What does a Texas LLC cost? This is a common question for new business owners in Texas who are establishing a limited liability company. So let’s explore this question and review some general information about LLCs and how they are formed.
How Much Does It Cost to Form an LLC in Texas?
An LLC, short for limited liability company, is a type of business structure used by many large and small businesses in the United States.
An LLC combines some of the most advantageous characteristics of a corporation with the flexible characteristics of a sole proprietorship or a partnership.
Tax benefits are one of the main reasons that business owners choose to form an LLC. An LLC can be a single-member LLC with only one owner or a multi-member LLC with several owners.
Single-member LLCs are usually treated as sole proprietorships for federal tax purposes. However, multi-member LLCs can choose to be taxed as a corporation or partnership. These tax choices give business owners control over how their business handles profit and loss.
LLC owners, even single-member LLC owners who are taxed like a sole proprietorship, also benefit from limited liability protection. For example, the owner or member's assets are protected if the LLC is involved in a lawsuit or collections action.
When establishing a new LLC in Texas, the owner or members will incur several formation fees, including:
- Certificate of Formation Fee. Texas requires all new LLCs to file a Certificate of Formation, similar to articles of organization, with the Secretary of State. If your LLC is registered in another state, a Texas Foreign LLC fee is $750.
- Texas Certificate of Good Standing. A certificate of good standing is proof that the LLC is registered. Texas doesn’t require this document, but you need it to open a business bank account and apply for business loans. Texas charges a $15 filing fee for a certificate of status.
There are several optional fees that an LLC owner may run into when forming their LLC in Texas. Some additional fees may include:
- Registered Agent Fee. Business owners can be their registered agents, but some businesses like to hire a registered agent service. The cost for a registered agent will vary.
- DBA “doing business as” Name. If the company wants to conduct business under a different name than the registered one, the owner must file an Assumed Name Certificate and pay the $25 filing fee.
- Certified Document Copies. Texas charges $30 for certified copies of business documents.
Based on ContractsCounsel’s marketplace data, the average cost to start an LLC in Texas is $495.00.
Texas LLC Ongoing Costs
Once an LLC is formed, the owner or members will be responsible for paying yearly fees to keep the business in good legal standing with the state. Some ongoing fees that Texas LLC owners may encounter include:
- Texas Annual Report Fee. Texas requires all LLCs to file an annual report, but they do not charge a filing fee. However, if the report is late (filed after May 15), the business will be subject to a $50 late fee.
- Business license renewal fees. Some businesses may require state or county permits. However, most permits need to be renewed annually or every few years.
Texas LLC Drafting Projects
Operating Agreement Drafting
Texas laws do not require members of an LLC to have or file an operating agreement with the state. However, it is highly recommended that a business drafts an operating agreement anyway.
An operating agreement outlines business policies and will protect a business owner’s assets from any business liability. Benefits of having an operating agreement include:
- Clear set of company policy and procedure
- Liability protection
- Tax benefits
- Conflict resolution
Hiring a lawyer who has experience drafting operating agreements is highly encouraged. An attorney will know how to custom tailor an operating agreement to fit your business’s needs while protecting the owners and members from business liability.
Certificate of Formation Drafting
Texas requires all LLCs to file a Certificate of Formation, similar to Articles of Organization required in other states. A Certificate of Formation is a document that provides the Secretary of State with valuable information about your business.
Information required on a Certificate of Formation includes:
- LLC name. The name must meet Texas naming guidelines, and an LLC name must consist of “limited liability company” or “limited company” or one of its abbreviations: LLC, L.L.C., LC, or L.C.
- Registered agent name and physical address. The registered agent must be over 18 years old and live in Texas.
- Governing authority type. The governing authority is the management structure of the LLC. It can either be member-managed or manager-managed.
- Business purpose. Businesses can be formed for any legal purpose in Texas, but the language used in this section can affect licensing and tax exemption status.
If you aren’t sure what language you should use in the Certificate of Formation, it is recommended that you hire a Texas attorney to draft this important business document.
An experienced lawyer will know what needs to be included in the Certificate of Formation to ensure that your LLC has a name that follows Texas guidelines. In addition, your business purpose allows you to take advantage of any tax benefits available.
How Do Texas Lawyers Charge for LLC Projects?
Hourly Rates for Texas LLC Projects
Texas LLC lawyers commonly use an hourly rate fee structure to charge clients. Under this fee agreement, the lawyer will keep track of their time working on LLC formation projects like filing formation documents or drafting an operating agreement.
Once the lawyer completes the job and all legal projects are finished, the lawyer will bill the LLC owner for their time at a predetermined hourly rate. This fee agreement ensures that a lawyer is compensated for all time working for the business owner.
ContractsCounsel’s marketplace data shows that the average hourly rate for an LLC lawyer in Texas ranges from $200 to $350 per hour.
Flat Fee Rates for Texas LLC Projects
If a lawyer is hired for a specific project, like drafting an operating agreement, they can choose to use a flat rate fee instead of charging hourly.
Under a flat fee rate agreement, the lawyer will determine a fair cost of legal services based on the complexity of the project and an estimate of the time it will take to complete. Flat rate fees are usually paid upfront before the lawyer begins work.
ContractsCounsel’s marketplace data shows the average flat fee rate for an LLC project in Texas is $495.00.
Get Help with Forming an LLC in Texas
Do you need help with a Texas LLC project? If so, post a project in ContractsCounsel’s marketplace to receive flat fee bids from business lawyers who are licensed to practice law in Texas. All lawyers on the ContractsCounsel’s platform are vetted by our team to make sure you are provided with top tier service.