cost, but your time might be better spent on your new business.

This is why we recommend you use ZenBusiness or IncFile to form your Texas LLC. It’s quick, easy, and covers all of the paperwork for you!

Naming your Texas LLC

The first step in starting your LLC in Texas is finding a suitable name. Make sure that you choose a name that is available and is not already being used by some other entity. Moreover, the name should meet the Texas business naming requirements. Lastly, if the name is available as a web domain, that would be a huge advantage for you as well.

Your business name needs to have the phrase “Limited Liability Company” or any of its abbreviations such as L.L.C, LLC, Company, Co., Ltd., etc. Moreover, it should not have any words or phrases that would confuse your company with a governmental agency such as the FBI, State Department, etc.

It is a good idea to read the Texas Secretary of State’s guidelines to learn more.

Choosing a Registered Agent

All LLCs in the state of Texas have to designate a registered agent to act as the LLC’s point of contact with the state. The individual you choose as your registered agent must be 18 years of age or older. Moreover, they should have a physical address in the state.

They have to ensure their availability during normal business hours so that the state can get in touch with them if required. You can become your own registered agent. However, there are plenty of incorporation services out there, like ZenBusiness and IncFile, who give discounts and a free year of registered agent services if you use their services. We recommend that you check them out and take a load off your shoulders.

Filing your Articles of Organization

Once you have appointed your registered agent, the next step is to file for the certification of formation. You will have to pay a $300 fee for this certificate. You will be required to fill in the information regarding the type of business entity you want, the membership structure of your company, etc.

Creating a Business Operating Agreement

You are not legally obligated to have a business operating agreement, but it is a good choice to get one. A business operating agreement is a document that outlines the hierarchy of your company as well as lays down some operating rules for your LLC.

It not only ensures that all the owners and partners are on the same page, but it also avoids future conflicts. If you choose a quality LLC formation service such as ZenBusiness or Northwest Registered Agent, you will get business operating templates as part of their LLC formation packages at very nominal prices.

Getting an EIN

The last thing that you need to do is obtain an EIN from the IRS. It is basically the social security number for your business. With the help of an EIN, you can open your business bank account, file federal taxes as well as state taxes. Moreover, you can hire employees for your company as well.

Cost to Form a Texas LLC: Conclusion

You must be thinking that it costs a lot to get your LLC up and running. Don’t worry, most of these charges are one-time fees, and you won’t have to pay them again. Moreover, if you hire professional incorporation services, then you can get features like business operating templates, registered agent services, etc. at discounted rates.

As a new business owner, you are bound to be swamped with loads of pending tasks. Forming an LLC is a time-consuming process and instead of spending your time sorting out paperwork, you should let a professional LLC formation company help you form a Texas LLC.

Frequently Asked Questions

To form my Texas LLC, do I need a business attorney?

It is not a legal obligation to hire an attorney for forming your LLC in Texas. However, if you want to hire one to take care of your business needs, make sure that you know the hourly costs of an attorney. Instead of hiring an attorney to form your LLC, you can get the services of a professional incorporation service that costs less and provides a lot more facilities.

What is the difference between a corporation, LLC, and LP?

Corporations are owned by several shareholders and are managed by a particular board of directors. In the case of LLCs, they are owned by members who usually manage and run the LLC as well. An LP is a partnership between various limited partners.

You can form a corporation, LLC, or LP, by filing a certificate of formation with the Texas state.

What is a close corporation?

A domestic, for-profit corporation is known as a close corporation. You have to state clearly in your certificate of formation if your company fulfills this criterion.

Can one individual act as the director, sole shareholder, and member of an LLC?

Yes, this is possible. For professional corporations and for-profit entities in Texas, one person can be the president, sole director, and sole shareholder of the LLC. However, in the case of non-profit corporations, the Texas Business Organizations Code states that LLCs should have a minimum of at least three directors.

What is the difference between a manager of an LLC and a member of the LLC?

A person who holds membership interest or ownership in an LLC is its member. An LLC requires at least one member for its formation. A manager of the LLC can be a member with management authority. On the other hand, the manager of the LLC can be an individual who is overseeing the day-to-day operations without having any membership interests in the LLC.

In your certificate of formation, you have to mention how your LLC will be managed. If you are not sure which management structure will be best for your LLC, you can call a business attorney or contact professional LLC services such as ZenBusiness or Northwest Registered Agent.

Do I have to submit an annual report with the state for my business?

Not every LLC has to file annual reports with the state. Only specific types of business have to do so. If your company is registered as a Limited Liability Partnership (LLP), then you are required to file an annual report before June 1 every year. The secretary of state will send you a notice to file the annual report before March 31.

All non-profit corporations are required to submit a report when they receive a notice from the state. Usually, they have to submit a report once every 4 years. The notice will be sent to the registered agent to ensure that you don’t miss the deadline.

A few limited partnerships that are not obligated to file franchise taxes will have to file a report upon receiving notice from the Secretary of state. Again, the period is usually four years in this case.

Can I create a non-profit LLC in Texas?

Under the Texas Business Organizations Code, no specific term like “nonprofit LLC” exists. However, the code allows you to form an LLC and run it for non-profit purposes. A non-profit LLC is not automatically exempt from paying state taxes or federal taxes. You will have to check with the IRS or get in touch with the Texas Comptroller to see if your LLC can get tax-free status.

Why is a Texas LLC the best for you?

When it comes to choosing the type of business entity, you have many choices. However, a few choices such as limited partnership, sole proprietorship, etc. might place your personal assets at a risk. How? Well, if you get sued, or you can’t pay your business debt, then your personal vehicles, funds, assets, etc. can be seized to cover the costs.

However, if you create a Texas LLC or a Texas Corporation, then you will get personal asset protection. You and your business are considered separate entities, so you will not be responsible for the business debts.

How many types of LLCs are there?

There are various types of LLCs. If you are the owner of your LLC, the LLC will be termed as a single-member LLC. If you have partners, then your LLC would be a multi-member LLC. If your LLC is being formed in the state where you do business, it will be termed as a domestic LLC.

If an LLC is formed in a state other than the one in which it does business, it is termed as a foreign LLC. Professional LLCs are those entities that represent industries like medicine or law. Texas series LLC provides protection across multiple divisions of the company, which is very common in real estate.

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