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What Does It Cost To Start An LLC In Texas?

Business Law Tips & Advice, LLC Investor Resources

Attorney Nate Gilbert

The Comprehensive Guide to Forming a Successful LLC in Texas

Introduction

Conducting an Exact Name Search

Filing with the State

Additional LLC Formation Fees in Texas

Maximizing Efficiency and Protection: The Role of an Attorney

Texas LLC Formation Package

Texas LLC Formation

Texas LLC Premium Package

The Value of Professional Expertise

Ongoing Costs for Texas LLCs

Taxes for Texas LLCs

Frequently Asked Questions

Starting a business is an exciting endeavor that comes with a variety of important decisions. Among these decisions, choosing the right legal structure is paramount. In the state of Texas, forming a Limited Liability Company (LLC) offers a flexible and advantageous option for entrepreneurs. While the official filing fee is $300, it’s worth considering additional steps to ensure your business’s success in the long run. In this comprehensive guide, we will delve into the intricacies of forming an LLC in Texas and explore the benefits of enlisting the assistance of an experienced attorney like Nathaniel Gilbert.

Before finalizing your business name, it’s wise to perform an “Exact Name Search” on the Secretary of State’s website. This step helps ensure your chosen name isn’t already registered by another business in Texas. This includes among different entity types: if the name for your LLC is in use by a Corporation or Non-Profit, the name is considered taken.  

Beyond an exact match, it’s recommended to search for similar names to prevent confusion and potential legal issues down the line. It should be noted that even where the Secretary of State allows you to have the name, if it is similar enough to other names in the same area of commerce as your business you may run into legal issues.  Each search costs around $1, totaling approximately $7 for a thorough search process.

The foundation: Filing with the state

The first step in forming your Texas LLC is to file the Certificate of Formation with the State of Texas Secretary of State. This filing, requiring a fee of $300, legally establishes your business as an LLC. While this is the fundamental requirement, there are additional steps that you will need to take in establishing the legal foundation of your LLC if you truly wish to take advantage of the liability protection provided by the entity.

State of Texas LLC Filing Fee: $300 + LLC Formation Package with Attorney Nathaniel Gilbert: $900

To form your Limited Liability Company in Texas requires a $300.00 filing fee with the State of Texas Secretary of State.  Legally speaking, this is all that is technically required to form your LLC.  However, there may be other costs if you are considering actually running or growing your business.

Additional LLC Formation Fees in Texas

While the base filing fee for forming an LLC in Texas is $300, there are some additional costs to keep in mind:

  • Name Reservation Fee: $40 to reserve your desired LLC name for 120 days
  • Registered Agent Fees: $100-$300 per year if using a third party registered agent service. Can be free if serving as your own agent.
  • Assumed Name Certificate: $25 if operating your LLC under a different name (DBA/Assumed Name)
  • Expedited Processing Fees: $25 per document for expedited filing, $10 for certified copies

Maximizing efficiency and protection: the role of an attorney

While legally you can establish your LLC with the filing fee alone, seeking professional guidance can pay dividends in the long run. Attorney Nathaniel Gilbert, a San Antonio Business Formation expert, offers two comprehensive packages that go beyond the basics, ensuring your LLC’s success.

Performing an “Exact Name Search” on the Secretary of State’s website is always advisable before forming your LLC.  This essentially ensures you are not naming your business the same as another business already registered in the State of Texas.  Additionally, you should run a search for everything similar to your name—If your business is “Nate’s Texas Butcher Shop,” you might also consider searching for “Nate’s Butcher”, “Texas Butcher Shop”, and “Nate’s Butcher.”  You would hate to grow your business for a year only to find out it is being confused with another shop across the state.  Each search runs approximately $1, so let’s assume about $7.00 in Name Search Fees as well.

Texas LLC Formation Attorney

San Antonio Business Formation Attorney Nathaniel Gilbert helps Texans organize and run their business to maximize efficiency and asset protection

Working with an attorney to help form your LLC is always advised.  Building the foundation of your business the right way the first time will save you headaches down the road when your business starts to grow, expand, or become much more profitable.  Below are the fees charged by San Antonio Business LLC Formation Attorney Nathaniel Gilbert. For more information contact us today!

Texas LLC Formation Package

For $1,100 (excluding filing fee), Attorney Nathaniel Gilbert provides a comprehensive package that includes:

  • Filing of the Certificate of Formation: Ensuring accurate and timely filing with the state.
  • Drafting Your Operating Agreement: Creating a tailored agreement that outlines the management and ownership structure of your LLC.
  • Corporate Governance Documents and Organizational Resolutions: Crafting a resolution that serves as a framework for decision-making throughout your business’s life, including other necessary corporate governance documents.
  • Meeting With Nate: One of the most valuable offerings in this package gives you extensive time to review each document in your LLC, line by line, and prepare for managing and growing your business.
  • Asset Protection Memorandum: Providing valuable insights into running a successful LLC that safeguards your assets.

Texas LLC Formation: $900 (does not include filing fee)

  • Filing of the Articles of Organization
  • Application for EIN (Federal Employer Identification Number)

  • Draft and Finalize Your Operating Agreement
  • Draft Organizational Resolution for your use throughout the life of the business
  • A memorandum regarding running a successful LLC that protects your assets

Texas LLC Premium Package

For those seeking an even more robust foundation, the Texas LLC Premium Package, priced at $2,800 (excluding filing fee), offers everything in the LLC Setup Package along with additional features:

 Custom Drafted Independent Contractor Agreement: To be used for either hiring Independent Contractors for the LLC, or hiring the LLC as an Independent Contractor

AND

A Client Service Contract for the LLC

Texas LLC Premium Package: $2,160 (does not include filing fee)

  • Everything in the LLC Setup Package above

The Value of Professional Expertise

Enlisting the services of Attorney Nathaniel Gilbert not only streamlines the formation process but also minimizes the risks associated with legal oversights. As your business grows, having a solid legal foundation in place becomes increasingly critical.

Ongoing Costs for Texas LLCs

In addition to the initial startup costs, Texas LLCs have some ongoing fees:

  • Franchise Tax: LLCs earning over $2.47M per year must pay an annual franchise tax of 0.375% (retail/wholesale) or 0.75% (other businesses).
  • Annual Report: All LLCs must file an annual Public Information Report (PIR), due May 15 each year. No fee for filing but $50 late penalty.
  • Amendments: $150 per amendment to make changes to your LLC, which includes changes to Registered Agents, Addresses, Names, or Purposes (changing to a PLLC).

Taxes for Texas LLCs

While Texas does not have a state income tax, LLCs still have some tax obligations:

  • Federal Income Taxes: LLC profits subject to federal income taxes. Single-member taxed as sole prop, multi-member as partnership. Can elect S-corp or C-corp taxation.
  • Self-Employment Taxes: Members may have to pay self-employment taxes of 15.3% on LLC earnings.
  • Sales Taxes: If selling taxable goods or services, must collect and remit Texas sales tax. Rates average 8.25%.

Final Thoughts

Forming an LLC in Texas is a strategic move for any aspiring entrepreneur. While the state filing fee of $300 establishes your business, the additional investments in professional guidance and expert legal services can lead to substantial benefits in the long run. With Attorney Nathaniel Gilbert’s experience and tailored packages, you can navigate the complexities of forming an LLC with confidence, setting the stage for a successful and protected business journey. Remember, the right choices at the start can make all the difference as your business thrives and expands.

Frequently Asked Questions

What are the ongoing costs for a Texas LLC?

The main ongoing costs for Texas LLCs are the potential annual franchise tax if earnings exceed $2.47M, and any fees associated with filing amendments if you need to make changes to your LLC. You also need to file an annual Public Information Report (PIR) but this has no filing fee.

Does a Texas LLC need an Operating Agreement?

An Operating Agreement is not legally required, but it is highly recommended to establish rules and protocols for your LLC. It can help prevent disputes between members and smooth business operations.

What are the tax implications of a Texas LLC?

A Texas LLC’s income is passed through and taxed at the personal level of members. An LLC can choose corporate taxation if desired, and advised to do so by a Tax Professional. Texas does not have state income tax but LLCs still owe federal income taxes. Sales tax collection also applies if selling taxable goods or services.

Is it better to form an LLC in Texas or another state?

For a Texas-based business, it is typically better to form the LLC in Texas rather than another state. Foreign LLC registration in Texas has a $750 fee. Local formation keeps compliance simple. Out-of-state formation is only recommended for specific benefits, such as anonymity through a Wyoming LLC or Delaware LLC. Anonymity only goes so far though, and several corporate levels in your business structure may lead to more complications without necessarily any added protection.

How do I check if my desired LLC name is available in Texas?

You can check name availability on the Texas Secretary of State website. It’s recommended you search for the exact name and any similar names or variations to avoid potential naming or competition issues.  Additionally, if you are going through any branding processes, or acquiring an EIN, it may be advisable to wait until final approval from the Secretary of State prior to finalizing those details.

Nathaniel Gilbert

Nathaniel Gilbert is the sole attorney at The Law Office of Nathaniel Gilbert, PLLC. Practicing in the areas of Business Law, Nate assist clients with LLC formation and drafting contracts in the states of Texas, Colorado, and Kansas. He can be reached at 726-999-0087.

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