Delaware vs Texas for LLC

Quick Answer

For most small businesses, Texas offers the better value with a higher upfront cost ($300) but no annual fees unless you exceed $2.47 million in revenue. Delaware is ideal for businesses seeking maximum legal protections and privacy, despite its lower formation fee ($90) but mandatory $300 annual tax regardless of revenue.

Side-by-Side Comparison

Feature	Delaware LLC	Texas LLC
Formation Fee	$90	$300
Annual Fee	$300 (mandatory)	$0 (unless revenue > $2.47M)
Processing Time	1-2 weeks standard, 24 hours expedited (+$50)	5-7 business days online, 2-3 days expedited
State Income Tax	None for out-of-state operations	None
Franchise Tax	$300 flat annual	Only above $2.47M revenue threshold
Registered Agent Required	Yes	Yes
Operating Agreement Required	No	No
Publication Required	No	No
Privacy Protection	Strong	Moderate

Data as of April 13, 2026

Formation Costs

Delaware LLC Formation: The Certificate of Formation filing fee is $90 as of April 2026, making it one of the most affordable states for initial LLC formation. Delaware offers expedited processing for an additional $50, reducing processing time from the standard 1-2 weeks to 24 hours.

Texas LLC Formation: Texas charges $300 for LLC formation through the Secretary of State, significantly higher than Delaware’s initial fee. However, Texas offers online filing with processing times of 5-7 business days, or expedited service completing formation in 2-3 days.

Both states require a registered agent, which typically costs $100-300 annually if you hire a service, though you can serve as your own registered agent if you have a physical address in the state.

Delaware Llc Cost Texas Llc Cost

Ongoing Costs

Delaware Annual Requirements: Delaware LLCs must pay a mandatory $300 Annual Tax every year by June 1st, regardless of revenue or business activity. This flat fee applies whether your LLC generated $0 or $10 million in revenue.

Texas Annual Requirements: Texas LLCs have no annual fee unless gross receipts exceed $2.47 million. Below this threshold, you simply file a no-fee Franchise Tax Report. Once you cross the $2.47 million revenue threshold, franchise tax calculations become more complex and potentially expensive.

For small businesses expecting revenue under $2.47 million annually, Texas offers significant long-term savings. A Delaware LLC costs $300 annually while a Texas LLC costs $0 in most cases.

Tax Comparison

State Income Tax: Neither Delaware nor Texas imposes state income tax on LLCs, as both are pass-through entities where profits and losses flow to members’ personal tax returns.

Franchise Tax Structure:

• Delaware: Flat $300 annual tax for all LLCs
• Texas: No franchise tax below $2.47 million gross receipts threshold

Sales Tax Considerations:

• Delaware: No state sales tax (0%)
• Texas: 6.25% base sales tax rate, with local taxes potentially adding more

Personal Income Tax (for members):

• Delaware: 2.2-6.6% graduated income tax rates
• Texas: No personal income tax

Privacy Protections

Delaware Privacy Advantages: Delaware offers superior privacy protections, particularly for corporations. The state does not require disclosure of LLC members’ names in public filings, and Delaware’s Court of Chancery provides predictable business law precedents.

Texas Privacy Protections: Texas provides standard privacy protections for LLC members, not requiring member names in formation documents. However, Texas lacks Delaware’s specialized business court system and extensive case law protecting business privacy.

Both states allow anonymous LLC ownership through properly structured registered agent services and operating agreements, though Delaware’s legal framework provides more established precedents for privacy protection.

Legal Protections

Delaware Legal Framework: Delaware’s Court of Chancery specializes exclusively in business disputes, providing faster resolution and judges with deep business law expertise. Delaware law offers flexible LLC operating agreement provisions and strong asset protection through charging order protections.

Texas Legal Protections: Texas provides standard LLC asset protection through charging order limitations, preventing creditors from seizing LLC assets to satisfy members’ personal debts. Texas courts handle business disputes through the general court system rather than specialized business courts.

Delaware’s legal advantages become most valuable for larger businesses, complex ownership structures, or companies planning eventual sale or investment rounds.

Which State Should You Choose?

Choose Delaware if you:

• Plan to raise investment capital or sell the business
• Need maximum legal protections and privacy
• Operate in multiple states already
• Value predictable business law precedents
• Don’t mind paying $300 annually regardless of revenue

Choose Texas if you:

• Expect revenue under $2.47 million annually
• Want to minimize ongoing costs
• Operate primarily within Texas
• Prefer straightforward tax compliance
• Can afford the higher upfront formation cost

For most small businesses and startups, Texas offers better value due to zero annual fees below the revenue threshold. Delaware makes sense for businesses prioritizing legal protections or planning significant growth.

Frequently Asked Questions

Can I form an LLC in Delaware or Texas if I live in another state?

Yes, you can form an LLC in either Delaware or Texas regardless of where you live. However, you’ll need a registered agent with a physical address in your chosen state. If you conduct business in your home state, you may also need to register as a foreign LLC there, potentially creating additional costs and compliance requirements.

What happens if my Texas LLC exceeds the $2.47 million revenue threshold?

Once your Texas LLC’s gross receipts exceed $2.47 million, you’ll owe franchise tax calculated on either total revenue or apportioned capital, whichever results in a lower tax. The tax rate ranges from 0.375% to 0.75% depending on your business type and revenue calculation method.

Do Delaware LLCs really offer better asset protection?

Delaware’s asset protection advantages come primarily from its specialized Court of Chancery and extensive business law precedents rather than fundamentally different LLC statutes. Both states provide charging order protection, but Delaware’s court system offers more predictable outcomes in complex disputes.

Can I change my LLC’s state of formation later?

Yes, but the process is complex and expensive. You would typically need to dissolve the original LLC and form a new one in your preferred state, potentially triggering tax consequences and requiring new contracts, bank accounts, and licenses. It’s better to choose the right state initially.

Which state processes LLC formations faster?

Texas generally processes online LLC formations faster (5-7 business days standard) compared to Delaware’s 1-2 weeks. However, Delaware offers 24-hour expedited processing for $50, while Texas expedited service takes 2-3 days.

Do I need an operating agreement in Delaware or Texas?

Neither state legally requires an operating agreement, but both strongly recommend one. An operating agreement protects your limited liability status, defines member relationships, and provides operational guidelines. Delaware law offers more flexibility in operating agreement provisions.

What are the publication requirements for LLCs in these states?

Neither Delaware nor Texas requires LLC publication in newspapers, unlike states such as New York. This saves hundreds of dollars in formation costs and eliminates ongoing publication requirements.

How do registered agent requirements differ between Delaware and Texas?

Both states require registered agents with physical addresses (not P.O. boxes) within the state. Delaware registered agent services typically cost $100-200 annually, while Texas services range from $150-300 annually. You can serve as your own registered agent if you maintain a physical presence in the state.

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This article provides general information for educational purposes only. Business formation requirements and tax implications vary based on individual circumstances. Consult with an attorney or accountant for advice specific to your situation.