Why Form an LLC in Texas?
Texas is the second largest economy in the United States and would be the eighth largest economy in the world if it were an independent country. With no personal or corporate income tax, a business-friendly regulatory environment, and a workforce of over 14 million, Texas attracts more business relocations than any other state.
The Lone Star State is particularly strong for energy, technology, healthcare, construction, and professional services. Major companies including Tesla, Oracle, HP Enterprise, and Charles Schwab have relocated their headquarters to Texas in recent years, drawn by the combination of no income tax and lower operating costs.
However, Texas has the highest filing fee among popular LLC formation states at $300. If you do not have operations in Texas, this premium is hard to justify. Wyoming ($100), New Mexico ($50), and even Delaware ($90) all cost less to form. For non-residents with no Texas connection, other states offer better value.
Texas makes the most sense if you operate within the state, serve Texas customers, or want the credibility that comes with one of America's largest business markets.
Texas LLC Costs and Fees
All fees below are sourced from the Texas Secretary of State fee schedule.
| Fee | Amount | When Due |
|---|---|---|
| Certificate of Formation | $300 | One-time (at formation) |
| Annual report | $0 | No traditional annual report |
| Franchise tax (under $2.47M revenue) | $0 | File No Tax Due report by May 15 |
| Franchise tax (over $2.47M revenue) | 0.375% - 0.75% | Due May 15 annually |
| Registered agent | $100-150/year (third party) | Ongoing |
| Personal income tax | 0% | Texas has no personal income tax |
| Corporate income tax | 0% | No traditional corporate income tax |
| Sales tax | 6.25% + local (up to 8.25%) | If selling taxable goods/services in TX |
| Amendment | $150 | When needed |
| Certificate of Good Standing | $15 | When needed |
The $300 filing fee in context
Texas's $300 filing fee is the highest among popular formation states. However, the ongoing costs are low: $0 annual report and $0 franchise tax for businesses under $2.47M in revenue. Over five years, Texas costs $300 total in state fees, compared to Wyoming's $400 ($100 + 5 x $60). Texas is actually cheaper long-term if your revenue stays under the franchise tax threshold.
Step-by-Step: How to Form a Texas LLC
Step 1: Choose your LLC name
Your LLC name must be distinguishable from existing entities in Texas and must include "Limited Liability Company," "LLC," or "L.L.C." Search availability on Texas Comptroller's office and the Texas SOS entity search. Name reservation costs $40 for 120 days.
Step 2: Appoint a registered agent
Every Texas LLC must have a registered agent with a physical street address in Texas. The registered agent must be a Texas resident or a business entity registered to do business in Texas.
Step 3: File Certificate of Formation
File online through SOSDirect or by mail. The filing requires:
- LLC name with designator
- Purpose of the LLC (can be general)
- Duration (perpetual or specific end date)
- Registered agent name and address in TX
- Name and address of each governing person (managers) or each member
- Name and address of each organizer
- $300 filing fee
Step 4: Create a Company Agreement
Texas calls the Operating Agreement a "Company Agreement." While not required to be filed with the state, it is the governing document of the LLC and essential for banking and operations.
Step 5: Obtain an EIN
Apply for an EIN from the IRS using Form SS-4. Standard process for all states.
Step 6: File initial franchise tax report
Texas requires a franchise tax report within one year and 89 days of formation. For LLCs with revenue under $2.47 million, file a No Tax Due report (no payment required). Register with the Texas Comptroller.
Annual Compliance Requirements
- Franchise tax report: Due May 15 annually. File a No Tax Due report if revenue is under $2.47 million. If over, calculate and pay franchise tax.
- Federal tax filing: Form 5472 with pro forma 1120 for foreign-owned LLCs. Due April 15.
- Registered agent: Maintain a registered agent with a physical Texas address.
- FinCEN BOI Report: Required under the Corporate Transparency Act.
- Sales tax returns: If registered for Texas sales tax, file returns on the required schedule.
Texas Taxes for LLCs
| Tax Type | Rate | Notes |
|---|---|---|
| Personal income tax | 0% | Texas has no personal income tax |
| Corporate income tax | 0% | No traditional corporate income tax |
| Franchise (margin) tax | 0.375% - 0.75% | Only on revenue over $2.47M; retail/wholesale pay 0.375% |
| Sales tax | 6.25% + local | Combined rate up to 8.25% |
| Property tax | Varies (avg ~1.7%) | On real and personal property in TX |
The Texas Franchise Tax Explained
The Texas franchise tax (also called the margin tax) is often misunderstood. Here are the key points:
- Threshold: Businesses with total revenue of $2.47 million or less owe $0 in franchise tax (2026 threshold, adjusted periodically)
- Filing requirement: Even if you owe $0, you must file a No Tax Due report by May 15 each year
- Rates: 0.375% for retail and wholesale businesses; 0.75% for all other businesses
- Calculation: The tax is calculated on the LLC's "margin," which is total revenue minus the greatest of: cost of goods sold, compensation, 30% of total revenue, or $1 million
- First report: Due within one year and 89 days of formation
For most new LLCs, especially those owned by non-residents, revenue will be well under the $2.47 million threshold. The franchise tax effectively costs $0 — you just need to file the No Tax Due report.
Processing Times
| Processing Option | Time | Additional Fee |
|---|---|---|
| Online filing (SOSDirect) | 2-3 business days | $0 |
| Mail filing | 5-7 business days | $0 |
Pros and Cons of a Texas LLC
Advantages
- No personal or corporate income tax
- No annual report fee
- No franchise tax under $2.47M revenue
- Second largest US economy
- Strong business infrastructure and workforce
- Lower long-term cost than Wyoming (over 5 years)
- Well-established LLC law
Disadvantages
- $300 filing fee (highest among popular states)
- $150 amendment fee (expensive to change)
- Member/manager names are public in filings
- Franchise tax report required even if $0 owed
- High sales tax (up to 8.25%)
- High property taxes (if holding TX property)
- Slower processing than Wyoming (2-3 vs 1-3 days)
Our Pricing: Texas LLC Formation
Domestic Filers (US Residents)
$249 service fee + $300 state filing fee
International Filers (Non-US Residents)
$349 service fee + $300 state filing fee
Every formation package includes:
- Certificate of Formation filing with Texas Secretary of State
- One year of registered agent service in Texas
- Custom Company Agreement (Operating Agreement)
- EIN application
- Banking introduction letter
- Digital document delivery within 24 hours of state approval
- Compliance calendar with all filing deadlines
- Dedicated support via email and WhatsApp
Form your Texas LLC today
$549 all-in for US residents. $649 for international filers. The Lone Star State, simplified.
Start My Texas LLC →Considering other states? Read our Wyoming vs Delaware comparison guide for a full breakdown.