John BlessingTexas has long been recognized as one of the most business-friendly states in the United States. With no personal state income tax, no corporate income tax, and a legal framework that offers strong liability protection, the state attracts entrepreneurs from across the country and around the world.
For many business owners, the limited liability company, or LLC, is the preferred entity structure because it combines the liability protection of a corporation with the tax flexibility and operational simplicity of a partnership.
Cost of an LLC in Texas
The Mandatory State Filing Fee
The foundational cost of forming an LLC in Texas is the filing fee for the Certificate of Formation, which is submitted to the Texas Secretary of State. This fee is $300 and applies to all limited liability companies seeking to organize under Texas law. The fee is mandatory and non-negotiable for standard commercial entities. It is a one-time payment due at the time of filing.
Several important details surround this fee. First, the same $300 fee applies whether an entrepreneur files directly with the Secretary of State or uses a commercial formation service. The state fee is identical regardless of who submits the paperwork . Formation services may charge additional fees for their assistance, but they do not reduce or replace the state’s filing fee.
Second, payment method affects the total amount paid. Texas charges a statutory convenience fee of 2.7 percent on credit card payments made to the Secretary of State . On a $300 filing fee, this surcharge adds approximately $8.10, bringing the total to roughly $308.10 when paying by card. Paying by check or money order avoids this surcharge entirely. Prospective filers should factor this into their budgeting.
Third, the filing fee is generally not refundable if the application is rejected. However, the Secretary of State does not charge the card or will return checks and refund cash when a document cannot be filed, meaning a rejection generally costs time rather than the filing fee itself .
Registered Agent Requirements and Costs
Every LLC formed in Texas must maintain a registered agent and a registered office within the state . The registered agent is responsible for receiving legal documents, official correspondence, and service of process on behalf of the LLC. This is a mandatory requirement, not an optional one.
An LLC has two primary options for satisfying this requirement. The first is to serve as its own registered agent. In this case, the cost is $0. The individual serving as the agent must maintain a physical Texas street address and be available during normal business hours to receive documents . Many single-member LLCs operated by Texas residents choose this option to minimize costs.
The second option is to hire a professional registered agent service. These services typically charge between $50 and $300 annually, depending on the provider and the level of service offered . Professional registered agents provide a business address, handle document receipt and forwarding, and offer compliance reminders.
For business owners who value privacy, do not maintain a physical Texas address, or prefer not to be publicly listed as the agent, this service can be worthwhile. When comparing providers, it is important to examine renewal rates, included features, and support quality rather than focusing solely on the first-year price, as some services increase fees after the initial term .
Optional Name Reservation and Assumed Name Fees
Prospective business owners may wish to reserve a business name before filing the Certificate of Formation. Texas offers a name reservation option that holds a name for 120 days. The fee for this reservation is $40 . This is optional and is typically used by entrepreneurs who are not yet ready to file formation documents but want to secure a specific name.
If an LLC intends to operate under a name different from its legal name, it must file an Assumed Name Certificate, commonly known as a DBA. At the state level, this filing carries a fee of $25 . For entities other than registered businesses, such as sole proprietorships and general partnerships, the assumed name filing is handled at the county level, and fees vary by county . An LLC should file the assumed name certificate with the Secretary of State if it wants statewide protection for the DBA.
Certificate of Good Standing and Certified Copies
An LLC may occasionally need to obtain a Certificate of Fact – Status, which is Texas’s equivalent of a Certificate of Good Standing. This document proves that the LLC is in compliance with state filing requirements and is often requested by banks, lenders, and licensing boards.
The fee for this certificate is $15 . Certified copies of formation documents may also be requested for various purposes. The Secretary of State charges $15 plus $1 per page for certified documents .
The Texas Franchise Tax and the No-Tax-Due Threshold
Texas does not impose a traditional corporate income tax or personal income tax. Instead, the state levies a franchise tax, sometimes called the margin tax, on taxable entities doing business in Texas, including LLCs . This tax is based on the entity’s taxable margin, which is calculated from gross revenue after certain deductions and elections.
The most important fact for small business owners is the no-tax-due threshold. For the current report year, the threshold is $2,650,000 in annualized total revenue. An LLC with revenue at or below this amount owes no franchise tax. The threshold has increased from $2,470,000 in the previous reporting year, reflecting periodic adjustments by the Texas Comptroller.
Even when no tax is owed, the LLC must still file a Public Information Report, or PIR, with the Texas Comptroller. The filing deadline is May 15 of each year . This report lists the names and addresses of the LLC’s officers, managers, or members.
There is no state fee for filing the PIR, but failing to file can result in a $50 penalty and may affect the LLC’s good standing status . Texas no longer requires the separate No Tax Due Report that was previously filed by entities below the threshold; the PIR now serves as the primary annual filing for those entities .
For LLCs with revenue above the threshold, franchise tax rates depend on the entity’s classification. The standard rate is 0.75 percent of taxable margin for most entities, including service providers and manufacturers.
Retail and wholesale businesses pay a reduced rate of 0.375 percent . The EZ Computation method, available to qualifying entities with $20 million or less in revenue, applies a rate of 0.331 percent .
It is worth emphasizing that the franchise tax is separate from federal income taxes. An LLC’s federal tax treatment depends on its classification: a single-member LLC is typically taxed as a sole proprietorship, a multi-member LLC as a partnership, and an LLC may elect to be taxed as an S corporation or C corporation.
Texas does not add a state-level layer to these federal obligations for LLCs below the franchise tax threshold.
Foreign LLC Registration
An LLC formed in another state that wishes to conduct business in Texas must register as a foreign LLC with the Texas Secretary of State. The filing fee for this registration is $750.
This is significantly higher than the domestic formation fee. In addition to the registration fee, the foreign LLC must maintain a registered agent in Texas and comply with annual franchise tax filing requirements.
Industry-Specific Licenses and Permits
While Texas does not require a general state business license, many industries require specific permits or professional licenses. The costs of these licenses vary widely.
Examples include cosmetology salon licenses starting around $108 and food-service establishment permits at approximately $258 plus inspection fees.
Local governments may also impose their own licensing requirements and fees.
Prospective LLC owners should research the specific requirements for their industry and municipality before finalizing their budgets.
Fee Waivers for Veterans
Texas offers a meaningful fee waiver for veteran-owned businesses. Under Senate Bill 938, an LLC that is 100 percent owned by an honorably discharged veteran of the United States armed forces may qualify for a waiver of the $300 Certificate of Formation filing fee.
The waiver also includes an exemption from franchise tax obligations for the first five years of operation.
To claim this benefit, applicants must submit Form 05-904 with supporting DD-214 documentation when filing formation paperwork. This waiver represents a substantial savings for qualifying entrepreneurs.
Budgeting Examples
To illustrate the range of potential costs, two budgeting scenarios are useful.
A lean do-it-yourself budget assumes the owner files the Certificate of Formation directly, serves as their own registered agent, and avoids optional filings.
The base cost begins at $300 for the state filing fee, plus the 2.7 percent card surcharge if paying by credit card, bringing the total to approximately $308. There is no cost for the registered agent, and the EIN from the IRS is free.
This approach is feasible for Texas residents who maintain a physical address in the state and are comfortable handling the filing process themselves .
A standard small business budget includes professional services and optional filings. The state filing fee remains $300. A professional registered agent service adds $50 to $300 annually.
An operating agreement, while not legally required in Texas, is strongly recommended and may be drafted by an attorney or obtained through a formation service at additional cost.
Business licenses or permits, if required for the industry, add their own fees. This approach provides greater privacy and convenience but increases the initial outlay and recurring expenses.
Conclusion
The cost of forming an LLC in Texas begins with the mandatory $300 Certificate of Formation filing fee, which applies regardless of whether the entrepreneur files directly or uses a commercial service.
Registered agent services, name reservations, assumed name filings, and certificates of good standing represent optional or situational costs that can increase the total.
On an ongoing basis, the franchise tax is the most significant potential expense, but the no-tax-due threshold of $2.65 million for 2026 means most small LLCs owe nothing.
The annual Public Information Report must still be filed, and failure to do so carries penalties even when no tax is due.
Veterans who fully own their LLC may qualify for a waiver of the filing fee and a five-year exemption from franchise tax.
By understanding these costs and planning accordingly, entrepreneurs can establish and maintain a Texas LLC without unexpected financial surprises.
Disclaimer
This article is provided for general informational purposes only and does not constitute legal, tax, or financial advice. The costs, fees, thresholds, and requirements described herein are based on publicly available information and may vary depending on the specific facts of a case, changes in applicable law, and administrative adjustments by the Texas Secretary of State or the Texas Comptroller. Nothing in this article creates an attorney-client relationship. Readers should consult a licensed attorney, accountant, or tax professional in their jurisdiction for advice regarding their specific situation.