How to Form an LLC in Texas (2026 Guide)
A 2026 step-by-step guide to forming an LLC in Texas — franchise tax, and the Public Information Report. Texas is one of the friendlier states to form an LLC in — no state income tax, no annual report per se, and a franchise tax that most small LLCs owe nothing on.
Updated: August 2026 · Industry Advisors · Filed 2006.
Texas is one of the friendlier states to form an LLC in — no state income tax, no annual report per se, and a franchise tax that most small LLCs owe nothing on. The formation itself is straightforward. What catches founders is the recurring Public Information Report and the May 15 franchise-tax deadline that runs regardless of whether tax is owed.
Step 1 · the Formation Timeline
- Filing agency — Texas Secretary of State
- Form — 205 (Certificate of Formation)
- Filing fee — $300 est.
- Processing — 2–3 business days online
- Registered agent — individual TX resident or authorized entity
- State income tax — none
- Franchise tax — No Tax Due Report if revenue < $2.47M (2026 threshold), else tiered
Step 2 · the Franchise Tax + PIR Mechanics
Every Texas LLC files with the Comptroller each year, even at zero revenue — that's the piece founders miss when they hear "no annual report." The PIR (Form 05-102) is due regardless of revenue. Miss May 15 and the LLC's Certificate of Formation can be forfeited.
Step 3 · the Margin Math (If You Cross the Threshold)
Step 4 · Recurring Calendar
Quick Tool · Texas LLC Year-One Cost Estimator
Estimate Your TX Year-One Setup Cost
Expand each row that applies.
Certificate of Formation (Form 205)
$300 est. filed with the Texas SoS. Higher than most states, but no recurring annual-report fee.
Registered agent (if paid)
$100–$300/yr est. — skip if a TX-resident member serves.
Franchise Tax + Public Information Report (year 2 due May 15)
$0 franchise tax if revenue < $2.47M. The PIR is required regardless of tax owed. Late-filing consequences include forfeiture of Certificate of Formation.
Franchise Tax (if revenue exceeds threshold)
Retail/wholesale: 0.375% of margin. Other: 0.75% of margin. Margin computation is favorable — talk to a TX CPA at the threshold.
Sales & Use Tax Permit (free but required for taxable sales)
No fee. Free registration through the Comptroller. See sales-tax nexus post for the nexus rules.
Local business license (city-dependent)
$25–$500/yr est. if your city or municipality requires one. Texas has no state general business license.
Typical first-year total for a small TX LLC: $425–$1,100 est.
Quick Check
Q1. Your Texas LLC had zero revenue year 1. Do you file anything with the Comptroller?
Answer: Yes. The Public Information Report (Form 05-102) is required regardless of revenue. File a No Tax Due Report (Form 05-163) alongside it.
Q2. Your TX LLC nets $3M in revenue in the retail sector. What franchise tax do you owe (roughly)?
Answer: Compute margin (typically ~70% of revenue for retail using the 30% deduction), then apply 0.375%. On $3M revenue, margin ~$2.1M, tax ~$7,875. Talk to a TX CPA about the margin election.
Q3. What happens if you miss the May 15 franchise-tax deadline?
Answer: The Comptroller can forfeit your Certificate of Formation. Reinstatement requires paying delinquent taxes, filing missed reports, tax clearance, and a reinstatement fee.
Where This Connects
Core LLC stack: registered agent, EIN, Operating Agreement. Recovery paths for lost certificates in the reinstatement post. Nexus and sales-tax details in the nexus post. Fits with the annual compliance cadence in the Q4 checklist.
Sources and Further Reading
- Texas Comptroller · Franchise Tax
- Texas Secretary of State · LLC FAQs
- IRS · Small Business and Self-Employed
The Everyday Owner's Blueprint maps the May 15 PIR + franchise-tax cadence onto the 12-week formation walk-through.
Industry Advisors · 30 Wall Street, New York, NY 10005. Education, not legal or tax advice. Texas rules and franchise-tax thresholds change; confirm current requirements at sos.state.tx.us and comptroller.texas.gov before you file.
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