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Texas LLC Formation Costs and Fees

State Filing Fee: The primary cost to form an LLC in Texas is the state’s Certificate of Formation filing fee of $315 sos.state.tx.us

. This is a one-time fee paid to the Texas Secretary of State when you submit Form 205 (Certificate of Formation). If you file online via the state’s SOSDirect system and pay by credit card, note that a small 2.7% convenience fee will apply sos.state.tx.us (about $8 on a $300 filing). To avoid that charge, you can file by mail and pay with a check or money order to the Secretary of State, though this may take a bit longer for approval.

Name Reservation (Optional): Texas allows you to reserve an LLC name before filing, but it’s optional and costs $40 for a 120-day holdsos.texas.gov. Most budget-conscious entrepreneurs skip this step and simply search for an available name (for free) and then go straight to filing the LLC. Bypassing the reservation saves money, since you’ll secure your name automatically when the LLC is formed. Similarly, purchasing an assumed name (DBA) isn’t needed unless you plan to operate under a different name; that would cost an extra $25 if ever required sos.texas.gov.

Registered Agent: Every Texas LLC must designate a registered agent with a physical Texas address to receive official mail and service of process sos.state.tx.us. You can be your own registered agent (or use a willing friend/associate in Texas) at no cost, which is the most affordable route. Hiring a commercial registered agent service is optional; while it adds convenience, it typically costs $100–$200 per year, so doing it yourself or using someone you know can save that recurring expense.

No General Business License: Unlike some states, Texas does not require a general statewide business license gov.texas.gov for LLCs. That means you won’t pay a state license fee just to operate. Depending on your industry and location, you might need specific permits or local licenses, but many small businesses incur no licensing cost at the state level. Always check city/county requirements for any local fees, but there’s no blanket Texas business license fee to worry about.

Ongoing Taxes: Texas doesn’t impose a personal income tax or a corporate income tax on LLCs. Instead, LLCs are subject to the state franchise tax, which only kicks in above a certain revenue threshold. Most small LLCs owe no franchise tax – as of 2024, if your annual revenue is $2.47 million or less, you pay $0 in franchise tax comptroller.texas.gov. The state even removed the need for those small LLCs to file a “no tax due” report each year comptroller.texas.gov, though a simple informational report may be required. In short, once you’ve paid the $300 formation fee, Texas does not charge ongoing annual fees to keep a standard LLC active (you’ll just need to remain in good standing with any required tax filings, which cost nothing if you owe nothing).

Step-by-Step: Forming a Texas LLC on a Budget

Following these steps will help you start your Texas LLC cheaply and correctly. This DIY approach focuses on minimal required costs and smart choices to avoid extra fees:

Choose an Available Business Name: Pick a unique name for your LLC that complies with Texas naming rules (it must include an identifier like “LLC” or “Limited Liability Company”). Search the Texas Secretary of State’s records to ensure your desired name isn’t already taken. You can search online via SOSDirect (the state’s business database) and avoid paying for a name reservation unless you’re not ready to file – reserving costs $40, so skip it to save money sos.texas.gov. Once you’re ready to form the LLC, the name will be secured upon approval of your Certificate of Formation.

Appoint a Registered Agent (for Free): Designate a registered agent with a Texas address who will receive official notices for your LLC sos.state.tx.us. The cheapest solution is to serve as your own registered agent if you reside in Texas or use a trusted person (like a business partner or relative in the state). This way, you avoid paying a registered agent service. Just ensure the agent is available during business hours at the listed address. (Tip: The Secretary of State requires the agent to consent to the appointment, so if it’s yourself, you’ll simply indicate that in the form.) Using a free or self-agent saves you around $100+ per year compared to hiring a commercial agent.

File the Certificate of Formation: This is the core step where you officially create your LLC. Texas Form 205 (Certificate of Formation) can be filed online through SOSDirect or by mail to the Secretary of State. Fill in basic details about your LLC: name, registered agent, management structure, etc. If filing online, you’ll create an SOSDirect account and complete the form digitally; if by mail, you can download Form 205 and send the completed form. Standard processing is reasonably quick (often a few business days if filed online, or a bit longer by mail), so you don’t need to pay for expedited service unless you’re in a big rush. Texas does offer 1-2 day expedited processing for an extra $25 fee sos.texas.gov, but skipping this saves money – the regular processing time is usually sufficient for most new businesses.

Pay the $300 State Filing Fee: When you submit your Certificate of Formation, you must pay the Texas LLC filing fee of $300 to the state sos.state.tx.us. This fee is the same whether you file online or by mail. For the most affordable approach, consider how you pay: online payments by card will incur a 2.7% convenience fee (about $8.10) sos.state.tx.us. To avoid that small surcharge, you can mail in your form with a check for $300 (no card fee). Either way, $300 is the mandatory cost to officially form your LLC. Once filed, the state will process your paperwork and, upon approval, issue a Certificate of Formation (proof that your LLC legally exists). You’ll typically receive this certificate via email (for online filings) or mail. Congratulations – at this point your LLC is officially formed, and you’ve only spent the required amount.

Draft an Operating Agreement: An operating agreement is an internal document that outlines how your LLC will be run (ownership percentages, roles, rules, etc.). Texas law doesn’t require you to file an operating agreement with the state, so there’s no government fee for this step. However, it’s highly recommended to have one, especially if you have multiple members. The good news is you can do this at no cost. Many entrepreneurs draft their own operating agreement using free templates or guides available online, tailoring them to their needs. You might also use a low-cost legal template service or consult an attorney if you prefer, but from a budget standpoint, a DIY operating agreement will suffice for most simple businesses. Keeping this in-house saves money and still provides you with a useful document for managing your LLC and showing to banks or investors if needed.

Obtain an EIN from the IRS (Free): Most LLCs will need an Employer Identification Number (EIN) from the IRS, especially if you plan to hire employees, open a business bank account, or elect a specific tax status. Don’t pay anyone for an EIN – you can get one completely free on the IRS website in minutes irs.gov. The IRS online EIN application is a quick questionnaire, and at the end you’ll be issued your EIN immediately at no cost. Many third-party services charge $75 or more to “get an EIN for you,” but since it’s a simple process, doing it yourself saves that fee entirely irs.gov. Just visit the official IRS EIN application page and follow the steps; make sure to do it during IRS business hours (weekday hours) when the online application is available.

Handle Texas Tax and Business Compliance: With your LLC formed, you’ll need to keep up with a few ongoing responsibilities, but fortunately these don’t have to cost anything if done correctly. Texas Franchise Tax: As mentioned, most small LLCs owe no franchise tax due to high revenue thresholds (no tax if ≤ $2.47 million revenue) comptroller.texas.gov. If you do cross that threshold, you’d pay a percentage of revenue, but many new LLCs won’t need to pay this tax. Even the annual “No Tax Due” report requirement has been eliminated for small entities comptroller.texas.gov, simplifying compliance. Just be aware you may need to file a simple Public Information Report each year (no fee) to update ownership information comptroller.texas.gov. Permits and Licenses: Double-check if your type of business needs any specific permits or professional licenses in Texas or your locality. Texas has a useful Business Licenses & Permits Guide to identify any applicable fees or permits, but again, no general state license is required gov.texas.gov. Staying compliant by filing any required state tax reports and renewing any necessary permits on time will prevent fines – and timely DIY filings mean you avoid paying late penalties or third-party compliance services.

By following the above steps, you have formed your Texas LLC by spending only on the necessities (approximately $300 total in state fees, plus maybe postage). There are no hidden Texas fees beyond what we’ve covered – for instance, Texas does not require annual LLC renewal fees or an annual report fee like some states do. This makes maintaining your LLC quite affordable year to year.

Using an Affordable Filing Service (Optional)

If the DIY process feels overwhelming or you simply prefer professional assistance, you can still keep costs low by choosing an affordable LLC filing service. Be cautious here: many popular legal filing companies charge premium prices or try to upsell expensive packages. Instead, opt for a budget-friendly provider that charges only a small service fee on top of Texas’s state fee. For example, AAAFiling.com offers Texas LLC formation services for about $39 plus the state filing fee aaafiling.com. With such a service, you’d pay the required $300 state fee (often listed as $315 if the service files online to account for state processing fees) and a $39 preparation fee, totaling roughly $339–$354 in all. This option can save you money compared to high-cost competitors, while still handling the paperwork for you. When using a filing service, make sure all you’re paying is the state fee and the low service fee – avoid unnecessary add-ons you don’t truly need. In summary, if you do choose help, stick with an inexpensive, reputable service like AAAFiling to keep your startup costs almost as low as doing it yourself.

(Important: Whether you DIY or use a service, remember that no third-party can waive or reduce the Texas state fee – any formation will require paying the state’s $300. Services that advertise “cheap LLC” are usually referring to their own service fee on top of the state fee. Always look for transparency in pricing.)

Extra Cost-Saving Tips for Starting a Texas LLC

Only Pay Mandatory Fees: Limit your expenditures to the $300 state filing fee and truly necessary items. Bypass optional charges like name reservations or expedited processing unless crucial

sos.texas.gov. By focusing on what’s required, you keep your formation budget lean.

Do It Yourself When Possible: Texas provides user-friendly tools (like the SOSDirect online portal) for business filings, so you can confidently handle the process on your own. Filing directly with the state avoids the extra charges that full-service firms would impose

sos.state.tx.us. Likewise, get your EIN and draft basic documents yourself to save on service fees irs.gov.

Be Your Own Registered Agent: Serving as your own registered agent (or using a willing friend’s Texas address) is legal and free. This move saves you the annual fee a registered-agent company would charge, while keeping you in control of important documents.

Use Free Resources: Take advantage of free information and templates. The Texas Secretary of State’s website offers all the forms and instructions you need, and the IRS issues EINs at no cost

irs.gov. You can find free or low-cost operating agreement templates instead of paying a lawyer to draft one from scratch for a simple LLC.

Choose Budget-Friendly Services if Needed: If you decide to get help, compare providers and go with one that has low, transparent fees. For instance, AAAFiling.com’s flat $39 service fee (plus state fees) is a fraction of what some competitors charge

aaafiling.com. Steer clear of upsells or pricey “premium” packages that include items you can do yourself or don’t truly need.

Conclusion

Forming an LLC in Texas can be very affordable when you know which costs are required and how to avoid unnecessary expenses. By filing the paperwork yourself through the Texas Secretary of State and taking advantage of cost-saving strategies (like skipping optional fees and handling simple tasks on your own), you can start your LLC for around $300, which is just the state filing fee. Texas’s business-friendly policies — no general license fee, no annual report fee, and no franchise tax for most small LLCs — help keep ongoing costs low gov.texas.gov

comptroller.texas.gov. Every dollar counts when you’re starting a new business, so sticking to the essentials is key. With the guidance above, you’re equipped to launch your Texas LLC on a shoestring budget, without cutting any legal corners. Enjoy the peace of mind of having your new LLC, and the extra funds you saved can be invested right back into growing your business.

If you’re considering forming a Limited Liability Company (LLC) in Texas, you’ll find plenty of advantages, especially when it comes to taxes. Let’s break down some of the key reasons why an LLC is a smart choice for entrepreneurs in the Lone Star State.

What is an LLC?

An LLC, or Limited Liability Company, is a business structure that protects its owners (known as members) from personal liability. It combines features of both partnerships and corporations, offering flexibility in management and simplifying tax responsibilities.

Key Tax Advantages of a Texas LLC

1. Pass-Through Taxation

One of the biggest tax perks of an LLC is pass-through taxation. This means that instead of the business itself paying federal income tax, the profits and losses pass through to the members’ personal tax returns. This avoids the double taxation that corporations often face, where income is taxed at both the corporate and personal levels.

2. No State Income Tax

Texas stands out for not having a state income tax, which means LLC members who live in Texas won’t owe state taxes on the income they earn from their business. This can result in significant savings compared to states that do have income taxes.

3. Franchise Tax Relief

While Texas does have a franchise tax, many small LLCs are either exempt or pay reduced rates. As of 2024, LLCs with total revenue under $1.23 million don’t owe any franchise tax. Businesses with revenue between $1.23 million and $20 million may qualify for a lower tax rate through the E-Z Computation method, making it easier to keep more of your earnings.

4. Tax Flexibility

Another benefit of an LLC is the flexibility in how it’s taxed. By default, a single-member LLC is taxed like a sole proprietorship, and a multi-member LLC is taxed like a partnership. However, you can choose to have your LLC taxed as a C-corporation or an S-corporation if it suits your financial strategy better. For example, choosing S-corp status can provide tax advantages, such as allowing members to receive dividends that are taxed at a lower rate.

5. Deductible Business Expenses

Running an LLC also comes with the ability to deduct common business expenses. This includes things like office supplies, rent, utilities, and employee salaries. Keeping track of these costs can help lower your overall tax bill, making your business more profitable in the long run.

6. Self-Employment Tax Savings

LLCs taxed as S-corporations offer another potential tax-saving strategy. Members can take a reasonable salary and pay self-employment tax on just that amount, while the rest of the profits are distributed as dividends, which aren’t subject to self-employment tax. This can lead to significant savings, especially for growing businesses.

Final Thoughts

Forming an LLC in Texas comes with numerous tax benefits that make it an appealing option for business owners. From avoiding double taxation to enjoying no state income tax and potential franchise tax exemptions, there are many ways to save. Additionally, the flexibility in tax treatment and opportunities to deduct business expenses further enhance the appeal. As always, it’s a good idea to consult a tax advisor or legal professional to make sure you’re making the best decisions for your business and staying compliant with all applicable laws.

We all know it is important to keep up with compliance when it comes to your business or really anything in life. Below is a guide to help you keep your Texas LLC online and good to go!

Steps to Form an LLC

Before getting into ongoing maintenance, let’s quickly cover the basics of forming an LLC in Texas:

Choose a Name: Your business name must be unique and meet Texas requirements.
File the Certificate of Formation: Form the TX LC online with AAAFiling.com.
Appoint a Registered Agent: Your LLC needs to have a registered agent with a physical address in Texas to receive legal documents.
Create an Operating Agreement: While not required, it’s a good idea to draft an operating agreement that outlines how your LLC will be run.
Ongoing Compliance Requirements

Okay, so now we are caught up and the LLC is up and running:

1. Franchise Tax and Annual Report

Texas requires LLCs to file both an annual report and a franchise tax form:

Franchise Tax: This tax is based on your LLC’s revenue. If your business makes less than $1.23 million in revenue (as of 2024), you won’t owe any tax but still need to file a “No Tax Due Report.”
Annual Report: Also called the Public Information Report, this document must be submitted each year. It basically just keeps the state updated on who the members/managers of the LLC are.

2. Registered Agent
Your LLC needs a registered agent. This is not new info because you needed one to file the LLC in the first place. You still need to re-tell the state who the registered agent is in the report.

3. Federal and State Tax Obligations

Your federal tax requirements depend on how your LLC is classified for tax purposes (sole proprietorship, partnership, S-corp, or C-corp). Additionally, you need to ensure compliance with any state taxes, such as sales tax if applicable. So, did the LLC make tons of money, like in the millions? If you there is probably a state tax burden. If not you probably don’t have to pay anything.

4. Business Licenses and Permits

Often times you can contact your city and county to determine if there are any special licensing required for your industry.

5. Employment Regulations

If your LLC has employees, there are additional requirements to follow:

Payroll Taxes: Make sure to withhold and pay both federal and state payroll taxes.
Workers’ Compensation: Depending on your business, workers’ comp insurance may be required.
Maintain Employment Records: Keep accurate payroll and employee records as required by law.
Best Practices for Maintaining Your LLC
1. Keep Accurate Records

Make sure to keep detailed records of financial transactions, contracts, and other important documents. This includes minutes from meetings, updates to your operating agreement, and major business decisions.

2. Keeping things separate

A good rule of thumb is to keep your business and personal expenses separate. Should be easy because you most likely by this point have a separate business bank account.

3. Update Your Operating Agreement

An operating agreement is pretty handy. If you have more than one officer it keeps everone in line with rules outlining spending and payouts and powers of officers. Plus the bank will probably want to see it before opening a bank account.

4. Stay Informed

Stay updated on changes in laws or regulations that could impact your business. You can subscribe to newsletters or join local business groups to keep yourself in the loop.

Final Thoughts

It’s good to keep your LLC in good standing. You spent all that money to get the LLC started so why let it get shut down for non-compliance right?

$39 Texas LLC and Incorporation Filing - No Hidden Fees!

The Cheapest Fastest Way To Start An LLC or Incorporate in Texas! Lowest prices online! Check out our Upfront Pricing:

Which LLC package is the best fit for your business?

Starter

Pro

Premium

All of Our $39 LLC and Incorporation Packages Include:

Table of Contents

Your business is very important to us!

Fast Texas LLC Filing: File LLC in Texas Online!

Cheapest Way to Start an LLC in Texas

Tax Advantages of Forming an LLC in Texas

What is an LLC?

Key Tax Advantages of a Texas LLC

1. Pass-Through Taxation

2. No State Income Tax

3. Franchise Tax Relief

4. Tax Flexibility

5. Deductible Business Expenses

6. Self-Employment Tax Savings

Final Thoughts

How to Keep Your Texas LLC Compliant and in Good Standing

Step-by-Step Guide to Filing an LLC in Texas

What do I need?

How long does it take?

How much does it cost?

Still looking for more info?

LLC Filing Online With AAAFiling.com
Incorporate Online in Texas

Cheap LLC Texas Formation | How to Form

Texas Limited Liability Company Online

CONTACT US

$39 Texas LLC and Incorporation Filing - No Hidden Fees!

The Cheapest Fastest Way To Start An LLC or Incorporate in Texas! Lowest prices online! Check out our Upfront Pricing:

Which LLC package is the best fit for your business?

Starter

Pro

Premium

All of Our $39 LLC and Incorporation Packages Include:

Table of Contents

Your business is very important to us!

Why Starting an LLC in Texas Makes Sense

The Cheapest Way to Start an LLC in Texas with AAAFiling.com

Texas LLC Formation Costs and Fees

Step-by-Step: Forming a Texas LLC on a Budget

Using an Affordable Filing Service (Optional)

Extra Cost-Saving Tips for Starting a Texas LLC

Conclusion

Fast Texas LLC Filing: File LLC in Texas Online!

Cheapest Way to Start an LLC in Texas

Tax Advantages of Forming an LLC in Texas

What is an LLC?

Key Tax Advantages of a Texas LLC

1. Pass-Through Taxation

2. No State Income Tax

3. Franchise Tax Relief

4. Tax Flexibility

5. Deductible Business Expenses

6. Self-Employment Tax Savings

Final Thoughts

How to Keep Your Texas LLC Compliant and in Good Standing

Step-by-Step Guide to Filing an LLC in Texas

What do I need?

How long does it take?

How much does it cost?

Still looking for more info?

LLC Filing Online With AAAFiling.comIncorporate Online in Texas

Cheap LLC Texas Formation | How to Form

Texas Limited Liability Company Online

CONTACT US

LLC Filing Online With AAAFiling.com
Incorporate Online in Texas