If you’re starting an LLC, or limited liability company, in Texas, it’s essential to understand the fees and costs of forming your LLC. As well as the initial filing fee you’ll have to pay when you start your LLC, you may also have to pay reporting and annual fees.
As of 2020, the average filing fee for an LLC in the United States was $132. However, as well as the state’s filing fees, there are other costs to consider when settling your LLC.
Let’s explore the costs of starting an LLC in Texas and consider what fees you may have to pay before, during, and after you file your LLC.
How much does it cost to start an LLC in Texas?
The various costs of filing an LLC in Texas range between $40 and $500 depending on the complexity of your filing and how you choose to start your LLC. However, at minimum, all LLC registrations will cost at least $300, because this is the fee you will pay to register your LLC with the state of Texas.
LLC registration fees in Texas
The initial Texas LLC cost for filing an LLC is $300. This fee covers your registration paperwork, or form 205, which includes details such as the name of your company, the purpose of the company, and the names and addresses of company members.
When you choose a company name, you must choose a name that’s different from the names of all other companies operating within the state of Texas. If you’re worried that the name you want could be taken before you can file your LLC, you can also pay $40 to reserve a name for up to 120 days.
Other costs to consider when filing your LLC in Texas include the fees you will pay if you want certified copies of relevant certificates. A copy of the Certificate of Formation will cost you $30 while a Certificate of Status will cost you $5.
Registering a foreign LLC in Texas
It’s also important to understand the costs of registering a foreign LLC in Texas. If you want to conduct business in Texas through an LLC formed in another state, you need to register your LLC with the Texas Secretary of State by filing form 304, also called the Application for Registration of a Foreign Limited Liability Company.
This costs $750 to file, plus an extra $30 if you want a copy of the Application for Registration or an extra $5 for a copy of the Certificate of Status.
What are LLC expenses and fees in Texas?
As well as the LLC filing fee of $300, which is a one-time fee that you pay to the state to form your LLC, you may also have to pay other expenses and fees to the state of Texas after you’ve registered your LLC.
Fees for changes and amendments
You could also be charged a fee for making changes and amendments to your LLC. For example, if you amend the articles of organization or change the registered agent of your LLC, you must notify the Secretary of State of these changes and pay a fee.
This fee is usually set at $15 for most changes, but if you want to change the registered agent this incurs an initial fee of $15 plus an additional fee of $15 to cover the filing of a consent form that’s signed by the registered agent.
The good news is that there are no annual registration fees or reporting fees for LLCs in the state of Texas. However, this doesn’t mean that you will not have to pay any annual fees at all after registering your Texas LLC. You may have to file an annual franchise tax statement with the Texas Comptroller of Public Accounts. This is free to submit, but you will be charged a $50 late fee if you fail to submit the form on time.
Registered agent fees
In Texas, you will need a registered agent to register an LLC and the initial registration form requires the name and address of your registered agent. You can be your own registered agent, but many founders of LLCs choose to use a registered agent service to ensure that they meet state regulations and reduce the risk of missing annual filing deadlines and late fees.
Paying a registered agent doesn’t add a huge amount to the costs of filing an LLC in Texas. It’s usually possible to hire a registered agent for around $30 plus the filing fee. Don’t forget that you may also have to pay amendment fees if you want to change your LLC’s registered agent at a later date.
A registered agent must be either a Texas resident or an organization that’s permitted to conduct business in Texas. The person or organization must also have a physical address in Texas. Your LLC cannot be its own registered agent.
Fees by state
It’s important to remember that the fees and costs that you will incur when you register and run an LLC vary by state across the US. If you’re registering an LLC in Texas, this will cost $300. In other states, such as Florida, you may pay less to register your LLC but pay higher reporting fees on an annual basis.
Depending on the state that you register your LLC in, the cost of filing your LLC could range between $50 and $800. In most states, the cost of registering your LLC will make up the majority of the costs that you will incur for starting your business.
It’s always important to check the fees of the state that you’re registering your LLC in, as well as any additional annual fees or fees to register a foreign LLC in a new state. If you registered your LLC in Texas initially, you may still have to pay additional fees to register it in another state.
To summarise the Texas LLC fees that you will pay for registering and operating an LLC in Texas, they include:
- A $300 registration fee when you register your LLC
- Optional fees of $5 to $40 for certificates and name reservations
- No Annual reporting fees, but a $50 late fee for missed deadlines
- A $15 fee if you want to make changes to your LLC
What does an LLC cover?
An LLC, or limited liability company, is a type of corporate structure that protects individual owners from company liabilities. In other words, by forming an LLC, a company’s owners can protect themselves from being held personally responsible for the debts and liabilities of the business.
A Texas limited liability company is a type of hybrid organization that combines some of the properties of corporations with some of the properties of partnerships. They limit the liabilities of owners in the way that corporations do while also allowing for flow-through taxation as in a partnership.
The advantages of operating as an LLC
The main reason why business owners choose to operate using an LLC structure is because of the safety net that LLCs provide. Operating as an LLC limits your own personal liability as well as the personal liabilities of your partners and investors. It does this by separating the business assets of the company from your own personal assets, which means that if your business is found liable for fees, debts, and other charges, you will never have to pay money from your own personal savings to cover these outstanding debts.
Operating as an LLC also protects you from legal charges brought against the company. If your company is sued, you cannot be held personally responsible or pursued legally as an individual.
LLCs also allow the profits of a business to pass directly to the business’s owners without the risk of double taxation. Instead of paying tax on profits when the money enters the company and then paying more tax when you earn the money as an individual, you can simply pay personal income tax on all of the profits of your business when you operate as an LLC. This makes LLC considerably more tax-efficient than some other alternative structures.
Is an LLC really necessary?
You don’t have to operate as an LLC to conduct business in the state of Texas. You could choose to operate under a different structure, for example as a partnership or a sole proprietor, depending upon the specifics of your business.
Some people choose to start a business without forming an LLC because it’s cheaper, quicker, and easier. If you don’t form an LLC, you don’t have to file your LLC registration with the state and you won’t have to pay fees to register your business. This is often the preferred option for entrepreneurs who aren’t yet sure whether their business idea is going to be successful or not.
However, many people choose to operate as an LLC because of the protections that the LLC structure offers. If you choose to operate without forming an LLC, you leave yourself open to risks and liabilities that an LLC can protect you from.
The risks of operating without an LLC
If you choose to operate without an LLC, you face additional risks that could endanger your own personal finances as well as the funding and security of your business.
As a sole proprietor or as a partner within a partnership, you could be held personally liable in the event that your business is sued or in debt. You could also be held personally liable for business-related activities carried out by your employees, for example, if one employee files a lawsuit against another. By forming an LLC, you can protect your own personal savings and assets no matter what happens to your business.
Lack of structure
If you choose to operate under a different structure, you risk having no clear company structure at all. By setting up an LLC, you can quickly and efficiently create a standard framework that lays out how your company divides profits, losses, and responsibilities and clarify what happens in the event of disagreements or if one of the partners wants to leave the business. Setting up an LLC today can reduce conflict in the future and safeguard your own rights and responsibilities.
Start-ups that operate as sole proprietorships, partnerships, or under other models may find it harder to secure funding when compared to LLCs and other corporate structures. Banks and lenders may be more reluctant to invest in businesses that don’t operate as LLCs because they’re more at risk of the issues listed above.
Get in touch
If you’re looking for fast and affordable assistance in setting up your LLC in Texas, at Wyoming LLC Attorney we can help. We offer everything you need to get your business started the right way, and our experienced lawyers can manage the legal side of your business for you while protecting your privacy and offering you high-quality legal advice and support.
Want to get started today? We offer a 24-hour filing guarantee.