I
United States

United States

Company Formation in Texas

State of Texas — Secretary of State

Formation Time
2–4 business days
Min. Capital
No minimum
Corporate Tax
0% state income tax (Franchise Tax margin tax applies)
Foreign Ownership
100%

Overview

Texas is the eighth-largest economy in the world by GDP ($2.6 trillion) and the fastest-growing commercial powerhouse in the United States. Renowned for its 'Texas Economic Miracle', the state boasts 0% personal income tax, 0% corporate net income tax, and business-friendly regulatory courts. Businesses in Texas are subject to the Texas Franchise Tax, a margin tax; however, under Texas Senate Bill 3, entities with annualized total revenues equal to or below $2.47 million owe $0 in franchise tax (filing a simple No Tax Due Information Report). Austin has become the premier hub for high-growth tech firms ('Silicon Hills'), hosting Tesla, Dell, Oracle, Apple, and thousands of tech startups, while Dallas-Fort Worth and Houston anchor global finance, aviation, energy, and biomedical research. For companies seeking a substantial, credible US operating footprint with no personal income tax and massive internal market access, Texas is the ultimate destination.

8th largest global GDP
0% state income tax
$2.47M tax-free threshold
Silicon Hills tech hub
Series LLC

Why Choose Texas

1

8th largest economy in the world — larger GDP than Canada, Italy, or Brazil

2

0% personal income tax and 0% state corporate income tax

3

Texas Franchise Tax exemption threshold ($2.47M revenue threshold pays $0 tax)

4

Austin ('Silicon Hills') is the leading destination for tech relocation and venture capital

5

Houston is the world's energy capital and home to the Texas Medical Center

6

Dallas-Fort Worth is a premier international logistics, aviation, and financial hub

7

Series LLC permitted by statute for real estate and multi-business asset partitioning

8

Business-friendly courts and no corporate franchise cap penalties

Business Entity Types

EntityOwnershipDirectorsCapitalTaxBest For
LLC100%N/A (member or manager managed)NonePass-through taxation; $0 Texas franchise tax if revenue ≤ $2.47MTech companies, consulting, e-commerce, real estate, energy services
Corporation100%1None21% federal corporate income tax; 0% state CIT (franchise tax applies if > $2.47M)High-growth enterprises, manufacturing, multi-shareholder ventures
Series LLC100%N/ANonePass-through per seriesReal estate investors, holding multi-property portfolios across Texas

Step-by-Step Formation Process

1

Entity Name Clearance

1 day

Search SOSDirect system to confirm name availability under Texas law.

2

Filing Certificate of Formation

2–4 business days

File Form 205 electronically with the Texas Secretary of State.

3

Federal EIN Registration

3–10 business days

Obtain Employer Identification Number from the IRS for corporate operations.

4

FinCEN BOI Filing & Governance

1–2 days

File federal BOI report and draft Texas company agreement/bylaws.

5

Corporate Banking Setup

3–7 business days

Open US business checking accounts with premier regional and national banks.

Costs & Fees

Government / License FeeUSD 300+
Our Service FeeUSD 900 – 2,200
Annual RenewalUSD 350+

Fees are indicative and may vary based on business activity, entity type, and additional approvals required. Contact us for a precise custom quote.

Get Custom Quote

Banking

Texas has an exceptionally deep commercial banking sector. In addition to digital banking (Mercury, Relay), major national banks (JPMorgan Chase, Bank of America, Frost Bank) operate comprehensive commercial centers across Austin, Dallas, and Houston.

Account Opening Time
3–7 business days
Multi-Currency
Yes — multiple currencies supported

Recommended Banks

Frost Bank (premier Texas bank)JPMorgan ChaseMercuryRelayBank of America

Tax Overview

Corporate Tax
0% state corporate income tax; 21% federal CIT
Personal Income Tax
0% state personal income tax
VAT / Sales Tax
6.25% state sales tax (up to 8.25% combined local)
Capital Gains Tax
0% state capital gains tax
Withholding Tax
30% federal statutory (reduced by treaties)
Double Tax Treaties
68 countries

Texas Franchise Tax has a 'No Tax Due' threshold of $2.47 million in total annualized revenue. Entities below this threshold file a simple No Tax Due Information Report and pay $0. Entities over the threshold pay between 0.375% (wholesale/retail) and 0.75% (other industries) on taxable margin.

Frequently Asked Questions

How does the Texas Franchise Tax work and will my business owe tax?
Texas does not have a traditional corporate income tax. Instead, it levies a Franchise Tax based on taxable margin. Crucially, under current law, any business with annualized gross revenues of $2.47 million or less owes $0 in franchise tax. You must still file a straightforward 'No Tax Due Information Report' and Public Information Report by May 15 each year.
Why are so many global technology companies moving from California to Texas?
Companies are relocating to Texas to escape California's high tax burden (8.84% corporate tax, up to 13.3% personal tax, and $800 minimum franchise tax). Texas levies 0% personal income tax, offers lower real estate and labor costs, and has a booming tech talent ecosystem in Austin and Dallas.
What is the difference between Texas Member-Managed and Manager-Managed LLCs?
In a Member-Managed LLC, all equity owners participate directly in daily operational governance. In a Manager-Managed LLC, the members appoint one or more managers (who can be non-members or professional executives) to run the business, which is ideal for passive investors, foreign founders, or multi-investor commercial ventures.
Can foreign non-residents form a Texas LLC?
Yes. Texas law imposes no citizenship or residency restrictions on LLC members or managers. Foreign founders can form and own 100% of a Texas company remotely without ever setting foot in the United States.
Does Texas offer a Series LLC structure?
Yes. Under Chapter 101 of the Texas Business Organizations Code, a Texas LLC can establish independent series with separate assets, liabilities, members, and business purposes. This is particularly popular for commercial and residential real estate investors seeking asset separation under a single state filing.
What documents do I need to open a Texas corporate bank account?
To open a corporate bank account for a Texas entity, you will need the stamped Certificate of Formation from the Texas Secretary of State, your IRS EIN Confirmation Letter, your executed Company Agreement, and valid passports and address verification for all beneficial owners holding 25%+ equity.