Creating a Limited Liability Company (LLC) in Texas is advantageous and economically favorable when proper guides are followed. Contrary to the assumption that starting a business in Texas comes with high costs, the idea that starting an LLC strategically makes financial sense is entirely true.
This extensive guide covers everything from filing fees to legal requirements, savings strategies, and post-formation activities. We will take you step-by-step, regardless of whether you live in Texas or out of state, towards building your LLC most cost-effectively.
Factors to Keep in Mind Before Creating an LLC in Texas
Most entrepreneurs start looking for the cheapest route to form an LLC without considering some basic pointers, losing name application contests, and incurring additional costs in the process. Therefore, these key LLC formation points should be considered beforehand:
1. Availability of a Business Name
Conduct a name availability search, as all Texas LLCs are required to have distinct names. You can avoid name conflicts and redundant application costs by conducting a free search on the Texas Secretary of State’s official website.
2. Business Activities
Understanding all the aspects of your business is essential, whether it is an online retail shop or a consultancy business. These aspects could determine whether you will require other specific licenses or permits, which would otherwise increase your expenses.
3. Registered Agent Requirement
As your Texas LLC is a creature of the state, you are under a legal obligation to have a registered agent. If you don’t mind doing the work yourself, you will need a physical address in Texas and be present during the workday to answer calls.
4. Legal Structure
An LLC affords a business owner protection from liability while allowing them some flexibility around how they want to be taxed or managed. If your business has several members or complicated financial relations, it might benefit from professional guidance, even if you thought a ‘cost-effective’ approach was best.
Cheapest Way to Start an LLC in Texas: Step-by-Step Guide
Step 1: Choose a Name for Your LLC
Make sure the name is distinguishable and includes “LLC” or “Limited Liability Company.” Conduct a free name search on the SOSDirect website.
Step 2: Appoint a Registered Agent
To save money, you may choose to act as your registered agent. This avoids the average $100–150/year fee charged by other registered agent services.
Step 3: File the Certificate of Formation (Form 205)
You can file online using SOSDirect or send in a paper application. This is the only payment the state requires you to pay to create your LLC.
Cost: $300 (state filing fee)
Step 4: Draft an Operating Agreement
In Texas, this document is optional, but I suggest having an Operating Agreement. Attorneys are not necessary for this; you can download a free template from the internet.
Step 5: Obtain an EIN for No Charge
An Employer Identification Number (EIN) is vital for taxation as well as business banking. You can directly apply for it on the IRS website without any charges.
Step 6: Establish a Business Bank Account
Opening a business bank account helps to further distinguish your expenses from your LLC, thus maintaining the integrity of your LLC and protecting your assets. You can find numerous online banks that offer free business checking accounts.
Texas LLC Formation Guidelines and Avoidance of Unwarranted Costs
Knowing the expectations and not overspending as set by law can help mitigate potential costs:
Mandatory:
- Certificate of Formation: A one-off fee of $300
- Registered Agent: $0 if handled personally
- Franchise Tax and Public Account Report: Annually, an additional fee is levied if the LLC owes taxes, but it is free otherwise
Optional but Overpriced Services:
- Operating Agreement drafting
- EIN Filing Services (some websites offer to apply online on behalf of clients for $75–$150)
- Business license services (check your local business criteria)
Avoid:
Paying for unnecessary add-ons.
Paying for “Texas LLC Kits,” certificates, or other marketing scams should be avoided.
What Are the Total Costs That Need to Be Incurred by an LLC for Operation in Texas?
Texas offers $300 flat-rate templates for LLC formation. Using self-drafted forms and avoiding company services keeps costs minimal. Texas is one of the cheapest states to start an LLC and allows entrepreneurs to manage businesses personally and professionally without major financial strain.
The estimated total savings when avoiding hidden fees are significant. Skip unnecessary formation solutions, auto-renewal services, and additional marketing gimmicks.
How Much Is the Minimum Charge Required to Get Started With a New LLC?
The main goal when starting is to submit Form 205 and appoint a registered agent, both of which can be self-managed for free. Operating agreements and business license applications can also be self-drafted, cutting further costs.
Texas remains one of the best states for forming LLCs using free templates and doing everything DIY-style to avoid overspending.
Guidelines for the Formation of a Texas LLC Affordably
Want to reduce your spending even more? These suggestions could be useful:
-
Do Everything Yourself
Self-directed tasks, including filing the Certificate of Formation with the Secretary of State and applying for an EIN, translate to fee reductions. -
Take Advantage of Online Resources
Operating agreements, compliance calendars, and even accounting spreadsheets are all freely available online. -
Set Up a No-Fee Business Banking Account
Select a bank that does not charge for business checking and avoid monthly servicing costs. -
Avoid Disorganized Filing
Delinquency of tax registration and report submissions may cost you. Take advantage of free online calendars or reminders to monitor essential reporting or taxation deadlines. -
Skip Unnecessary Additional Features
Fancy seals, branded binders, and certificates are nice to have, but not mandatory, especially for beginners.
Advantages of Setting Up an LLC in Texas
Setting up an LLC in a deregulated state like Texas is an entrepreneur’s dream, and here are a few reasons why it stands out:
- No Requirement for Personal State Income Tax: LLC income passes through directly to the owner without additional state tax
- Business-Oriented State: Texas has always ranked among the top-tier states for entrepreneurship
- Inexpensive Sustenance: Minimal ongoing costs beyond the one-time filing fee
- Enhanced Reliability: An LLC boosts credibility with customers, vendors, and partners
Acquiring an LLC in Texas through the cheapest option available is the smartest financial decision you could make.
Next Steps After Forming Your Texas LLC
After registering your LLC, the following steps should be undertaken:
-
Apply for Business Licenses or Permits
You may need specific local or state licenses depending on your business and location. -
Set Up Accounting and Bookkeeping
Use basic accounting software or spreadsheets to track income and expenses from the start. -
Comply with Texas Franchise Tax
Filing a “No Tax Due” report is mandatory every year with the Texas Comptroller—even if no tax is owed. -
Build a Business Website
Create a website using low-cost platforms like Wix or WordPress to enhance your brand presence.
How EasyFiling Can Help with Texas LLC Formation
The most economical way to form an LLC in Texas is to do it by oneself. However, not everyone has the time or mental comfort to deal with paperwork, forms, and state-mandated filings. This is where EasyFiling can help.
Why Choose EasyFiling?
- Transparent Pricing: No undisclosed charges or unwanted upselling
- DIY & Full-Service Options: Get assistance only for the parts you need help with
- Texas Experts: With us, Texas entrepreneurs launch with confidence
- Registered Agent Services: Optional but inexpensive, giving you peace of mind while saving time
If you’re looking for an economical, yet effortless journey, EasyFiling is the perfect middle ground between do-it-yourself and full-service business formation.
FAQs
How long does it take to form an LLC in Texas?
For online applications, the typical processing time is 2–3 business days. Mailed applications may take 7–10 days.
Do I need an attorney to start an LLC in Texas?
Not necessarily. Most individuals complete the process themselves, though some choose to use services like EasyFiling.
Can a non-resident start an LLC in Texas?
Absolutely. You don’t need to live in Texas or the U.S. to start a Texas LLC, as long as you have a registered agent based in Texas.
Are there any yearly costs for keeping a Texas LLC?
Yes. You must file an annual Franchise Tax Report and Public Information Report. Most LLCs owe no tax but must still file to stay in good standing.
Conclusion
One doesn’t need a large budget to start a business. For those wondering how to start an LLC in Texas for the cheapest price, the optimal way would be to implement DIY methods, utilize free services provided by the government, and eschew excessive add-ons from third-party sites.
With just $300 for the filing fee, you can form an LLC and skip the stress of overspending. For those seeking some guidance without paying a premium, EasyFiling provides affordable LLC formation solutions specifically designed for entrepreneurs in Texas.
Anticipating starting a business? Texas is all set for you.
Swostika Silwal
