How much does it cost to set up an S Corp in Texas?
The cost to form an S Corp in Texas varies depending on some factors, which would include services used to incorporate, and other additional requirements and filings one may be seeking. Below is a breakdown of most of the associated costs with detailed explanations.
1. Filing the Certificate of Formation
In Texas, for filing the S Corporation, you will have to file the Certificate of Formation with the Texas Secretary of State. For that particular document, there is a filing fee:
- $300 (as of 2024).
2. Reservation of Name
If you'd like to book the name before filing for the Certificate of Formation, this is the amount:
- $40 for a 120-day reservation.
3. Federal S Corp Election (Form 2553)
To elect S Corporation status with the IRS, you will need to file Form 2553. This form does not have a filing fee, but it must be filed within 2 months and 15 days of the formation of your corporation or by March 15 for the current tax year to get timely approval.
4. Franchise Taxes
Texas imposes an annual franchise tax on businesses. The amount depends on the revenue of the business:
- Businesses with total revenue less than $1.18 million (for 2024) are typically assessed a minimum franchise tax of $0 to $300.
- Revenue above this will be subject to tax at a percentage of the business's revenue.
5. Registered Agent Fees (If Applicable)
If you use a third-party registered agent service (which is required in Texas for any corporation), this may cost:
- $100 - $300 per year.
6. Legal and Professional Services (Optional)
If you hire an attorney, accountant, or formation service to assist you in setting up your S Corporation, the total cost will depend on the type of service you need:
- Professional services will run anywhere from $100 - $1,500 depending on what you need.
Total Estimated Cost
If you just do a basic setup with no professional services:
- $300 (Certificate of Formation)
- Additional optional fees for registered agent services and attorney fees, etc.
In all, the base cost of S Corporation incorporation in Texas will be from $300 to $1,000, depending on the level of service and assistance chosen.