📋 Business Formation in Texas
Forming an LLC in Texas requires filing a Certificate of Formation (Form 205) with the Texas Secretary of State (via SOSDirect). The state filing fee is $300.
- ✓Choose a unique LLC name including "LLC" or "Limited Liability Company"
- ✓File Certificate of Formation (Form 205) online via SOSDirect — $300 fee
- ✓Designate a registered agent with a TX street address
- ✓Draft an Operating Agreement (not required by state, highly recommended)
- ✓Obtain an EIN from the IRS
- ✓File an annual Public Information Report (PIR) with the TX Comptroller
- ✓Register for Texas franchise tax — even if no tax is due
Texas has no state personal income tax, which is a major advantage for LLC owners. However, LLCs are subject to the Texas franchise tax (also called the "margin tax") if they exceed the no-tax-due threshold of $2,470,000 in annual revenue (2024).
📅 Key Filing Deadlines & Fees
The Texas Franchise Tax Annual Report is due May 15 each year. Even if your LLC owes $0 in franchise tax (below the threshold), you must still file the No Tax Due Report.
| Filing / Requirement | Deadline | Fee |
|---|---|---|
| Certificate of Formation | At formation | $300 |
| Franchise Tax Annual Report + PIR | May 15 each year | $0 if below threshold |
| No Tax Due Report (if revenue < $2.47M) | May 15 each year | $0 |
| Franchise Tax (if revenue > $2.47M) | May 15 each year | 0.375%–0.75% of margin |
| Registered Agent Maintenance | Ongoing | $100–$300/yr |
👥 Employment Law Basics
Texas is an at-will employment state with relatively employer-friendly regulations compared to states like California.
- ✓Minimum wage: $7.25/hr (federal minimum; Texas has not set a higher state minimum)
- ✓Overtime: Federal FLSA rules — 1.5x pay for hours over 40/week
- ✓Workers' comp: Not mandatory in Texas (unique among most states), but recommended
- ✓Non-competes: Enforceable if reasonable in scope, duration, and geography, and supported by adequate consideration
- ✓Final paycheck: If employee resigns: 6th day after next regular payday. If terminated: within 6 days
- ✓New hire reporting: Must report new hires to the TX Office of the Attorney General within 20 days
📄 Relevant Legal Templates
Free downloadable templates commonly used by Texas businesses.
LLC Operating Agreement
Best practice for Texas LLCs
Employment Contract
At-will employment agreement (TX-compliant)
Non-Compete Agreement
Enforceable non-compete for TX employees
NDA Template
Non-disclosure agreement for TX businesses
Independent Contractor Agreement
Contractor agreement for TX engagements
Service Agreement
Client services contract template
❓ Frequently Asked Questions
Does Texas have a state income tax for LLCs?
Texas has no state personal income tax. However, LLCs are subject to the Texas franchise tax (margin tax) on revenues above $2,470,000 (2024 threshold). Below this threshold, you file a No Tax Due Report with $0 owed.
How do I form an LLC in Texas?
File a Certificate of Formation (Form 205) with the Texas Secretary of State via the SOSDirect online portal. The filing fee is $300. Processing typically takes 2-3 business days online.
When is the Texas franchise tax due?
The Texas Franchise Tax Annual Report is due May 15 each year. All LLCs must file, even if they owe $0 (they file a No Tax Due Report). Missing this deadline results in penalties and possible forfeiture of your LLC.
Is workers' compensation insurance required in Texas?
Texas is unique: workers' compensation insurance is not mandatory for most private employers. However, if you don't carry it, employees retain the right to sue you for workplace injuries. Most businesses choose to carry it anyway.
Are non-compete agreements enforceable in Texas?
Yes, Texas courts will enforce non-compete agreements if they are reasonable in scope (time, geography, and activity), ancillary to an otherwise enforceable agreement, and supported by adequate consideration such as employment, trade secret access, or specialized training.
Disclaimer: This page provides general legal information only. Laws change frequently. Always consult a licensed attorney in Texas for advice specific to your situation.