For more information on starting an LLC in Texas, see our Texas LLC Formation Guide.
Texas LLC frequently asked questions
How much does a Texas LLC cost?
Each state charges a fee for establishing a new LLC or registering an existing out-of-state LLC to do business there. The filing fee to form an LLC in Texas is $300; the filing fee to register an out-of-state LLC is $750.
The annual report filing fee is $60 for Wyoming LLCs with less than $300,000 in taxable assets. LLCs with $300,000 or more in assets pay $0.0002 per dollar of assets.
Why create an LLC?
LLCs provide a number of advantages over sole proprietorships, partnerships, or corporations. Here's why small business owners frequently choose to form an LLC:
- Personal asset protection: LLC members are shielded from personal liability for business actions and debts. Creditors generally cannot pursue owners' personal assets to satisfy business obligations.
- Flexible taxation: LLCs typically don't pay entity-level taxes. Business income and losses pass through to the owners' personal tax returns; taxes are paid at the individual level. LLCs can also elect to be taxed as an S corporation or C corporation.
- Credibility: An LLC provides a more formal business structure than a sole proprietorship or partnership, which can help establish credibility.
- Easier than incorporating: LLCs face fewer state requirements and ongoing formalities than S corporations or C corporations.
What are the downsides of starting an LLC?
LLCs usually cost more to form and maintain than a sole proprietorship or general partnership. There are also ongoing compliance obligations with the state, such as maintaining a registered agent and filing an annual report.
Texas has fewer regulatory burdens than many other states, but Texas LLCs must still meet basic compliance requirements. To remain in good standing, LLCs must file an annual Public Information Report. Failure to file can result in the entity forfeiting its right to transact business in Texas, which means loss of court access and personal liability protection.
For more information on LLC pros and cons, read our Guide to forming an LLC.
Do I need to have an operating agreement for my Texas LLC?
While Texas doesn’t mandate an LLC Operating Agreement, having one in place can be a powerful tool for staying organized and prepared for unexpected changes or challenges in your business journey.
An Operating Agreement serves as a foundational document that outlines how your business is governed, covering member roles, management structure, decision-making processes, and more.
What business licenses are required in Texas?
Most Texas businesses need to obtain one or more licenses or permits to operate legally. Before launching your LLC, it’s important to research the required business licenses at the federal, state, and local levels. While some licenses involve one-time fees, others require recurring payments to maintain compliance. The best place to start is by conducting thorough research to determine what business licenses you will need to obtain.
Conclusion
For small business owners, making the decision to form an LLC is a major step. Since LLC services aren't one-size-fits-all, it's important to identify what your business needs and choose a provider that delivers those essentials. Review what's included in each package, especially "free" options. Some services exclude essentials or add fees later, so understand what you're getting upfront. Choose a provider with a proven track record for accurate, timely filings and clear guidance, and look for companies that guarantee their work against filing errors.
