Florida vs Texas LLC (2026): Cost, Taxes & Which State Is Better

This comparison comes up in two main situations. First, someone is moving from Florida to Texas (or the reverse) and wants to know whether they need to re-form their LLC or foreign-qualify. Second, an entrepreneur in a third state is trying to decide whether to form out-of-state in Florida or Texas for tax or business reasons. Both scenarios have different right answers, and this guide covers both.

A note upfront: if you physically live and operate your business in Florida, form in Florida. If you live and operate in Texas, form in Texas. Forming in the other state to "save money" almost always backfires — you will need to foreign-qualify in your home state anyway, which cancels out the savings while adding a layer of compliance. The comparison below is most relevant to people who genuinely have a choice of operating base or are forming a holding company.

Cost comparison: Florida vs Texas

The cost difference between a Florida LLC and a Texas LLC is one of the largest of any two major-population states. Texas eliminated its formation fee for most LLCs in 2010 and has no mandatory annual report requirement for LLCs below the franchise tax threshold. Florida charges $125 to form and $138.75 every year thereafter — plus a brutal $400 late fee if you miss the May 1 deadline.

• Florida Year 1: $125 Articles of Organization filing fee (online) + $138.75 annual report if due in same year
• Texas Year 1: $0 Certificate of Formation filing fee (online via SOSDirect)
• Florida Year 2+: $138.75 annual report — due by May 1 each year
• Texas Year 2+: $0 for LLCs with annualized total revenue under $1,230,000 (the 2024 no-tax-due threshold)
• Florida 5-year total (no RA): ~$680 (Year 1 filing + 4 annual reports)
• Texas 5-year total (no RA): $0 for most small LLCs
• Adding a registered agent at $150/year: Florida ~$1,430 over 5 years; Texas ~$750 over 5 years

For a lean early-stage business with under $1.23 million in annual revenue, Texas is essentially free to maintain at the state level — a structural advantage that compounds over time. Florida's $138.75 annual report is not expensive in absolute terms, but the $400 late penalty for missing the May 1 deadline turns a minor fee into a significant financial trap for busy founders.

Taxes: both have no income tax but differ on business taxes

Florida and Texas share one critical tax similarity: neither state has a personal income tax. LLC profits flow through to the federal return only, which makes both states popular with high-earning business owners leaving high-tax states like California or New York. However, the business-level tax picture differs meaningfully.

Florida LLC taxes

Florida has no personal income tax and no franchise tax on LLCs. A single-member LLC or multi-member LLC treated as a pass-through entity pays no Florida-level income tax. Florida does have a corporate income tax (5.5%) but that applies only to C corporations and LLCs that have elected to be taxed as C corporations — standard pass-through LLCs are not subject to it. The $138.75 annual report is an administrative filing fee, not a revenue-based tax. The $400 late fee for missing May 1 is a penalty, not a tax, but it hits at the same time as taxes are top of mind in the spring.

Texas LLC taxes

Texas has no personal income tax and no corporate income tax in the traditional sense. Instead, Texas imposes a franchise tax (officially called the Texas Margin Tax) on most businesses, including LLCs. For 2024 and 2025, the no-tax-due threshold is $1,230,000 in annualized total revenue. LLCs below this threshold owe $0 in Texas franchise tax but must still file a no-tax-due report with the Texas Comptroller each year. LLCs above the threshold pay 0.375% of margin (for retail and wholesale businesses) or 0.75% of margin (all other businesses), applied to the lower of revenue minus cost of goods sold, revenue minus compensation, 70% of revenue, or revenue minus $1 million. For most small and mid-size LLCs the effective rate is well below 0.375%.

Asset protection: which state protects you better

Both Florida and Texas offer charging-order protection for LLC membership interests, meaning a personal creditor who wins a judgment against you cannot seize your LLC interest directly — they can only receive a charging order entitling them to distributions if the LLC makes them. This is the core liability shield that makes LLCs attractive for asset protection.

Florida charging-order protection

Florida's LLC Act (Chapter 605) explicitly establishes charging-order protection as the exclusive remedy for a judgment creditor against a member's LLC interest. Florida courts have generally respected this protection. However, Florida case law has shown some willingness to allow additional remedies (such as foreclosure of the membership interest) in cases involving single-member LLCs where the charging order would be inadequate — a notable weakness for SMLLC owners.

Texas charging-order protection

Texas's Business Organizations Code also provides charging-order protection as the exclusive remedy against LLC membership interests, and Texas courts have been more consistent than Florida courts in extending this protection to single-member LLCs. Texas's charging-order statute explicitly covers both single-member and multi-member LLCs without the ambiguity that has appeared in some Florida cases. For a single-member LLC used as an asset-protection vehicle, Texas's statutory framework is marginally stronger.

• Charging-order protection: Both Florida and Texas — statutory, exclusive creditor remedy
• Single-member LLC protection: Texas — stronger statutory coverage; Florida — some case law risk for SMLLCs
• Homestead protection: Florida — among the strongest in the country (unlimited for primary residence); Texas — also strong (acreage-based homestead exemption)
• Business court system: Neither state has a court equivalent to Delaware's Court of Chancery for complex disputes
• Practical bottom line: For most LLCs, both states provide adequate protection; Texas is marginally stronger for single-member LLCs

Annual report: Florida's $400 late fee trap

Florida's annual report system is one of the most punishing in the country for small business owners who miss the deadline. Here is how it works and why the $400 late fee catches so many people off guard.

Florida requires all LLCs to file an annual report with the Division of Corporations (Sunbiz) between January 1 and May 1 each year. The filing fee is $138.75. If you file between May 2 and the third Friday of September, you are charged an additional $400 late fee — bringing your total to $538.75 for a late filing. This is not a small penalty; it is more than the original formation fee. If you fail to file entirely by the third Friday of September, the Florida Division of Corporations administratively dissolves your LLC.

• Annual report filing window: January 1 through May 1 (on time)
• On-time fee: $138.75
• Late filing window: May 2 through third Friday of September
• Late fee: $400 additional (total: $538.75)
• Miss entirely: Administrative dissolution — reinstatement costs $138.75 + $100 reinstatement fee
• Texas by comparison: No annual report for LLCs (only the franchise tax no-tax-due report, which carries no fee for small LLCs)

The May 1 deadline is especially dangerous because it falls during tax season when business owners are already overwhelmed with federal and state filings. Set a calendar reminder in January so you can file early and avoid the crush. The Florida Sunbiz system allows filing as early as January 1 — take advantage of this.

Operating in both states: the foreign qualification reality

One of the most common mistakes people make when comparing Florida and Texas is assuming they can pick the cheaper state for LLC formation and avoid the home-state costs entirely. In practice, if you form an LLC in Texas but physically operate your business in Florida — with employees, an office, regular customers, or a business address in Florida — you are required to register as a foreign LLC in Florida. The same is true in reverse.

Foreign qualifying in Florida costs $125 (same as the domestic formation fee) and requires the same $138.75 annual report each year. This means if you live in Florida and form in Texas hoping to save money, you will pay $0 in Texas plus $125 to foreign-qualify in Florida plus $138.75 per year — more than just forming domestically in Florida from the start. The only scenario where forming in Texas saves you money as a Florida resident is if your business has no Florida presence whatsoever, which is rare for an owner who actually lives and works in Florida.

Which industries thrive in each state

Industries that favor a Florida LLC

• Tourism and hospitality: Florida's 130+ million annual visitors make it one of the world's largest tourism markets — restaurants, hotels, tour operators, and short-term rental businesses are deeply embedded in the Florida economy and need domestic Florida registration
• Real estate: South Florida, Orlando, and Tampa Bay are among the most active real estate markets in the country — investors, property managers, and developers benefit from Florida domestic registration and relationships with local title companies and lenders
• International business: Miami is the de facto gateway to Latin America and the Caribbean — import/export businesses, international trade companies, and Latin American-focused enterprises often specifically need a Florida entity for banking and relationship purposes
• Healthcare and elder care: Florida's demographics (highest proportion of retirees in the U.S.) drive massive demand for healthcare services — home health agencies, assisted living operators, and medical practices all need Florida domestic entities
• Boating and marine industry: Florida is the boating capital of the U.S., with the largest concentration of marine businesses — marinas, dealers, and service companies almost always need Florida domestic registration

Industries that favor a Texas LLC

• Energy: Texas produces more oil, natural gas, and wind energy than any other state — upstream, midstream, and downstream energy companies are deeply integrated into the Texas regulatory and business ecosystem
• Technology: Austin's tech boom has made Texas the second-largest tech hub in the U.S. — software companies, SaaS businesses, and tech startups increasingly choose Texas over California
• Construction and contracting: Texas's population growth drives massive construction demand — general contractors, subcontractors, and home builders are among the largest LLC users in the state
• Agriculture: Texas is the largest agricultural state by land area — ranching, farming, and agricultural processing operations have decades of Texas LLC precedent and specific Texas statutory protections
• Logistics and distribution: Texas's central geography and major ports make it a logistics hub — trucking companies, third-party logistics operators, and distribution centers are common Texas LLC users

When to pick Florida

• You live in Florida and operate your business here — domestic formation is always cheaper than foreign qualification
• Your business serves Florida customers and you need a Florida address for contracting, banking, and licensing purposes
• You operate in industries deeply tied to Florida — real estate, tourism, healthcare, marine, or Latin American trade
• You need relationships with Florida-based banks or lenders that prefer domestic Florida entities
• You want Sunbiz's established online infrastructure for certificate of status, registered agent records, and public filings
• Your business model involves Florida-specific licenses (contractor license, real estate license, healthcare license) that require a Florida-registered entity

When to pick Texas

• You live in Texas and operate your business here — domestic formation is always the right choice
• You want to minimize annual fees — Texas costs $0 to form and $0 per year for LLCs under $1.23M in revenue
• You are forming a holding company or passive investment LLC and want to minimize ongoing compliance costs
• Your business is in energy, tech, construction, agriculture, or logistics — industries with strong Texas ecosystems
• You want the strongest charging-order protection for a single-member LLC — Texas's statutory protection is more explicit than Florida's
• You are moving from Florida to Texas and want to re-domicile your existing LLC to Texas

Our recommendation

For pure cost minimization, Texas wins decisively — $0 to form, $0 per year for most small LLCs, and no annual report filing requirement creates a meaningful compliance advantage over Florida's $138.75/year mandatory report with a $400 late fee trap. Over five years, a Texas LLC with a registered agent costs roughly $680 less than the equivalent Florida LLC.

For business owners actually operating in Florida, form in Florida. The foreign-qualification math doesn't work in Texas's favor once you account for Florida registration requirements for businesses with Florida presence. Florida's Sunbiz infrastructure is well-established, filings are fast and reliable, and a Florida LLC carries domestic credibility with Florida banks, title companies, and government agencies.

The bottom line: neither state is wrong — they serve different businesses. Texas is the lean, low-cost option with a marginal edge in single-member LLC asset protection. Florida is the right home for businesses embedded in Florida's economy, even with the higher annual fees. If you are genuinely undecided because your business has no strong geographic anchor, Texas's $0 ongoing costs make it the rational default for cost-conscious founders.

Don’t want to file yourself? Northwest Registered Agent files your LLC for $39 + state fee and acts as your registered agent the first year free.