Florida is simpler; Texas is technically free for most small LLCs but asks for more paperwork. Both skip personal state income tax, which is why founders eye them. But for a pure non-resident online business with no US footprint, the honest verdict is that neither beats Wyoming or New Mexico — you’d be picking a bigger, busier state for no benefit.
If you’re deciding between just these two, it comes down to filing burden versus a small annual fee, and whether you actually touch the ground in either state.
The headline both states share: no personal income tax
Texas and Florida are two of the handful of US states with no personal state income tax. That’s the reason they show up in “best state for an LLC” lists. For a non-resident, it’s also mostly a non-event — a non-resident with no US-source income generally doesn’t owe state income tax anywhere, so “no income tax” isn’t the differentiator it looks like.
The real difference is the annual filing, so let’s look at exactly what each state makes you do.
Florida: one flat fee, done
Florida is the low-effort option. Each year you file an annual report by May 1 for $138.75, and that’s the whole obligation. Miss the deadline and a $400 late penalty hits — steep, so don’t sleep on May 1 — but the baseline is one form, one fee, predictable forever.
The cost of that simplicity is privacy: Florida’s annual report publicly lists your managers or managing members by name in the Sunbiz database. We dig into that trade in Delaware vs Florida.
Texas: free for most, but more paperwork
Texas has no annual report fee. That sounds like the winner until you read the fine print. Every Texas LLC has to file two things annually with the Comptroller: a franchise tax report and a Public Information Report (PIR).
Here’s the saving grace: Texas only charges franchise tax once your revenue clears the no-tax-due threshold (around $2.47 million for the 2024–2025 cycle). Below it, you owe $0 in franchise tax. As of recent years, businesses under the threshold no longer have to file the separate No Tax Due Report — but the Public Information Report is still required to keep the entity in good standing. So Texas is genuinely free in dollars for a small LLC, but it’s not free in effort: you’ve got a franchise tax account to maintain and a PIR to file, due May 15.
Founders pick Texas thinking it’s zero-maintenance because there’s no annual report fee. The franchise tax account and Public Information Report are still mandatory, and forgetting them puts your LLC out of good standing. Free in dollars, not free in attention.
The side-by-side
| Texas | Florida | |
|---|---|---|
| Filing fee | ~$300 | ~$125 |
| Annual report fee | $0 | $138.75 |
| Annual filing required | Franchise report + PIR | Annual report |
| Franchise / margin tax | Yes (most owe $0) | No (corp income tax only) |
| Personal state income tax | ||
| Owner names public | ||
| Filing simplicity | More paperwork | One flat form |
Texas wins the dollar line for a small LLC and loses the simplicity line. Florida loses on cost by ~$139 a year and wins on “one form and you’re done.” Both list your name publicly, so neither is a privacy play.
Note Texas’s higher formation fee too: the Certificate of Formation runs about $300, versus roughly $125 in Florida. So Florida is cheaper to start, and Texas is cheaper to maintain — they cross over depending on how long you keep the company open.
When a non-resident would pick either
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Pick Texas if you have a real Texas connection
A team in Texas, a warehouse, customers you’re serving on the ground, or plans to relocate there. The $0 franchise tax for a small business is genuinely attractive — you just accept the extra annual paperwork. Forming in Texas with no Texas activity buys you nothing.
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Pick Florida if you operate or live in Florida
Same logic. If the business physically touches Florida, forming there is natural, and the flat $138.75 report is easy to live with. Just know that operating from Florida can create sales-tax nexus — see sales-tax nexus for a foreign-owned LLC.
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Pick neither if you're a pure online non-resident
No US team, no US inventory, no US storefront? You’re paying big-state overhead for nothing. Wyoming and New Mexico are cheaper, more private, and simpler.
The honest take
For a non-resident running an online business with no US ground presence, both Texas and Florida are the wrong tool. They’re large, commercially active states whose rules are built for businesses that operate inside them. You’d inherit the filing burden (Texas) or the public name listing (Florida) without using any of the upside that makes those states attractive to companies actually based there.
The better default for that founder is a low-cost privacy state. New Mexico has no annual report at all — form it once and there’s no recurring state filing, which is about as low-maintenance as a US LLC gets. Wyoming charges a small annual fee and keeps your name off public records. We compare all three directly in Wyoming vs New Mexico vs Florida, and lay out the full running cost in how much a US LLC costs.
Between Texas and Florida specifically: choose Florida for the simplest possible maintenance, or Texas if you’ll stay under the franchise threshold and don’t mind the extra forms. But if you’re choosing freely as a non-resident, look one state over before you commit to either.
Form in the right state for an online business
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