- Usual entity
- LLC or corporation
- Franchise tax
- Report required, threshold applies
- Personal income tax
- None at state level
- Registered agent
- Texas address required
Form a company in Texas
A large, business heavy state with no personal income tax and a franchise tax regime that most small businesses satisfy with a report rather than a payment.
- Country
- United States
- Usual entity
- LLC or corporation
Why founders choose Texas, and when they should not.
Texas is a natural home state for the very large number of businesses physically based there. There is no personal income tax, the economy is deep enough that local banking and professional support is easy, and forming is straightforward.
The distinctive feature is the franchise tax. It is a tax on margin rather than profit, but there is a revenue threshold below which most small businesses owe nothing. The catch is that the reporting obligation can still exist even when the payment does not, and treating no tax due as no filing due is a reliable way to fall out of good standing.
Who Texas fits.
Texas usually suits
- Businesses with premises, staff or customers in Texas
- Owners who have relocated to Texas
- Companies serving the energy, construction and logistics sectors concentrated there
- Multi state operators wanting a southern base
On fees. Government filing fees are set by the jurisdiction and change without notice, sometimes mid year. We quote the current fee for your specific filing at intake, confirmed against the authority on the day, rather than publishing a figure here that may be stale by the time you read it. Our own service fee is on the pricing page and does not change.
- Order matters
- Doing these out of sequence causes rework
Filing in Texas, step by step.
The sequence specific to Texas, including the parts that differ from other jurisdictions.
Name
Check availability with the Secretary of State
Texas applies a distinguishability standard and will reject close matches.
Agent
Appoint a Texas registered agent with a Texas street address and written consent to the appointment
Certificate
File the Certificate of Formation
Texas uses this name rather than Articles of Organization, which trips up filers copying forms from elsewhere.
Documents
Company agreement, which is what Texas calls the operating agreement, plus the membership or share register
Franchise tax
Register with the Comptroller and diarise the annual franchise tax report, which is due even when no tax is payable
- Missing one
- How we track these
What a Texas entity owes each year.
| Obligation | Who wants it | When and how much |
|---|---|---|
| Franchise tax report | Comptroller of Public Accounts | Annually. A report is expected even below the revenue threshold where no tax is due |
| Public information report | Comptroller | Filed alongside the franchise tax report, confirming officers and directors |
| Registered agent | Your agent | Annually |
| Sales and use tax | Comptroller | If you sell taxable items in Texas |
- Honest comparison
- Including where another jurisdiction wins
Texas against Delaware for a growing company
Companies that grow inside Texas often ask whether they should have incorporated in Delaware instead. Unless outside investment is coming, the answer is usually no, and moving later is a real project rather than a form.
What does change the calculation is hiring. A Texas company that employs people in other states will need to qualify in each of those states regardless of where it was formed, so the home state question matters less as the footprint grows and the multi state compliance question matters more.
The Texas specific trap is treating no tax due as no filing due. The revenue threshold removes the payment, not the report, and a missed report is how an otherwise healthy Texas entity forfeits its right to transact.
What people get wrong about Texas
Below the revenue threshold you generally owe no franchise tax, but a report is still expected. Skipping it is one of the most common ways a small Texas entity quietly loses its right to transact.
It is calculated on a margin figure, which means a low profit but high revenue business can be assessed in ways that surprise owners who expect a tax on profit.
Hiring somebody who works from home in Texas generally means the entity is doing business in Texas, with the registration and reporting that follows.
Texas questions
Below the revenue threshold, generally no payment is due, but the reporting obligation should be assumed rather than ignored. We confirm the current threshold at the time of filing.
It is a solid operating state and a poor pure formation state. Choose it because you are here, not because of the tax headline.
Yes, with a physical address in Texas.
Forming in Texas?
We will confirm the entity, the current government fee and the realistic timeline before anything is filed.