Texas has no individual income tax, but taxable entities including LLCs fall within the franchise-tax system. For 2026 and 2027 reports, the Comptroller lists a $2.65 million no-tax-due threshold, a 0.375% retail or wholesale rate, and a 0.75% rate for other businesses. Entities at or below the threshold do not file a No Tax Due Report, but they still file the applicable Public Information Report or Ownership Information Report. Filing the Certificate of Formation (Form 205) costs $300. Texas is a strong fit when the business has real operations, owners, employees, property, or customers in its large market.
How much does a Texas LLC cost?
Texas charges $300 to file a domestic LLC Certificate of Formation. Add any registered-agent service, licenses, tax registrations, and professional help you choose. Texas has no separate Secretary of State annual-report fee, but Comptroller information reporting is required and franchise tax can apply. For 2026–2027 reports, entities at or below $2.65 million in annualized total revenue owe no franchise tax; the applicable information report remains due.
Why form your LLC in Texas
Energy, tech, aerospace, and a massive consumer market. Texas has no individual income tax, but businesses should model franchise tax and reporting obligations.
- No personal income tax
- $2.65M franchise-tax no-tax-due threshold for 2026–2027 reports
- Austin is the 3rd-largest U.S. tech hub
- SpaceX, Tesla's Gigafactory Texas, Apple Austin — major tech investments
- 2nd-largest state economy in the U.S.
- Strong oil & gas, aerospace, and ag economies
Best fit for: Energy & oil · Tech (Austin) · Aerospace & defense · Real estate
Don’t want to file yourself? Northwest Registered Agent files your Texas LLC for $39 + state fee and acts as your registered agent the first year free.
How to form a Texas LLC in 7 steps
- 1Search the Texas business name database
Use the TX SOSDirect business search to confirm name availability. The name must include "Limited Liability Company", "Limited Company", "L.L.C.", "L.C.", "LLC", or "LC". Reserve a name for $40 (held 120 days) if needed.
- 2Appoint a Texas registered agent
Required to have a physical Texas street address. Can be the LLC owner if they're a Texas resident, or a commercial registered agent service. The agent must sign a written consent.
- 3File the Certificate of Formation (Form 205)
File online through Texas SOSDirect for $300. Under Tex. Bus. Orgs. Code § 3.005, the Certificate of Formation must include the LLC name, registered agent, governing authority (members or managers), and the organizer's signature. Standard processing is 13–15 business days. Expedited 2-day processing is available for $25 extra ($325 total).
- 4Draft a Company Agreement (Operating Agreement)
Texas calls the Operating Agreement a "Company Agreement." Not required by Texas law to be filed but strongly recommended to have. Defines membership interests, voting, profit/loss splits, and dissolution. Banks routinely ask for it.
- 5Apply for an EIN with the IRS
Free at irs.gov, takes 10 minutes online. Required for opening a business bank account, registering with the Texas Comptroller, and filing federal taxes.
- 6Register with the Texas Comptroller
Register through the Texas Comptroller for applicable sales and use tax, franchise-tax information reporting, and industry-specific accounts. The filing required depends on revenue and entity type.
- 7Calendar the May 15 PIR + Franchise Tax Report
Texas franchise-tax reports are generally due May 15. For 2026–2027, entities at or below the $2.65 million no-tax-due threshold do not file a No Tax Due Report, but they still file the applicable Public Information Report or Ownership Information Report. Late filings can trigger penalties and loss of good standing.
File directly with Texas Secretary of State →
Texas LLC taxes & compliance
No individual income tax. For 2026–2027, entities at or below $2.65M in annualized total revenue owe no franchise tax, but the applicable information report is still required.
Ongoing compliance checklist
- Public Information Report (PIR) — due May 15 every year
- Franchise-tax or information reporting — generally due May 15; filing depends on revenue and entity type
- No personal income tax
- Sales and use tax filings (Texas Comptroller)
- Federal income tax (Form 1065 multi-member, Schedule C SMLLC)
Registered agent rules
Required — TX street address.
Hidden costs new Texas LLC owners forget
- $300 filing fee — higher than most states
- Standard processing of 13–15 business days — pay $25 for 2-day expedited
- Public Information Report (PIR) + Franchise Tax Report — both due May 15 every year
- Combined sales tax averages 8.2% (6.25% state + local)
- Foreign LLC qualification: $750
- Property taxes among the highest in the U.S.
Should you use a formation service in Texas?
You can absolutely file directly with the Texas Secretary of State for the $300 state fee. The reasons most Texas owners use a service anyway are (1) registered-agent privacy — keeping their home address off public filings — and (2) calendar reminders for ongoing compliance.
Have Northwest form your Texas LLC for $39 + state fee
Free registered agent for the first year. Real human support. Privacy-by-default — your home address stays off public filings.
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See the real 5-year cost of a Texas LLC
Filing fee · registered agent · annual report · franchise tax — all calculated, year by year.
Open cost calculator for Texas →Texas's franchise tax: who actually pays it (and who doesn't)
Texas separates the Secretary of State formation filing from Comptroller compliance. The formation fee is $300. For 2026–2027 reports, the franchise-tax no-tax-due threshold is $2.65 million. An entity at or below that threshold does not file a No Tax Due Report, but it still files the applicable Public Information Report or Ownership Information Report. Above the threshold, taxable margin and the permitted calculation method determine liability. Calendar the May 15 deadline and use the Comptroller's current instructions for the report year.
A domestic Texas LLC starts with the $300 Certificate of Formation fee, plus any registered-agent or professional-service cost. Annual franchise tax may be $0 when revenue is at or below the current no-tax-due threshold, but information reporting remains required. A reliable five-year estimate therefore needs expected revenue, taxable margin, registered-agent choices, licenses, and taxes in every state where the business operates.
Texas franchise tax reports are due May 15 every year — including the year after formation. Owners who form in, say, November assume they have a full year before any filings are due, but a report covering that partial first year is still required by the following May 15. Missing this deadline triggers a $50 late penalty plus interest, and the LLC can eventually lose its good standing, voiding contracts and blocking certificate requests.
Texas LLC: frequently asked questions
How much does it cost to start an LLC in Texas?
Texas charges $300 to file a Certificate of Formation. There is no separate Secretary of State annual-report fee, but annual Comptroller information reporting applies. Franchise tax depends on revenue and taxable margin; entities at or below the $2.65 million threshold for 2026–2027 reports owe no franchise tax.
How long does it take to form an LLC in Texas?
Standard online filings through Texas SOSDirect take 13–15 business days — among the slower in the country. Expedited 2-day processing is $25 extra ($325 total). Mail filings can take 4–6 weeks.
Does Texas really have no income tax?
Texas has no individual income tax. LLCs can still owe Texas franchise tax and other state or local taxes. For 2026–2027 reports, the franchise-tax no-tax-due threshold is $2.65 million, with annual information reporting still required.
What is the Texas Franchise Tax?
Texas imposes franchise tax on taxable entities. For 2026–2027 reports, the no-tax-due threshold is $2.65 million, with rates of 0.375% for retail or wholesale and 0.75% for other businesses. Entities at or below the threshold do not file a No Tax Due Report, but they still file the applicable ownership or public-information report.
Does Texas have an LLC annual report?
Yes, but it's called the Public Information Report (PIR), not an annual report. It's due May 15 every year and is filed with the Franchise Tax Report. The PIR confirms ownership, registered agent, and other basic LLC info. There's no separate annual report fee.
Can a non-resident form an LLC in Texas?
Yes. Texas has no residency requirement for LLC members or managers. You only need a Texas-based registered agent. Out-of-state owners commonly use a commercial registered agent service.
Is Texas a good state to form an LLC?
Texas can be a practical choice for owners and businesses operating there. It has no individual income tax, a large market, and a $2.65 million franchise-tax no-tax-due threshold for 2026–2027 reports. The $300 formation fee, annual information reporting, local taxes, licensing, and any obligations in other states still belong in the comparison.
What's the Texas LLC sales tax rate?
Texas state sales tax is 6.25%, with local add-ons up to 2% (combined averaging 8.2%). If you sell taxable goods or services, register with the Texas Comptroller. Texas has many industry-specific exemptions worth researching.
What taxes does a Texas LLC pay?
Texas has no individual income tax, but taxable LLCs can owe franchise tax, sales and use tax, employment taxes, and local or industry charges. For 2026–2027 franchise-tax reports, the no-tax-due threshold is $2.65 million; the standard rate is 0.75% of taxable margin and the retail or wholesale rate is 0.375%. Entities below the threshold still file the applicable information report. Federal classification is a separate question.
Can a non-resident or out-of-state owner form an LLC in Texas?
Yes, Texas imposes no residency requirement on LLC members or managers, so anyone — including foreign nationals and residents of other states — can form a Texas LLC by filing a Certificate of Formation with the Texas Secretary of State. You will still need a registered agent with a physical Texas address, which can be a commercial registered agent service if you live elsewhere. If you also conduct business in your home state, that state may require you to register your Texas LLC as a foreign LLC there, which typically involves an additional filing fee and a local registered agent. Operating purely online or through Texas-based operations generally does not trigger foreign qualification in other states.
Do I need a business license to operate an LLC in Texas?
Texas does not issue a single statewide general business license, so forming your LLC with the Secretary of State is not the same as being licensed to operate. Depending on your industry, you may need state-level professional licenses or permits from agencies such as the Texas Department of Licensing and Regulation (TDLR) — for example, contractors, cosmetologists, and healthcare providers all require separate licensure. Most Texas cities and counties also have their own local business permits or certificates of occupancy, so check with your city hall or county clerk after you form your LLC. If you sell taxable goods or services, you must also register for a Texas Sales and Use Tax permit through the Texas Comptroller's office, which is free.
How do I dissolve an LLC in Texas?
To terminate a Texas LLC, wind up its affairs, obtain the Comptroller certificate needed to show the entity is current for tax purposes, and file the required termination document with the Secretary of State. Until the entity is properly ended, Comptroller reporting and possible penalties can continue. Verify the current form, fee, and sequence with both agencies before filing.
Is an operating agreement required for a Texas LLC?
Texas law does not legally require an LLC to have a written operating agreement, but the Texas Business Organizations Code strongly encourages one by allowing members to customize almost every aspect of the LLC's governance through such a document. Without an operating agreement, your LLC defaults to the rules set out in the Texas BOC, which may not reflect how you actually want to split profits, handle member exits, or make decisions. A well-drafted operating agreement is especially important in Texas for multi-member LLCs because it prevents disputes over ownership percentages, voting rights, and what happens if a member wants to leave. Banks and lenders in Texas will almost always ask for your operating agreement before opening a business account or approving a loan, making it a practical necessity even if it is not a legal one.