Texas vs California: what an LLC really costs
Texas charges $300 to form an LLC and California charges $70, but over 5 years the totals are $300 and $4,120. Both figures computed from each state's own fee schedule, plus what forming in one while operating in the other actually costs.
Estimate only — not tax, legal, or accounting advice. This is the published math for Texas and California LLC costs. Confirm final figures with your payroll provider, accountant, or the state agency before acting on them.
Figures assume you act as your own registered agent, which is lawful in most states and costs nothing — so this compares STATES rather than service purchases.
The ranking flips. California is cheaper to form, but Texas is cheaper by year 5. Comparisons that stop at the filing fee give the opposite answer to the one your bank account will.
| Texas | California | |
|---|---|---|
| Filing fee | $300 | $70 |
| Annual report | $0 annual | $20 biennial |
| Report due | Texas has NO Secretary of State annual report for LLCs. The annual filing is the franchise tax report to the Comptroller, due May 15 (next business day if May 15 falls on a weekend or holiday). An LLC at or below the no-tax-due threshold owes $0 in tax but must still file a Public Information Report or Ownership Report — the fee for that filing is $0, but skipping it forfeits the entity's right to transact business. | Statement of Information, Form LLC-12 ($20.00, or Form LLC-12NC at $20.00 when nothing has changed). The first one is due within 90 days of filing the Articles of Organization, then biennially. The filing window is the six-month period ending on the last day of the anniversary month of formation. Filing an amended statement between periods to report a change costs nothing. |
| Other yearly obligations | Texas Franchise Tax (margin tax) (formula) | Annual LLC Tax (franchise tax) $800; LLC Fee (total California income) (formula) |
| Per year, total | $0 | $810 |
| Year one | $300 | $880 |
| Year 5 total | $300 | $4,120 |
| Be your own agent? | yes, $0 | yes, $0 |
Forming in Texas while operating in California
+$800 to +$1,800
over 5 years, against simply forming in California.
- Forming in Texas while operating in California costs $800 to $1,800 MORE over 5 years than simply forming in California — and it cannot come out cheaper, because you carry the home state either way.
- Operating in California means registering there whichever state you formed in, so the Texas structure adds a second filing, a second annual report, and a second registered agent rather than replacing the first.
- It also does not move your tax: state income and franchise tax follow where the money is earned and where the business operates, not where the articles were filed.
- Failing to register in the state you actually operate in carries penalties and can cost you the right to bring a lawsuit there — the downside is not only the fees below.
Cheap to start, expensive to keep
California charges $70 to form an LLC and about $810 every year afterwards — 11.57× the filing fee, annually. The number most comparisons quote is the one that matters least.
Frequently asked
- Is it cheaper to form an LLC in Texas or California?
- Over 5 years, Texas — $300 against $4,120, acting as your own registered agent. That is the opposite of the filing-fee answer: California is cheaper to form, which is the number most comparisons stop at.
- Should I form in Texas if my business operates in California?
- On fees, no — and it is not close. Operating in California means registering there as a foreign LLC whichever state you formed in, so the Texas structure adds a second filing, a second annual report and a registered agent you must rent, on top of everything California charges anyway. Over 5 years that is $800 to $1,800 more than simply forming in California.
- Does forming in Texas lower my taxes?
- No. State income and franchise taxes follow where the business earns and operates, not where the articles were filed. That is why the fee comparison on this page is the whole of the fee argument — and the fee argument does not favour the two-state structure either.
Verified 2026-08-04 against Texas Secretary of State, Form 205 — Certificate of Formation, Limited Liability Company (Revised 12/21) (effective 2026-01-01)
Verified 2026-08-04 against California Secretary of State, Business Programs Division — Business Entities Fee Schedule (BE FEES, Rev. 06/2018) (effective 2026-01-01)
Full detail: Texas · California · Or compare any two verified states.