How to Form an LLC in Texas: Complete 2026 Guide
Texas is the second-largest state economy in the U.S. and charges no state income tax, making it one of the most business-friendly states for LLC formation. The filing fee is $300 through the Texas Secretary of State, and most LLCs owe zero franchise tax thanks to a $2.47 million revenue threshold (increasing to $2.65 million for 2026 reports). Texas combines zero income tax, a massive domestic market, and a straightforward online filing system that processes formations in 5-7 business days.
The number you need to remember: May 15. Every Texas LLC must file a Public Information Report (PIR) with the Texas Comptroller by May 15 each year, even if you owe $0 in franchise tax. Miss it, and you risk losing your LLC's good standing and eventually its right to do business in Texas.
Texas LLC at a Glance
| Item | Detail |
|---|---|
| State filing fee | $300 |
| Annual report | Public Information Report (PIR), no fee |
| Franchise tax | $0 if revenue under $2.47M (2025) / $2.65M (2026) |
| State income tax | None |
| Standard processing | 5-7 business days (online) |
| Expedited processing | $50 (2-3 days), $500 (next-day), $750 (same-day) |
| Registered agent | Required (physical Texas address) |
| Operating agreement | Not required by law, strongly recommended |
| Publication requirement | None |
What You Need Before Filing in Texas
Texas uses the SOSDirect portal for online business entity filings. You need:
- LLC name that includes "Limited Liability Company," "LLC," or "L.L.C." and is distinguishable from existing Texas entities. Search the Texas SOS Entity Search to check availability. Name reservation costs $40 and holds your name for 120 days.
- Registered agent with a physical street address in Texas (P.O. boxes not accepted). The agent must be a Texas resident or a business entity authorized to do business in Texas. You can serve as your own registered agent if you have a Texas street address.
- Certificate of Formation details: LLC name, registered agent name and Texas street address, governing authority (managers or members), organizer name and address, and purpose of the LLC.
- Governing structure decision: Texas requires you to specify whether the LLC is manager-managed or member-managed on the Certificate of Formation. This cannot be easily changed later without filing an amendment ($150).
Step-by-Step: Forming a Texas LLC in 2026
Step 1: Choose and Verify Your LLC Name
Search the Texas Comptroller's database and the SOS Entity Search to confirm your name is available. Your name must include "Limited Liability Company," "LLC," or "L.L.C." and cannot be deceptively similar to an existing Texas entity. Optional: reserve the name for 120 days for $40.
Step 2: Appoint a Texas Registered Agent
Every Texas LLC must designate a registered agent with a physical street address in Texas. The agent receives legal documents and official correspondence on behalf of the LLC. Northwest Registered Agent charges $39 for LLC formation and includes a free year of registered agent service in Texas.
Step 3: File the Certificate of Formation
Submit Form 205 (Certificate of Formation) through the SOSDirect portal. The filing fee is $300, non-refundable even if rejected. You'll need to specify the LLC name, registered agent details, whether the LLC is manager-managed or member-managed, names and addresses of governing persons, organizer details, and purpose. Payment by credit card (2.7% convenience fee) or prepaid deposit account. Online filings process in 5-7 business days.
Step 4: Obtain Your EIN (Federal Tax ID)
Apply for an Employer Identification Number at IRS.gov. It's free and takes about 5 minutes online. Required for business banking, hiring employees, and filing taxes.
Step 5: Draft a Company Agreement (Operating Agreement)
Texas calls it a "company agreement" rather than an operating agreement. It's not legally required, but it defines ownership percentages, profit distribution, management authority, and dissolution procedures. Without one, the Texas Business Organizations Code defaults apply.
Step 6: File Your Public Information Report (Starting Year 2)
Your first PIR is due May 15 of the year after formation. File through the Texas Comptroller's Webfile system. The PIR itself has no fee, but it's filed alongside the franchise tax report. Most LLCs under $2.47M revenue ($2.65M for 2026) owe $0 in franchise tax but must still file.
Step 7: Register for State and Local Taxes
Texas has no state income tax, but you may need to register for sales and use tax with the Texas Comptroller if you sell taxable goods or services. Local permits and licenses vary by city and county.
Texas LLC Costs: Full 2026 Breakdown
One-Time Formation Costs
| Cost Item | Amount |
|---|---|
| Certificate of Formation (Form 205) | $300 |
| Name reservation (optional) | $40 |
| Certified copy (optional) | $15 + $1/page |
| Certificate of Fact/Good Standing (optional) | $15 |
| Registered agent (Year 1) | $0-$300 |
| Company agreement (operating agreement) | $0-$500 |
| EIN (from IRS) | Free |
| Minimum total to form | $300 |
Annual Recurring Costs
| Cost Item | Amount |
|---|---|
| Public Information Report (PIR) | $0 (no filing fee) |
| Franchise tax (most LLCs) | $0 (under $2.47M/$2.65M threshold) |
| Registered agent renewal | $0-$300 |
| Annual minimum (state fees only) | $0 |
3-Year Total Cost: DIY vs. Online Service
| DIY Filing | Northwest Registered Agent | |
|---|---|---|
| Formation filing fee | $300 | $300 (state fee) |
| Service fee | $0 | $39 |
| Registered agent Year 1 | $0 (self) or ~$125 | Free (included) |
| Registered agent Year 2-3 | $0 (self) or ~$250 | $250 ($125/yr) |
| Franchise tax/PIR (Years 1-3) | $0 | $0 |
| Total 3-Year Cost | $300 (self as RA) $675 (with RA) | $589 |
Using Northwest Registered Agent saves $86 over three years versus hiring a separate registered agent, and you get compliance reminders for the annual franchise tax/PIR filing deadline.
Texas LLC Processing Timeline
| Filing Method | Typical Processing Time | Cost |
|---|---|---|
| Online (SOSDirect) | 5-7 business days | $300 |
| Mail/Fax (non-expedited) | Up to 40 business days | $300 |
| Standard expedited (mail) | 2-3 business days | $300 + $50 |
| Next-day (in-person) | Next business day | $300 + $500 |
| Same-day (in-person) | Same day (submit by noon) | $300 + $750 |
Texas launched the "Texas Express" expedited service in October 2025. Online filings through SOSDirect cannot be further expedited because they already process faster than expedited mail filings. For fastest results, file online through SOSDirect.
Preclearance option: For $50, you can have a draft Certificate of Formation reviewed for compliance before official submission. This prevents rejection delays and is recommended if using same-day or next-day expedited service.
Skip the paperwork. Northwest Registered Agent handles your entire Texas LLC formation for $39 + state fees.
Includes free registered agent service for 12 months, franchise tax/PIR reminders, and dedicated support.
Form Your Texas LLC for $39 →Best Online Service for Texas LLC Formation
We recommend Northwest Registered Agent for Texas LLC formation based on three factors:
- Cost efficiency: $39 formation fee includes a free year of registered agent service in Texas (worth $125). Total first-year cost: $39 + $300 state fee = $339.
- Franchise tax reminders: Northwest sends compliance alerts before the May 15 PIR/franchise tax deadline, preventing forfeiture of your LLC's privileges.
- Texas expertise: They file through SOSDirect and handle the registered agent designation correctly on the initial Certificate of Formation.
What's included in the $39 package: Certificate of Formation preparation and filing, registered agent service for 12 months, business address on public filings, online document dashboard, franchise tax/PIR reminders, and lifetime customer support.
Read our full Northwest Registered Agent review or compare all formation services.
Texas-Specific Considerations
The Franchise Tax: What Most LLCs Actually Owe
Texas has no state income tax, but it does have a franchise tax (also called a "margin tax"). The critical number: if your LLC's annualized total revenue is $2.47 million or less (for 2025 reports) or $2.65 million or less (for 2026 reports), you owe $0 in franchise tax.
But you still must file. Even if you owe nothing, the Public Information Report (PIR) is mandatory by May 15 each year. Failure to file can lead to forfeiture of your LLC's right to transact business in Texas.
For LLCs above the threshold:
- Retail/wholesale businesses: 0.375% of taxable margin
- All other businesses: 0.75% of taxable margin
- EZ Computation (revenue ≤ $20M): 0.331% of total revenue
Veteran fee waiver: If you're a veteran forming a new LLC between January 1, 2022, and December 31, 2025, and the business is 100% veteran-owned, Texas waives the $300 filing fee. You'll need verification from the Texas Veterans Commission.
No State Income Tax: What It Actually Means for LLCs
Texas is one of nine states with no personal income tax. For LLC owners, this means:
- LLC profits that pass through to your personal return are not taxed at the state level
- The franchise tax only applies at the entity level and only above the no-tax-due threshold
- You still owe federal income tax and self-employment tax on LLC profits
- If you live in another state with income tax and form a Texas LLC, your home state still taxes your income
Manager-Managed vs. Member-Managed: A Permanent Choice
Texas requires you to declare your management structure on the Certificate of Formation. This matters more than in most states because:
- Changing from member-managed to manager-managed (or vice versa) requires filing a Certificate of Amendment ($150)
- Manager-managed LLCs limit who can bind the company in contracts, which matters for multi-member businesses
- Member-managed LLCs give every member authority to act on behalf of the LLC
Default for most single-member LLCs: Member-managed. Default for multi-member LLCs with passive investors: Manager-managed.
When Texas Is NOT the Right Choice
Don't form in Texas if:
- You don't live or do business in Texas. The zero income tax only benefits Texas residents. If you live in California and form a Texas LLC, California taxes all your income regardless.
- You need the cheapest possible formation. At $300, Texas has one of the higher filing fees. New Mexico charges $50, and Wyoming charges $100.
- You want maximum privacy. Texas publishes manager/member names on the Certificate of Formation. Wyoming and Nevada offer stronger anonymity.
Texas makes sense if: You live in Texas, operate a business in the Texas market, want zero state income tax on pass-through profits, or need access to the second-largest state economy in the U.S.
Original Research: Texas Franchise Tax Compliance Cost Analysis
We analyzed Texas Comptroller data and industry reports to calculate the true compliance cost for Texas LLCs:
| Metric | Data |
|---|---|
| No-tax-due threshold (2025) | $2,470,000 annualized revenue |
| No-tax-due threshold (2026-2027) | $2,650,000 annualized revenue |
| Estimated % of LLCs below threshold | ~85-90% |
| PIR filing requirement | Mandatory even at $0 tax due |
| Late PIR penalty | $50 + potential forfeiture |
| Cost to reinstate after forfeiture | Variable (back taxes + penalties + interest) |
| Veteran fee waiver savings | $300 (available through Dec 31, 2025) |
| Best filing strategy | SOSDirect online ($300, 5-7 days) |
Finding: Texas is effectively a $0/year ongoing cost state for the vast majority of LLCs. With no annual report fee and a franchise tax threshold that covers about 85-90% of small businesses, the only annual obligation is filing the PIR (free). This makes Texas one of the cheapest states for ongoing LLC maintenance, despite having one of the higher initial filing fees ($300). Over three years, a Texas LLC owner who serves as their own registered agent pays only $300 total, compared to $402.50 for Florida or $475 for California (which also charges an $800/year minimum franchise tax).
Frequently Asked Questions About Texas LLC Formation
How Much Does It Cost to Form an LLC in Texas?
The state filing fee is $300 for the Certificate of Formation. There are no additional mandatory annual fees for most LLCs. Using Northwest Registered Agent at $39, total first-year cost is $339.
Does Texas Have State Income Tax?
No. Texas has no individual or corporate income tax. LLC profits pass through to owners' personal returns and are taxed only at the federal level. Texas does have a franchise tax, but most LLCs with revenue under $2.47M (2025) or $2.65M (2026) owe $0.
What Is the Texas Franchise Tax?
The franchise tax is a margin-based tax on business revenue. LLCs with annualized total revenue at or below $2.47 million (2025) or $2.65 million (2026-2027) owe nothing. Above that threshold, rates are 0.375% (retail/wholesale) or 0.75% (all others). You must still file a Public Information Report even if you owe $0.
Does a Texas LLC Need to File an Annual Report?
Texas doesn't have a traditional annual report. Instead, LLCs must file a Public Information Report (PIR) with the Texas Comptroller by May 15 each year. There's no filing fee for the PIR, but failure to file can result in forfeiture of your LLC's right to do business.
How Long Does It Take to Form a Texas LLC?
Online filings through SOSDirect process in 5-7 business days. Mail filings can take up to 40 business days. Expedited options range from $50 (2-3 days) to $750 (same-day, in-person only).
Do I Need a Registered Agent in Texas?
Yes. Every Texas LLC must designate a registered agent with a physical Texas street address. P.O. boxes are not accepted. The agent must be a Texas resident individual or a business entity authorized to operate in Texas.
Can I Form a Texas LLC Online?
Yes. Texas offers online filing through the SOSDirect portal. Payment by credit card (2.7% convenience fee applies) or prepaid deposit account. Online is the fastest non-expedited filing method at 5-7 business days.
Is Texas a Good State for an LLC?
For Texas residents, absolutely. Zero state income tax, zero annual report fees, zero franchise tax for most small businesses, and access to the second-largest state economy make Texas excellent for LLC formation. The $300 filing fee is above average but offset by $0 ongoing state costs.
Next Steps: Form Your Texas LLC
If Texas is the right fit:
- Use an online formation service to file through SOSDirect correctly
- Budget $339 for year one: $39 (Northwest) + $300 (state filing fee)
- Set a May 15 calendar reminder to file your PIR/franchise tax report annually
→ Form Your Texas LLC with Northwest for $39 + State Fees
Related guides: How to Form an LLC · LLC Formation Cost · Best LLC Formation Services · LLC Formation Comparison · Northwest Registered Agent Review · Delaware LLC · Wyoming LLC · California LLC · New Mexico LLC · Idaho LLC · Nevada LLC · Florida LLC · New York LLC · Illinois LLC