How Much Does It Cost to Set Up an S Corp in Texas?
Get a complete financial breakdown for a Texas S Corp, from the initial state formation costs to the ongoing expenses for maintaining compliance.
An S Corp is a federal tax designation, not a distinct business entity you can form from scratch. Business owners first create a state-level entity, like a Limited Liability Company (LLC) or a C Corporation, and then file an election with the Internal Revenue Service (IRS) to have that entity taxed under Subchapter S of the Internal Revenue Code. The total expense includes the initial state formation fee, the cost of mandatory services like a registered agent, and the procedural step of the federal tax election.
Texas State Formation Filing Fees
The foundational cost for establishing a business in Texas is the one-time filing fee paid to the Texas Secretary of State. The specific document and fee depend on whether you choose to form an LLC or a corporation. Both structures are eligible to make the S Corp election with the IRS.
To form a Texas LLC, you must file a Certificate of Formation, which carries a mandatory filing fee of $300. Similarly, creating a Texas for-profit corporation also requires filing a Certificate of Formation with an identical $300 fee.
Registered Agent Service Costs
Texas law requires every LLC and corporation to continuously maintain a registered agent within the state. The registered agent is a designated individual or company responsible for receiving official correspondence, legal notices, and tax documents on behalf of the business.
Business owners have a few options for meeting this requirement, each with different cost implications. You can hire a commercial registered agent service, and these professional services charge an annual fee ranging from $100 to $300.
Alternatively, a business owner or another individual can serve as the registered agent at no direct cost. To do so, the person must be a Texas resident with a physical street address in the state, not a P.O. Box, that is available during normal business hours. While this option saves money, it means the individual’s personal address becomes part of the public record and they must be consistently available to receive documents, a potential drawback for those who travel or do not maintain regular office hours.
Filing the Federal S Corp Election
Once your Texas LLC or corporation is officially formed, the next step is to request S Corp tax status from the IRS. This is accomplished by filing Form 2553, Election by a Small Business Corporation. There is no filing fee charged by the IRS to submit this form.
The form itself requires key information about the business, most of which is established during the state formation process. This includes the company’s legal name, address, Employer Identification Number (EIN), the date of incorporation, and the state of incorporation. Form 2553 must also include the name, address, and signature of each shareholder, signifying their consent to the S Corp election.
The completed form must be submitted to the IRS within a specific timeframe. For the election to take effect in the current tax year, the form must be filed no more than two months and 15 days after the beginning of that tax year.
The official Form 2553 can be downloaded directly from the IRS website. It can then be submitted by mail or fax to the appropriate IRS service center designated for Texas-based businesses.
Additional and Ongoing Business Costs
Beyond the direct state filing fees and the federal election process, new business owners should budget for other potential expenses. While not mandatory, many entrepreneurs choose to seek professional guidance during the setup phase. Consulting with a CPA or an attorney to ensure the entity is structured correctly and the S Corp election is appropriate can be a worthwhile investment, with fees varying based on the professional’s experience.
A primary ongoing cost to consider is the Texas Franchise Tax. All Texas LLCs and corporations, including those taxed as S Corps, are subject to this state-level tax. For 2025, entities with total annualized revenue at or below $2.47 million fall below the “no tax due” threshold and do not owe any franchise tax.
Although these businesses do not owe tax, most are still required to file an annual Public Information Report (PIR) or Ownership Information Report (OIR) with the Texas Comptroller. Failure to file these required reports can lead to penalties and jeopardize the company’s good standing with the state.