Choosing between a Wyoming LLC and a Texas LLC comes down to where your business actually operates. If you have employees, an office, customers, or regular sales activity in Texas, form in Texas. If you’re setting up a holding company, an investment vehicle, or a location-independent business with no physical presence in any particular state, Wyoming almost always costs less and keeps your name off the public record. The temptation to form in Wyoming while running a Texas business usually backfires, because Texas will require you to register and pay taxes there anyway.
Why Operating in Texas Changes Everything
This is the trap most people fall into. A Texas-based owner reads about Wyoming’s privacy and low fees, forms there, and assumes they’ve escaped Texas taxes and disclosure. They haven’t.
Texas requires any out-of-state LLC doing business in the state to register as a foreign LLC. That registration costs $750.1Texas Secretary of State. Foreign or Out-of-State Entities On top of that, every entity doing business in Texas is subject to the Texas franchise tax regardless of where it was formed.2Texas Comptroller of Public Accounts. Franchise Tax Overview And because the franchise tax filing includes a Public Information Report naming every manager (and every member of a member-managed LLC), the privacy benefit disappears too.3Texas Comptroller of Public Accounts. Texas Franchise Tax Public Information Report and Ownership Information Report
So a Texas business owner who forms in Wyoming ends up paying Wyoming’s $100 formation fee, Wyoming’s $60 annual report, $750 to Texas for foreign registration, and still files Texas franchise tax reports with full ownership disclosure. That’s more expensive and more work than simply forming in Texas from the start. The reverse applies in the other direction too: a Wyoming-based business operating in Texas has to register as a foreign LLC in Texas.
Wyoming formation makes financial sense when the LLC doesn’t physically transact business in another state. Holding companies, passive investment entities, and online businesses with no fixed location fit that profile. A Texas plumbing company does not.
Formation and Annual Costs
Wyoming charges $100 to file Articles of Organization.4Wyoming Secretary of State. Limited Liability Company Articles of Organization Texas charges $300 for the equivalent filing.5Texas Secretary of State. Business Filings and Trademarks Fee Schedule A $200 gap at formation.
The ongoing cost difference matters more. Wyoming requires an annual report on the first day of the month the LLC was originally formed. The minimum fee is $60, which applies to LLCs with $300,000 or less in Wyoming-based assets. Above that threshold, the fee rises to $0.0002 per dollar of Wyoming assets, so an LLC holding $1.2 million in state assets owes about $240.6Wyoming Secretary of State. Business Entities – Annual Reports For LLCs that hold no physical assets in Wyoming, which describes most out-of-state holding companies, the annual cost stays at $60.
Texas doesn’t charge a separate annual report fee. The reporting obligation is bundled into the franchise tax system. Every Texas LLC files a franchise tax report by May 15 each year even if no tax is owed, and the filing itself is free below the no-tax-due threshold. Late filers face a $50 penalty and eventual forfeiture of the LLC’s legal status.7Texas Comptroller of Public Accounts. Franchise Tax
Both states also require a registered agent with a physical street address in the state. P.O. boxes and virtual mailboxes don’t qualify.8Wyoming Secretary of State. Registered Agents and Offices Commercial agent services run $100 to $300 per year, a routine cost if you’re forming in a state where you don’t live.
State Taxes
Neither state has a personal or corporate income tax, which is the headline both are known for. The difference sits in the franchise tax.
Wyoming imposes no corporate income tax, no personal income tax, and no franchise tax.9Wyoming Business Council. Business Resources The annual report fee is the only recurring state-level cost. For holding companies and investment LLCs that don’t operate elsewhere, the tax footprint is as light as it gets in the United States.
Texas has no income tax, but every entity formed or doing business in Texas is subject to franchise tax. The no-tax-due threshold is $2.47 million in total revenue for reports due in 2025, rising to $2.65 million for reports due in 2026 and 2027.7Texas Comptroller of Public Accounts. Franchise Tax Most small LLCs fall below this line and owe nothing. They still have to file by May 15 or face penalties. Entities above the threshold pay tax calculated on their margin, which is revenue minus certain allowed deductions.
Both states collect sales tax on retail transactions and unemployment insurance tax on employers with payroll. Texas unemployment tax rates for 2026 range from 0.32% to 6.32% on the first $9,000 in wages per employee.10Texas Workforce Commission. Your 2026 Tax Rates These employer-level taxes apply where your employees actually work, not where the LLC is formed.
Privacy and Ownership Disclosure
Wyoming is one of the strongest states in the country for ownership privacy. The Articles of Organization require only the LLC’s name, its registered agent, a mailing address, and the organizer’s signature. There is no field for member or manager names.4Wyoming Secretary of State. Limited Liability Company Articles of Organization The annual report doesn’t ask for owners or managers either. Absent a court order to produce the operating agreement, Wyoming LLC ownership stays off the public record entirely.
Texas takes the opposite approach. Every Texas LLC files a Public Information Report alongside its annual franchise tax filing. The PIR requires names, titles, and addresses of all managers and, for member-managed LLCs, all members.3Texas Comptroller of Public Accounts. Texas Franchise Tax Public Information Report and Ownership Information Report That information is forwarded to the Secretary of State and made searchable through the state’s online Taxable Entity Search.11Texas Comptroller of Public Accounts. Public Information and Owner Information Reports Anyone can look up who owns a Texas LLC.
On the federal side, FinCEN eliminated Beneficial Ownership Information reporting for all U.S.-created entities under the Corporate Transparency Act as of March 2025. Only foreign-formed companies registered to do business in a U.S. state still file BOI reports.12FinCEN. Beneficial Ownership Information Reporting Neither a Wyoming nor a Texas LLC currently has a federal disclosure obligation, so the state-level difference is what matters.
Asset Protection: Charging Orders
If someone sues you personally, not your LLC, the question is whether they can reach the business to collect. Both states limit a judgment creditor to a charging order, which only entitles them to receive distributions you would have otherwise gotten from the LLC. The creditor cannot force distributions, seize company property, vote, or participate in management.
Wyoming’s statute goes further. It explicitly makes the charging order the exclusive remedy even for single-member LLCs, bars foreclosure on the membership interest, and prohibits courts from ordering other remedies like judicial directions or forced liquidation.13Justia Law. Wyoming Code 17-29-503 – Charging Order That matters because in many states single-member LLCs receive weaker protection on the theory that there are no other members whose interests need shielding.
Texas also designates the charging order as the exclusive remedy, with no ability to force a sale or interfere with management, and the exclusive-remedy language now covers single-member LLCs.14State of Texas. Texas Code BUS ORG 101-112 – Members Membership Interest Subject to Charging Order In practice both states offer strong protection. Wyoming has a longer track record of court decisions interpreting its statute, which asset protection planners tend to value for predictability.
Series LLCs for Real Estate Investors
Both states authorize series LLCs, which let a single parent LLC create multiple internal series, each with its own assets, members, and liabilities. The appeal is efficiency: instead of forming five separate LLCs to hold five rental properties, you form one series LLC with five series, each theoretically shielded from the liabilities of the others.
Wyoming authorizes series through the operating agreement. The agreement can establish one or more designated series of members, managers, transferable interests, or assets, and the debts of one series are enforceable only against that series.15Justia Law. Wyoming Code 17-29-211 – Series of Members, Managers, Transferable Interests or Assets No separate state filing is needed to create a series.
Texas requires a certificate of registered series filed with the Secretary of State, which gives each series its own public record and clearer legal identity.16State of Texas. Texas Business Organizations Code 101-623 – Filing of Certificate of Registered Series More paperwork, but potentially stronger liability separation because the state itself documents each series. The choice usually comes down to whether you want Wyoming’s lighter administrative burden or Texas’s more documented structure.
Which State Wins for Your Situation
Form in Texas if your business physically operates there. A Wyoming LLC doing business in Texas still owes Texas franchise tax, still files the Public Information Report, and pays an extra $750 for foreign registration on top of Wyoming’s fees. The privacy pitch doesn’t survive the Texas filing requirements, and you end up managing compliance in two states instead of one.
Form in Wyoming if you’re setting up a holding company, an investment vehicle, a passive real estate structure, or a business that operates online without a physical nexus in any particular state. The $60 annual report, zero state taxes, complete ownership privacy, and strong single-member charging order protection are hard to beat for that profile. Real estate investors holding properties across multiple states often use a Wyoming parent LLC with subsidiary LLCs in each state where a property sits.
For someone with genuine flexibility about where to establish the entity, Wyoming’s lower costs and stronger privacy make it the default. Texas wins on convenience for owners already operating there who don’t want to run compliance in two states at once.