LLC in Texas for Non-Residents (2025 Guide): Big Economy, Zero Privacy?

Author's Bio: The Foreign Founder Team specializes in US market entry for non-residents. We analyze state regulations not just for locals, but for international entrepreneurs who need remote management and tax efficiency.

Texas is a business giant. It has the 8th largest economy in the world (if it were a country) and a reputation for being aggressively pro-business.

For US residents, moving a business to Texas is often a no-brainer to escape high taxes in California or New York.

But for you—a non-resident entrepreneur—is Texas actually a good choice?

The answer is complicated. While Texas has no state personal income tax, it has a Franchise Tax system that can be confusing for foreigners, and it offers zero privacy for LLC owners.

In this guide, we will cut through the "Everything is bigger in Texas" hype and look at the cold, hard facts of forming a Texas LLC from abroad.

Is Texas Right for You? (Decision Tree)

Before we dive into the tax code, let's see if Texas fits your business model.

The "Privacy Problem" in Texas

If you are starting an online business (SaaS, E-commerce, Agency) and want to keep your ownership private, Texas is not for you.

Texas law requires the Certificate of Formation (Form 205) to list the names of the Governing Persons (Managers or Members).

• Public Record: Anyone can search the Texas Comptroller's website.
• What they see: Your name (or your manager's name) and address.
• The workaround: You can hire a professional "Manager-Managed" service or use a holding company in Wyoming to own the Texas LLC, but this adds complexity and cost ($$$).

If privacy is your #1 goal, stick with Wyoming or New Mexico.

Cost Breakdown: The $300 Hurdle

Texas is one of the more expensive states to start in, but cheap to maintain... if you file on time.

Expense	Cost	Frequency	Notes
State Filing Fee	$300	One-time	One of the highest in the US.
Registered Agent	~$50 - $150	Annually	Required for service of process.
Annual Franchise Report	$0	Annually	Free to file if revenue < ~$1.23M.
Public Information Report	$0	Annually	Filed with Franchise Tax report.
Late Filing Penalty	$50 + Interest	Penalty	Texas is very strict on the May 15th deadline.

The "No Tax" Myth Explained

You often hear "Texas has no taxes." This is true for personal income tax.

However, Texas funds its government through:

1. Property Taxes: Very high (relevant if your LLC owns real estate).
2. Sales Tax: High (8.25% average).
3. Franchise Tax: This is a tax on the "margin" of your business.
   • Good News: If your revenue is under the threshold (adjusted annually, roughly $1.23 Million in 2024/2025), you owe $0.
   • The Trap: You STILL MUST FILE the "No Tax Due Report" by May 15th every year. If you forget, you lose your good standing and pay a $50 penalty.

Banking for a Texas LLC

Texas is a major economic hub, so banking is generally easier than in niche states.

• Mercury / Relay / Brex: All work perfectly with Texas LLCs.
• Physical Branches: Chase, Wells Fargo, and Bank of America are everywhere in Texas. If you plan to visit the US to open a bank account in person, Texas (specifically Dallas, Houston, or Austin) is a great place to do it.

Texas vs. The Alternatives

Texas vs. Wyoming

• Wyoming is cheaper ($100 vs $300) and private.
• Texas has better brand recognition but no privacy.
• Winner: Wyoming for online businesses; Texas for local real estate.

Texas vs. Delaware

• Delaware is for selling shares to investors (C-Corps).
• Texas is for operating a business.
• Winner: Delaware for VC startups; Texas for small business operations.

Summary: When to Choose Texas?

We recommend forming a Texas LLC only in these specific scenarios:

1. Real Estate: You are buying a rental property in Austin, Dallas, or Houston.
2. Physical Presence: You have a warehouse, office, or employees physically located in Texas.
3. Client Requirement: You have a major client in Texas who insists you be a local entity (rare).

For 95% of non-resident digital entrepreneurs, New Mexico (Cheaper) or Wyoming (Private) are better, more efficient options.