Is Texas right for you?
Texas makes obvious sense if your business will actually be in Texas — customers, staff, property, a warehouse. The state’s size and the absence of personal income tax are genuine advantages, and a Texas address carries weight with U.S. customers in a way an out-of-state shell does not.
The trade-offs are cost and disclosure. The state filing fee is $300, well above most, and the governing person of the LLC appears on the public record — so Texas is not the state to choose if privacy is what you are after.
The franchise tax deserves a clear explanation, because it is widely misunderstood. Most small businesses owe nothing: no tax is due below roughly $2.47 million in revenue. But a report is still required every single year, and missing it can forfeit your right to do business in the state. No payment does not mean no filing.
- Businesses with a real Texas presence — premises, staff or inventory
- Founders who want a recognisable U.S. state on their invoices
- Companies selling to U.S. customers who value a domestic footprint
- The $300 state filing fee is among the highest in the country
- The governing person is listed publicly — no privacy shield here
- An annual Tax Due Report is mandatory even when the tax owed is zero
What Texas taxes
A summary, not advice — your actual position depends on where you live, where your customers are, and how the company is treated federally.
Income tax
None — Texas levies no personal income tax
Sales tax
6.25% state rate plus local, up to 8.25% combined
Franchise tax
No tax owed below roughly $2.47M revenue, but the annual report is still required
Texas for a non-resident founder
Perfectly workable for non-residents, but you pay more to form, get less privacy, and take on an annual report you cannot skip. Choose Texas because your business belongs in Texas, not as a default.
What Texas asks for every year
Formation is the easy part. These are the obligations that keep the company alive — and the ones people forget.
- 01
Franchise Tax Report
Due 15 May each year. Most small businesses owe nothing but must still file — the report is not optional.
- 02
Public Information Report
Filed alongside the franchise report, confirming officers, directors or managers.
- 03
Registered Agent
A Texas street address is required, continuously maintained.