Texas LLC vs Florida LLC

Zachary Copp, Esq. Best State, LLC

Texas LLC vs Florida LLC: Which State is Better for Your Needs?

Before you start a business, you have a lot of decisions to make.

Beyond choosing which type of business you want to operate and who you want to target as your niche market, decisions like your DBA, trademarks, domain name, branding and others are going to all be on your list of to-do's when it comes to setting up a business that protects you, your interests, and your company.

Whether you're a sole proprietor, a member of a partnership, or involved in a multi-member LLC, one of the most important decisions you can make - especially every year around tax time - is the state you choose to incorporate.

While perks like the state tax rate and other incentives might lead you to believe forming your LLC in Florida is a good way to save some money, you might end up costing yourself much more down the road if you choose the wrong state.

When it comes to forming an LLC in Texas vs Florida, here’s what I've learned while forming over 3,000 LLC since 2015...

Factors to Consider When Establishing an LLC in Texas vs Florida

Before you choose which state is best for your business needs, there are many factors to consider and questions you need to answer that will influence your decision one way or another.

With each state having its own laws and fees for setting up a limited liability company, you might think you’re saving money by setting up an LLC in a different state, but the hassle and expense of registering an out of state LLC might not be worth it at the end of the day.

So, before you take the plunge and dive right into registering an LLC in Florida, let’s review some of the pros and cons between registering an LLC in Texas vs Florida to help you decide which state is the best choice for you.

Initial Filing Fees and Costs for Forming an LLC in Texas vs Florida

Before you can form your business in either of these states, you’ll need to pay an initial filing fee that is due when submitting your formation paperwork to the secretary of state.

If you’re registering an LLC in Texas, it will cost you $300 to submit the Certificate of Formation and an additional $8.10 if you choose to pay online or by credit card. See the full details in our article: How much does it cost to form a Texas LLC

In comparison, registering a Florida LLC will cost only $125 at the outset.

That being said, there are more than just the initial filing fees to consider when choosing between a Texas LLC and Florida LLC.

Ongoing Fees to Maintain an LLC in Texas vs Florida

Beyond the initial filing fees, most states will charge an annual fee to maintain a limited liability company.

In Florida, the filing fee for an annual report is $138.75 unless you’re late to pay and are charged a $400 late fee for not filing your annual report on time. Should you fail to file an annual report and pay your late fee by the third Friday in September, the state and its administrators will dissolve your LLC.

In comparison, Texas is one of the few states that do not charge a fee to file the annual report. There is, however, franchise tax in Texas. Franchise tax only kicks in if the LLC makes more than the franchise tax theshhold ($1.23 million in 2023).

Just send me a message or call the number at the top of the page to speak to me directly to discuss your business and LLC formation needs.

Amount of Time it Takes to Register an LLC in Texas vs Filing an LLC in Florida

Aside from the cost to register and maintain an LLC in each state, one of the other important factors to consider when registering an LLC in Texas vs Florida is the amount of time it takes to process the paperwork and the different ways you can submit your application. Read more about how long it takes to form an LLC in Texas.

Online

In Texas, if you use SOSDirect to process your application, it can take 10 to 12 business days to process your registration according the Secretary of State and if you use SOSUpload instead, it can take just a few extra days (13 to 15 days) to get everything prepared. We observe processing times of about 4 business days.

In Florida, if you register your business online through the Secretary of State it takes about 48 hours to receive your filing number and other information needed to do business immediately. Unless they find something wrong with your filing and send it back to be fixed, you can start conducting business within days instead of weeks.

Mail and Fax

If you want to submit your application by mail or fax, you have that option in the state of Texas so long as you’re willing to wait up to 3-4 months for it to be processed unless you’re willing to pay to have them expedited and returned in 12-14 business days instead.

In comparison, business filings by fax are not accepted in the state of Florida and you cannot expediate your filings, but it will take about 15 days to process a registration sent by mail.

So… if speed is of the essence and you need to process your LLC filing as soon as possible, you can get a Texas LLC registered quickly if you file via SOSDirect (like we do). However, the fastest option is to register online in Florida and have it filed in about 48 hours.

Where Are the LLC’s Owners Located?

As a general rule: If all of the owners of an LLC live in the same state, the LLC should be formed in that state.

One possible exception to this rule would be if the LLC is being formed for the purpose of investing in real estate. In that case, the location of the real estate property is the preferred state to help protect your interests, but let’s review the differences between how Texas and Florida define “transacting business” in their state.

When Should a Florida LLC Register in Texas

In Texas, any out-of-state LLC that “transacts business” in the state has to file an Application for Registration of Foreign LLC with the state office, pay a $750 filing fee, and follow the annual filing requirements for a Texas LLC.

While state law does not define the term “transacts business” specifically, it does identify certain activities that are not examples of “transacting business” which include the following:

  • Involvement in a lawsuit
  • Holding a management meeting
  • Keeping a bank account
  • Borrowing or loaning money
  • Collecting a debt
  • Engaging in a single business transaction that takes less than 30 days
  • Engaging in business transactions that routinely go across state lines

Generally speaking, if you engage in regular business activities in Texas you are required to register as a foreign LLC, especially if you maintain a physical presence at an office location.

If you are unsure, I would recommend speaking to a business lawyer to discuss your concerns.

When Should a Texas LLC Register in Florida

Just the same, if you want your Texas LLC to have the authority to transact business in the state of Florida you have to file an Application of Foreign LLC for Authorization to Transact Business in Florida to register as a foreign LLC, pay a $100 filing fee, and follow the annual filing requirements for a Florida LLC.

As a result, if you are transacting business in both states it’s probably going to be more cost effective for you to form your LLC in Texas and then file as a foreign agent in Florida rather than the opposite, but I would recommend contacting a business lawyer to discuss any concerns.

Texas vs Florida for Real Estate Investors

As mentioned above, one possible exception to the general rule that a business owner should form an LLC in the state where they live involves real estate investment.

If the purpose of an LLC is to invest in real estate, it might be better to form the LLC in the state where the property is located. This is where most of the business activities will occur, after all, although it might still be necessary to register as a foreign LLC in your home state.

Other Factors to Consider When Forming an LLC in Texas vs Florida

Aside from the above, there are a few more things to consider when registering an LLC in Texas vs Florida that you’ll want to know about before you choose which state is best for you and your business needs.

  • The state of Texas allows series LLC registration while the state of Florida does not.
  • Both states have right-to-work laws which give workers the freedom to choose whether or not they wish to join a labor union in their workplace.

Texas LLC vs Florida LLC: The Final Verdict

Depending on your situation and the circumstances of your business, registering an LLC in Texas vs Florida could have a big impact on your bottom line.

While you could save some money upfront by incorporating in Florida thanks to its lower filing fees and taxes, you’ll still have to register as a foreign LLC in your home state of Texas.

If you want to err on the side of caution, you should probably register your LLC in Texas if you live in Texas and register your LLC in Florida if you live in Florida.

If you’re using the LLC to invest in or hold real estate, you’ll likely want to form the LLC in the state wher ethe property is located.

You can get in contact with me to discuss your situation and I will offer my advice to help you choose which state is the best for you and your needs. Just send me a message or call the number at the top of the page to speak to me directly and I will gladly answer any of the questions you might have about registering your LLC in Texas vs Florida.