Understanding the Costs of Forming an LLC in Texas

If you’re considering starting your own Limited Liability Company (LLC) in Texas, you’re likely wondering about the associated costs. I recently received a quote from an attorney for $1,700 to assist with the formation process. This caught my attention because I discovered that the Texas Secretary of State lists the filing fee as just $300 for LLCs with up to six members. So, what’s the difference?

Breaking Down Legal Costs

It’s important to clarify whether the attorney’s quote includes additional services beyond the basic paperwork. For example, their fee might cover legal advice, assistance with drafting an operating agreement, or filing tax forms—elements that can be invaluable, especially for first-time business owners. On the other hand, if the attorney’s charge is primarily for handling the paperwork, it could seem steep when compared to the state’s base filing fee.

DIY vs. Professional Help

Starting an LLC independently can certainly save you money, but it may not be the best path for everyone. If you’re confident in your ability to navigate the formation process, you could opt for the DIY route and only pay the state filing fee. However, if complexities arise or you desire peace of mind, hiring an attorney or utilizing a formation service is worth considering.

Typical Fees for Business Formation Services

While prices vary widely depending on the service provider, here’s a general overview:

• DIY Filing: About $300 (the filing fee).
• Online Formation Services: Typically range from $50 to $500, depending on the complexity of your needs and additional features like registered agent services or expedited processing.
• Attorney Fees: Usually start around $500 and can go up to $2,000 or more, based on the level of service provided.

Mandatory Costs and Ongoing Expenses

When forming your LLC, there are several mandatory costs and ongoing expenses to keep in mind:
– State Filing Fee: The cornerstone cost for filing your articles of organization.
– Registered Agent Fees: If you choose to hire a registered agent, expect to pay anywhere from $100 to $300 annually.
– Operating Agreement: While not required, it’s highly recommended to have one in place, which might incur additional legal costs.
– Annual Franchise Tax: Texas LLCs must pay an annual franchise tax, with the fee structure varying based on your revenue.

In addition to these initial expenses, be prepared for ongoing