How Much Does It Cost to Start a Business in Texas

How Much Does It Cost to Start a Business in Texas

How Much Does It Cost to Start a Business in Texas

Starting a business in Texas costs far less than in many other states, and that's by design. Texas has no corporate income tax, no personal income tax, and no state-mandated business license requirement. But "less expensive" doesn't mean "free." You'll need to account for formation fees, ongoing compliance costs, professional services, and industry-specific licensing. This guide breaks down every cost you'll actually face when starting a business in Texas.

Business Formation Costs

Your first real expense is filing your business structure with the state. Most entrepreneurs in Texas choose an LLC because it's simple, affordable, and offers liability protection.

Texas LLC Cost

Filing a Limited Liability Company (LLC) in Texas costs $300 with the Secretary of State. This is your Certificate of Formation fee, the baseline cost to start an LLC in Texas. You'll file this online through SOSDirect, and the Secretary of State does not publish a standard processing time, so ask for an expedite if timing matters.

The $300 fee covers:

  • Filing your Certificate of Formation (the legal document that creates your LLC)
  • Processing and approval by the Texas Secretary of State
  • Official filing record

That's it, no annual renewal fee to the Secretary of State. Texas doesn't require LLCs to file annual reports with the state, which saves you $50 to $100 per year compared to many other states.

Corporation Formation Cost

If you're forming a C-Corporation instead of an LLC, the filing fee is identical: $300 for your Certificate of Formation. The same processing times and SOSDirect portal apply.

Expedited Filing

If you're in a hurry, Texas offers three expedite tiers on top of your filing fee:

  • Standard Expedite: $50 per document, 2 to 3 business days
  • Next Day Expedite: $500 per document, processed by close of business the next day (if received by noon)
  • Same Day Expedite: $750 per document, processed by close of business the same day (if received by noon)

Most entrepreneurs skip expedite fees and accept standard processing. Expedite is worth it only if you're under a hard deadline.

Name Reservation

Before you file, you might want to reserve your business name to ensure it stays available. A Texas business name reservation costs $40 and holds your name for 120 days. This is optional, you can file your Certificate of Formation immediately without reserving first, but it's cheap insurance if you're still finalizing details.

Professional Services Costs

Formation is just the legal paperwork. Most entrepreneurs hire professionals to ensure it's done correctly.

Attorney Fees

A business attorney reviewing your formation documents or preparing an operating agreement typically charges:

  • Flat-fee LLC formation package: $300 to $800 (includes entity formation, operating agreement, registered agent setup)
  • Hourly consultation: $200 to $400/hour for general business questions

Many entrepreneurs choose to DIY the $300 filing fee using online formation services (LegalZoom, Rocket Lawyer, etc.), then pay an attorney $500 to $1,000 to review their operating agreement and ensure compliance with their specific situation. This hybrid approach runs $800 to $1,300 total.

Registered Agent

Texas requires every LLC and corporation to maintain a registered agent, a person or company authorized to receive legal documents on your behalf. The registered agent must be a Texas resident or business entity.

Your options:

  • You serve as your own registered agent: Free, but your home address becomes public record
  • Professional registered agent service: $75 to $300/year (varies by provider and services included)

Pricing varies by provider, so compare current rates before you buy. Changing your registered agent or registered office costs $15 with the Secretary of State, and resigning as an agent is free to file.

Accountant/CPA Setup Fees

An accountant helps you set up your books, understand Texas franchise tax obligations, and plan for tax filing. Initial setup typically runs:

  • Basic bookkeeping setup: $300 to $800 (one-time)
  • Ongoing monthly bookkeeping: $200 to $500/month depending on transaction volume
  • Annual tax return preparation: $500 to $1,500 for an LLC; $1,000 to $2,500 for a corporation

Many first-year founders skip this and use accounting software (QuickBooks Online at $15 to $30/month) instead, hiring a CPA only at tax time.

Licensing and Permit Costs

After filing your business structure, you may need industry-specific licenses and permits. Texas doesn't require a general state business license, so your costs here depend entirely on your industry.

Sales Tax Permit

If you're selling taxable goods or services, you need a sales tax permit from the Texas Comptroller of Public Accounts. The permit is free and typically takes 2 to 3 weeks to issue online. Texas charges a 6.25% state sales tax, plus local taxes of up to 2%, so your combined rate can reach 8.25% depending on your location.

Industry-Specific Licenses

Costs vary dramatically:

  • Food service/restaurant: $300 to $1,000+ (health permit, food handler licenses)
  • Professional licenses (plumbers, electricians): $200 to $500 (exam and application fees)
  • Real estate: $50 to $300 (license application)
  • Insurance agency: $150 to $400 (license and bonding)
  • Childcare facility: $500 to $2,000+ (background checks, facility approval)

Check with your local city or county and the relevant state regulatory board for your exact requirements. The Texas Business Licenses and Permits Guide (published by the Texas Economic Development and Tourism Office) is your reference for identifying required licenses.

Local Permits

Texas has no general state business license, counties license nothing beyond the assumed name filing for sole proprietors and general partnerships, and most cities have no general business license either. Some cities do require a certificate of occupancy or industry-specific permits, with fees set by the city, so call your city permitting office to confirm.

Ongoing Compliance and Tax Costs

Texas has no corporate income tax, a huge advantage. But you're not off the hook completely.

Texas Franchise Tax (If Applicable)

Texas has a franchise tax rather than a corporate income tax, and most small businesses owe none because they fall under the no tax due threshold. Here's how it works:

  • No tax due if your total revenue is ≤ $2,650,000 (for 2026 to 2027 report years). You still file a Public Information Report, but owe no tax.
  • Tax rate if above threshold: 0.375% for retail and wholesale businesses; 0.75% for all other businesses; 0.331% EZ Computation rate for entities under $20 million in revenue.
  • Filing deadline: May 15 each year to the Texas Comptroller
  • Filing fee: None (the tax itself is your only cost)

The tax is calculated on taxable margin (revenue after the allowed deductions), not on total revenue, so ask a CPA or the Comptroller to estimate your bill once you approach the threshold.

Sole proprietors and general partnerships don't file with the Comptroller, they report self-employment income on their personal tax returns instead.

Federal Self-Employment Tax

If you're a sole proprietor or single-member LLC (taxed as a sole proprietorship), you'll owe federal self-employment tax (Social Security + Medicare) on your net business income. This is approximately 15.3% of net profit up to the annual Social Security wage base, which the Social Security Administration adjusts each year. Corporations and multi-member LLCs taxed as partnerships have different rules.

Annual Filing and Compliance

Texas-specific compliance costs after your first year:

  • Public Information Report (filed even if no franchise tax is due): Free filing to the Comptroller (annual, by May 15)
  • Assumed Name certificate (DBA): $25 with the Secretary of State; county clerk fees apply only to sole proprietors and general partnerships and vary by county. Valid up to 10 years.
  • Registered agent change (if needed): $15 filing fee

Total Cost to Start a Business in Texas: Quick Summary

Bare minimum (DIY filing):

  • LLC formation: $300
  • Sales tax permit: Free
  • Total: $300

Typical small business (with professional help):

  • LLC formation: $300
  • Attorney/formation service: $500 to $800
  • Registered agent (year 1): $100 to $150
  • Accountant setup: $400 to $600
  • Industry-specific licenses: $200 to $500
  • Business insurance (general liability): $300 to $800
  • Total: $1,700 to $3,350

Growing business with ongoing costs (year 2+):

  • Franchise tax filing: $0 to $50,000+ (depends on revenue)
  • Monthly bookkeeping: $200 to $500
  • Annual accounting/tax prep: $500 to $2,500
  • Registered agent renewal: $100 to $150
  • Business insurance renewal: $300 to $1,000
  • License renewals (industry-specific): $50 to $500

Cost-Saving Tips for Texas Startups

Use SOSDirect for the fastest standard processing. Online filing through the Secretary of State is fastest and cheapest. Paper and hand-delivery filings take longer.

DIY your LLC formation, then hire an accountant. The $300 Secretary of State fee is unavoidable. But you can file your Certificate of Formation yourself on SOSDirect and save $500+ in attorney fees. Then hire a CPA to review your operating agreement and tax setup, a better use of professional dollars.

Serve as your own registered agent (if private). If you don't want your home address on public record, hire a registered agent service ($75 to $150/year). But if privacy isn't a concern, handle it yourself and save that cost entirely.

Bundle your initial filings. File your LLC formation and register your assumed name in the same session. This ensures consistency and reduces back-and-forth.

Confirm local licenses upfront. Call your city or county before you file. Some cities have no additional requirements; others do. Knowing this before you launch avoids surprises.

Start with accounting software, not a full-time bookkeeper. QuickBooks Online ($180 to $360/year) is far cheaper than a bookkeeper ($2,400 to $6,000/year) in your first year. Move to a bookkeeper once you're profitable.

Texas Advantage: No Income Tax

While startup costs are unavoidable, Texas saves you money long-term. With no state corporate income tax and no personal income tax, a business earning $100,000 in net profit keeps every dollar (minus federal taxes). Texas still has the franchise tax, but many small businesses owe none, and there is no state tax on personal income.

Where to File and Get Help

Disclaimer

This content is informational only and not legal, tax, or accounting advice. Startup costs vary by industry, location, and individual circumstances. The tax and franchise tax thresholds, rates, and deadlines cited were accurate as of 2026 but may change. Consult a qualified attorney or CPA in your state before making decisions about your business structure or tax strategy. The costs and timelines in this guide are estimates based on typical Texas filings and may vary by service provider.

For complex business situations, multiple owners, significant immediate revenue, or regulated industries, professional guidance is essential and will pay for itself.

Keep exploring: related Texas guides