What does it costto run an entity in Texas.
Texas charges a formation fee and requires an annual franchise tax filing, but Teamed's EOR removes both by employing your team under our own entity.
At a glance
The running costs in one paragraph
A Texas entity carries a one-time formation fee, an annual franchise tax filing calculated on margin, and the ongoing administrative load of keeping a registered agent, payroll tax accounts, and corporate records current. None of these costs disappear once you form the entity, they recur every year for as long as the entity exists.
- Minimum franchise tax
- $0
- Franchise tax basis
- margin
- Formation / registration fee
- $300
Formation
Setting up costs money before you hire anyone
Registering a company with the Texas Secretary of State carries a formation fee. That fee buys you a legal entity, not a working payroll, tax registrations, or a bank account, all of which take separate time and separate steps to line up.
Most founders underestimate the sequencing problem more than the cost itself. You need the entity formed before you can register for state payroll taxes, and you need those registrations before you can legally run a first payroll, which pushes real hiring dates out by weeks.
Franchise tax
Texas taxes margin, not simple revenue
Texas does not have a state income tax, but it does levy a franchise tax on business margin. The minimum franchise tax due is set at $0, which means many smaller or newer entities owe nothing, but the filing obligation itself does not disappear just because the tax owed is zero.
You still have to calculate margin, file the return, and keep the paperwork straight every year the entity is open. That work falls on your finance team or an outside accountant, and it does not stop just because your Texas headcount is small.
The ongoing tail
The bill doesn't end at formation
Beyond the formation fee and the annual franchise tax filing, a Texas entity needs a registered agent, corporate governance upkeep, and coordination between whoever handles state filings and whoever runs payroll. Each piece is manageable alone, but together they add real administrative weight for a small team.
This is the cost most companies miss when they compare 'set up an entity' against 'use an EOR'. The entity itself is cheap to form relative to what it costs to keep in good standing year after year.
Before you commit
Sometimes an employer of record is the better fit
An employer of record is sometimes the better answer, not a lesser one, especially for a small or still-changing headcount in Texas or when you're testing the market before committing. Talk to a member of the team about your specific situation, or run the crossover calculator to see how the maths shifts as your team grows.
Contractors, employer of record and your own entity all run on one platform at Teamed, so moving between them later does not mean changing provider or re-onboarding anybody. Real HR and legal experts handle the work rather than a ticket queue.
Talk to a member of the team and we will tell you plainly which one suits where you are. If you would rather look at the numbers yourself first, the crossover calculator models it on local salaries and employer costs rather than on a headcount rule of thumb.
Who carries it
Your own entity, when it's time. We set it up, migrate you in, and hand it back intact.
Global Entity and Employment Operations, which we call GEMO, is how Teamed forms your company, registers it for tax and payroll, runs it month to month and keeps its filings current, across 100+ countries. You stay the employer. We do the work behind it.
In Texas, that means we handle the formation fee, the franchise tax filing, the registered agent, and every other running cost while your team is small. We transfer a fully compliant entity to you the moment it makes sense financially, the same way across 100+ countries under our Global Entity and Employment Operations model.
They set up our EU entity and moved hires across without missing a payroll.
Questions
Common questions about running costs in Texas
Do I have to pay Texas franchise tax if my company is small?
You still have to file, but the minimum franchise tax due in Texas is set at $0, so many smaller entities owe nothing. The filing obligation itself does not go away just because the tax bill does.
What does it cost to register a company in Texas?
Texas charges a formation fee to register with the Secretary of State. That fee covers the entity itself, not payroll setup, tax registrations, or ongoing compliance work, which come as separate costs afterward.
How is the Texas franchise tax calculated?
It's based on margin rather than simple revenue or profit, which makes the calculation more involved than a flat percentage tax. This is one reason many companies use an accountant for the annual filing even when no tax is ultimately due.
Does an EOR avoid Texas entity running costs entirely?
Yes, because Teamed employs your team under our own Texas entity, you avoid the formation fee, the annual franchise tax filing, and the registered agent upkeep. You only take those costs on once you set up your own entity, typically when the crossover calculator shows it makes financial sense.
When does it make sense to switch from EOR to our own Texas entity?
It depends on your salaries, headcount, and how long you plan to stay in Texas, not on a fixed number of employees. Run the crossover calculator or talk to a member of the team to see where the numbers land for your specific situation.
Where these figures come from
Sources
Figures on this page come from the Texas Comptroller and the Texas Secretary of State.
Looking for a job in Entity Running Costs And Filings yourself? Teamed does not hire people directly. Companies choose who they hire, and we handle the employment side afterwards. Here is why we cannot help with your search.