Texas vs New York for LLC
Quick Answer
For most small businesses, Texas is the better choice due to no state income tax, no annual fees for smaller LLCs, and no publication requirement. However, New York may be preferable if you’re based there or need access to its financial ecosystem, despite higher formation costs and the expensive LLC publication requirement.
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| Feature | Texas | New York |
|---|---|---|
| LLC Formation Fee | $300 | $200 |
| Annual Fee | $0 (below $2.47M revenue) | $9 (biennial) |
| Processing Time | 5-7 business days (online) | 7-10 business days (standard) |
| State Income Tax | None | 4-10.9% |
| Publication Required | No | Yes ($200-$2,000+) |
| Franchise Tax | Yes (above $2.47M threshold) | No |
| Sales Tax Base Rate | 6.25% | 4.0% |
| Registered Agent Required | Yes | Yes |
| Operating Agreement Required | No | Yes |
Data as of April 13, 2026
Formation Costs
Texas LLC Formation:
- State filing fee: $300
- Expedited processing: Available (2-3 days)
- Publication requirement: None
- Total minimum cost: $300
New York LLC Formation:
- State filing fee: $200
- Expedited processing: $25 (24 hours)
- Publication requirement: $200-$2,000+ (varies by county)
- Total minimum cost: $400-$2,200+
The key difference is New York’s publication requirement, which mandates that LLCs publish a notice of formation in designated newspapers for six consecutive weeks. This can cost anywhere from $200 in rural counties to over $2,000 in Manhattan, making New York significantly more expensive despite the lower base filing fee.
Ongoing Costs
Texas Annual Requirements:
- Annual fee: $0 for LLCs with revenue under $2.47 million
- Franchise Tax Report: Required but no fee unless revenue exceeds threshold
- Public Information Report: $0 (due every four years)
New York Annual Requirements:
- Biennial Statement: $9 (due every two years)
- No franchise tax for LLCs
- Department of Taxation and Finance filings as required
Texas clearly wins on ongoing costs for smaller businesses. A Texas LLC with under $2.47 million in annual revenue pays nothing in state fees, while New York charges $9 every two years regardless of revenue.
Tax Comparison
Texas Tax Environment:
- State income tax: None
- Franchise tax: 0.375% to 0.75% of margin (only applies above $2.47M revenue threshold)
- Sales tax base rate: 6.25% (local taxes may apply)
New York Tax Environment:
- State income tax: 4-10.9% (among the highest in the nation)
- No franchise tax for LLCs
- Sales tax base rate: 4.0% (local taxes bring total to 7-8.5% in most areas)
For pass-through entities like LLCs, the absence of state income tax in Texas represents massive savings. A business owner earning $100,000 annually could save $4,000-$10,900 per year in state income taxes by choosing Texas over New York.
Privacy Protections
Both Texas and New York require similar disclosure levels for LLC formation:
Texas Privacy Features:
- Member names not required in Certificate of Formation
- Registered agent information is public
- Annual franchise tax reports require member/manager information
New York Privacy Features:
- Member/manager names not required in Articles of Organization
- Registered agent information is public
- Biennial statements require basic company information only
Both states offer similar privacy protections, with neither requiring public disclosure of member names in formation documents. However, both require registered agent information to be publicly available.
Legal Protections
Texas Legal Framework:
- Strong charging order protection for multi-member LLCs
- Established business court system
- Business-friendly legal environment
- Robust asset protection laws
New York Legal Framework:
- Comprehensive charging order protection
- Sophisticated commercial court system
- Well-developed business law precedents
- Strong creditor protection laws
Both states provide solid legal protections for LLC members, with well-established court systems experienced in business matters. New York’s legal system may be more sophisticated due to its role as a financial center, but Texas offers equally strong protections with a more business-friendly reputation.
Which State Should You Choose?
Choose Texas if:
- You want to minimize taxes (no state income tax)
- You prefer lower ongoing costs
- You don’t need New York’s specific business advantages
- Your business can operate from anywhere
- You want to avoid the publication requirement
Choose New York if:
- Your business is physically located in New York
- You need access to New York’s financial and business networks
- You can afford the higher formation and ongoing costs
- You’re comfortable with higher state income tax rates
- Your clients/customers expect a New York presence
For most small to medium businesses, Texas offers superior cost advantages. However, location-dependent businesses or those requiring New York’s unique business ecosystem may find the extra costs worthwhile.
Related Guides
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FAQ
Which state is cheaper for LLC formation?
New York has a lower base filing fee ($200 vs $300), but the required publication costs make it significantly more expensive overall. Total formation costs range from $400-$2,200+ in New York versus $300 in Texas.
Do I have to pay annual fees in both states?
Texas charges no annual fees for LLCs with revenue under $2.47 million. New York charges $9 every two years regardless of revenue. For ongoing costs, Texas is clearly more affordable for smaller businesses.
Which state has better tax advantages for LLCs?
Texas has no state income tax, while New York’s rates range from 4-10.9%. For pass-through entities like LLCs, this represents substantial tax savings in Texas. However, Texas does impose a franchise tax on larger businesses (above $2.47M revenue).
Can I form an LLC in Texas if I live in New York?
Yes, you can form an LLC in any state regardless of where you live. However, you may need to register as a foreign LLC in New York if you conduct business there, which involves additional fees and requirements.
What is New York’s LLC publication requirement?
New York requires LLCs to publish a notice of formation in designated newspapers for six consecutive weeks. This typically costs $200-$2,000+ depending on the county, with Manhattan being the most expensive.
Which state processes LLC formations faster?
Both states offer similar processing times. Texas processes online filings in 5-7 business days, while New York takes 7-10 business days for standard processing. Both offer expedited options for additional fees.
Do both states require operating agreements?
New York requires LLCs to have operating agreements, while Texas does not. However, it’s advisable to have an operating agreement in both states for legal protection and clarity among members.
Which state is better for large businesses?
For businesses with revenue above $2.47 million, the choice becomes more complex. Texas imposes franchise taxes above this threshold, while New York does not have franchise taxes for LLCs. The decision should factor in state income tax savings versus franchise tax costs.
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Learn More →This article is for informational purposes only and does not constitute legal or tax advice. Consult with an attorney or accountant for guidance specific to your business situation. Data current as of April 13, 2026.