Fees
Texas LLC formation costs
Texas does not require workers' comp for most private employers, making it one of two non-mandatory states in the country. However, government contracts, construction projects, and enterprise clients frequently require coverage as a contract condition. Texas rates (for LLCs that do purchase): clerical ~$0.25–$0.45 per $100 payroll, restaurant $3–$6, construction $8–$18. Texas is a competitive market — multiple private carriers write coverage.
| Fee | Amount | Notes |
|---|---|---|
| NEXT Insurance — Texas workers' comp for small LLCs | Quote-based; payroll × NCCI class-code rate × experience mod | Affiliate CTA: NEXT offers online workers' comp quotes for Texas LLCs with same-day COI. Best for small LLCs in retail, cleaning, food service, consulting, and light service industries. Texas has no state minimum rate — NEXT competes on schedule credits and digital service. |
| Pie Insurance — Texas workers' comp for small businesses | Quote-based; pay-as-you-go billing option available | Affiliate CTA: Pie specializes in small-business workers' comp and writes in Texas. Pay-as-you-go billing (tied to actual payroll cycles) reduces the upfront audit risk for Texas LLCs with variable headcount. Good fit for construction-adjacent LLCs and service businesses. |
| The Hartford — Texas workers' comp for multi-line accounts | Quote-based; payroll × rate × experience mod | Affiliate CTA: The Hartford writes Texas workers' comp alongside GL, BOP, and commercial auto. Best for established Texas LLCs wanting a single-carrier solution. Hartford has strong claims management capabilities for Texas's DWC dispute resolution process. |
| Employers Holdings — Texas workers' comp for W-2-heavy LLCs | Quote-based; restaurant, retail, hospitality focus | Affiliate CTA: Employers is licensed in Texas and focuses on small businesses with significant W-2 payroll. Good alternative for food service, hospitality, and light industrial LLCs that may not get competitive quotes from digital-first carriers. |
| Hiscox — supplemental coverage for Texas LLCs | Quote-based; GL/BOP/professional liability lines | Affiliate CTA: Hiscox does not write Texas workers' comp directly but is a strong source for general liability, E&O, and BOP. For Texas nonsubscribers who want GL coverage alongside their ERISA occupational benefit plan, Hiscox is worth a quote. |
| Clerical staff (NCCI code 8810) | $0.25 – $0.45 per $100 of payroll | Texas voluntary market base rate for standard office/clerical workers. Texas rates for clerical are competitive with the national average. |
| Restaurant / food service (NCCI codes 9079, 9082) | $3.00 – $6.00 per $100 of payroll | Slip-and-fall and kitchen injury exposures. Texas restaurant rates are moderate compared to California and New York. |
| Landscaping (NCCI code 0042) | $6.00 – $12.00 per $100 of payroll | Equipment, heat exposure, and physical labor risks. Texas landscape and lawn-care LLCs frequently purchase coverage to qualify for commercial property management contracts. |
| Carpentry / general construction (NCCI codes 5403, 5645) | $8.00 – $18.00 per $100 of payroll | Construction LLCs in Texas often have no choice — public contracts require coverage and most GCs require subcontractor certificates. Construction rates vary widely by specialty; roofing is typically highest. |
Requirements
What you need to know before filing
- Texas is one of only two states (with North Dakota having a monopolistic fund) where private employers can choose whether to carry workers' compensation insurance. Texas Labor Code §406.002 explicitly provides that private employers are not required to obtain workers' comp coverage unless they are government contractors or subject to specific contract conditions.
- Texas employers who do not carry workers' comp are called 'nonsubscribers.' Nonsubscribers lose the exclusive-remedy protection that workers' comp provides and can be sued by injured employees in civil court for actual damages — including pain and suffering — without the defense that the employee was contributorily negligent.
- Texas Labor Code §406.004 requires nonsubscribers to notify employees in writing of their nonsubscriber status and to file Form DWC-5 with the Texas Department of Insurance, Division of Workers' Compensation each year. Failure to notify employees or file the annual notice is a regulatory violation.
- Government contractors in Texas are often required by state law or contract terms to carry workers' comp. Texas Labor Code §406.096 requires contractors and subcontractors on certain public projects to provide workers' comp. Many private enterprise clients, staffing agreements, commercial leases, and construction GCs require coverage as a contract condition regardless of state law.
- Texas nonsubscribers frequently implement ERISA-governed occupational benefit plans as an alternative to traditional workers' comp. These plans (sometimes called 'non-subscriber plans' or 'wrap plans') can provide injury benefits while preserving the employer's ability to include arbitration clauses, caps on benefits, and other terms not permitted under traditional workers' comp. However, ERISA plans are complex and require careful plan documentation and administration.
- Texas employers with workers' comp through the private market receive the exclusive-remedy protection of Texas Labor Code §408.001, which bars most employee tort suits for covered injuries.
- LLC members and officers in Texas who perform work for the LLC are treated as employees for workers' comp purposes unless excluded by the policy endorsement. Texas allows officer and working-member exclusions via standard endorsement — confirm the exclusion is documented on the policy declarations.
- Texas premium rates in the voluntary market are generally lower than California, New York, and Florida for comparable industries. However, rates vary significantly by carrier, class code, and claims history. Texas uses the NCCI experience modification system.
- Texas workers' comp disputes are handled by the Texas Department of Insurance, Division of Workers' Compensation (DWC). The dispute resolution process — including benefit review conferences, contested case hearings, and appeals — is distinct from Texas civil courts and applies only to subscribing employers.
Documents
What you'll need to file
- LLC legal name, EIN, Texas Comptroller taxpayer ID, and principal business address
- Decision memo — document whether the LLC will subscribe (purchase workers' comp) or operate as a nonsubscriber
- If nonsubscriber: completed DWC Form 5 (annual filing with TX DWC) and written employee notice materials
- If subscriber: payroll by NCCI class code, employee headcount, and officer/member exclusion elections
- List of subcontractors with their workers' comp certificates or exemption filings
- Prior workers' comp policy declarations and 3-year NCCI loss runs if replacing coverage
- Contract requirements from government clients, GCs, and enterprise customers that specify workers' comp obligations
- If considering an ERISA nonsubscriber plan: plan document, SPD (Summary Plan Description), and plan administrator designation
Registered agent
Who receives legal mail for your LLC
Required in every state.
- Required?
- No
- Who can serve
- N/A — workers' compensation is an insurance procurement decision, not a state formation filing. A registered agent is required for the LLC itself (Texas Business Organizations Code §5.201) but has no role in workers' comp. Nonsubscriber DWC Form 5 is filed directly with the Texas DWC, not through a registered agent.
- Can I serve myself?
- Yes
- Commercial RA cost
- ~$0/yr
Workers' comp applications and nonsubscriber filings (Form DWC-5) are processed by the Texas Department of Insurance. Policy underwriting data (payroll, class codes, loss history) is shared between the carrier and NCCI for experience rating. Nonsubscriber status becomes part of the public DWC database searchable by employees.
Renewing or switching? Compare standalone registered agent services — Northwest, Harbor Compliance, Registered Agents Inc., InCorp, and more.
Process
How to form a LLC in Texas
Sequential — each step gates the next.
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Decide: subscriber or nonsubscriber Texas law gives private employers a genuine choice. Analyze your specific situation: Do you have government contracts? Do your GCs, clients, or commercial leases require workers' comp? Do you have employees in physically hazardous roles? If yes to any of these, the contract or commercial realities likely require coverage regardless of state law. If your LLC is office-based with low injury risk and no government or enterprise clients, the nonsubscriber analysis is more nuanced. Consult an employment attorney and insurance broker before deciding — the tort liability exposure from the nonsubscriber status can dwarf premium costs after a serious injury.
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If nonsubscriber: file DWC Form 5 and notify employees Texas Labor Code §406.004 requires nonsubscribers to file Form DWC-5 with the Texas Department of Insurance Division of Workers' Compensation annually (within 10 days of the start of each calendar year or within 10 days of becoming a nonsubscriber). Provide written notice to each employee of the nonsubscriber status — post it in the workplace and distribute individually. Failure to file or notify is a separate regulatory violation with penalties. Keep evidence of employee notification.
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If subscriber: quote from multiple carriers and bind coverage Texas is a competitive market — get quotes from at least 3 carriers (NEXT, Pie, The Hartford, Employers, or a local broker) before binding. Texas has no assigned-risk plan equivalent to CAARP; the Texas Mutual Insurance Company is the largest workers' comp carrier and functions as a market stabilizer. Verify that the policy includes all Texas locations and that any officer or LLC member exclusion elections are documented on the policy.
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Address subcontractor certificates Whether you are a subscriber or nonsubscriber, if you hire subcontractors who have their own employees, require those subcontractors to carry their own workers' comp. Under standard Texas carrier audit rules, payments to uninsured subcontractors may be added to your payroll for premium calculation. On Texas public projects, subcontractors are frequently required to carry coverage under Texas Labor Code §406.096 regardless of the prime contractor's status.
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Align coverage with your contracts before signing Before signing commercial leases, enterprise client agreements, staffing contracts, or government bids, review the workers' comp insurance requirements section. Texas contracts often require coverage even when state law does not. Some contracts require specific liability limits ($500K or $1M per occurrence) and waiver-of-subrogation endorsements. Binding a policy after you sign a contract that required pre-existing coverage can create a coverage gap retroactive to contract date.
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Prepare for annual premium audit Texas workers' comp policies — like all NCCI-state policies — are audited annually after the policy term. Reconcile actual payroll, class codes, officer/member exclusions, and subcontractor certificates. If your payroll grew or you added employees during the policy period, budget for additional audit premium. Texas Mutual and most private carriers conduct audits by mail or phone for small accounts.
Annual obligations
What your LLC owes every year
Year-2+ costs most formation guides omit.
| Obligation | Due date | Fee | Consequence if missed |
|---|
Provenance
Statute basis & official sources
Last verified 2026-05-08.
Texas Labor Code §406.002 provides that private employers are not required to obtain workers' comp unless specified by law or contract. §406.004 requires annual nonsubscriber notice filing (DWC Form 5) and employee notification. §406.096 requires coverage on certain public works projects. §408.001 grants subscribing employers the exclusive-remedy defense against employee tort suits. §406.033 eliminates three common-law defenses (contributory negligence, fellow servant rule, assumption of risk) for nonsubscribing employers. Texas Insurance Code §2053 governs workers' comp insurer licensing. NCCI governs class code rates and experience modification in Texas.
Direct filing portal: https://www.tdi.texas.gov/wc/employer/coverage.html
If you skip the LLC
- Loss of three common-law defenses — nonsubscribers cannot use contributory negligence, fellow servant, or assumption of risk as defenses in employee injury lawsuits; employees can recover full tort damages
- Civil tort liability — injured employees can sue nonsubscribers for actual damages including pain and suffering, lost wages, medical costs, and potentially punitive damages if employer conduct was grossly negligent
- Contract breach — government contracts, GC agreements, enterprise client MSAs, and commercial leases that require workers' comp will treat non-compliance as a breach; the LLC can be terminated from the project and held liable for consequential damages
- Regulatory penalty — failure to file Form DWC-5 as a nonsubscriber or failure to notify employees is a violation of Texas Labor Code §406.004; penalties apply per day of non-compliance
- Reputational barrier — enterprise clients and staffing agencies often run insurance certificate verification; missing workers' comp COI blocks contract approval even when state law does not require coverage
- Personal liability exposure for members — nonsubscriber tort suits may pierce the LLC liability shield if the member was personally involved in a safety decision that led to the injury
Formation context
Who should form in Texas?
- Recommended for
- Texas LLCs with any W-2 employees who need to evaluate subscriber vs. nonsubscriber status before onboarding staff; Texas construction LLCs where GC requirements or §406.096 public-project rules mandate coverage regardless of the employer's preference; Texas LLC owners considering a nonsubscriber occupational benefit plan as an alternative to traditional workers' comp; Texas LLCs entering government contracts, enterprise MSAs, or commercial leases with workers' comp certificate requirements
- Tax treatment (default)
- Workers' comp premiums (if purchased) are deductible as ordinary business insurance expenses. ERISA nonsubscriber plan costs — including plan document fees, administration, and benefit payments — are also generally deductible. The DWC-5 filing fee (currently $0) has no tax consequence. Consult a CPA for treatment of specific claim payments and reserves.
A foreign LLC with Texas employees must address Texas workers' comp. If the foreign LLC's home state is a subscriber state (e.g., California), the home-state policy may not cover Texas employees — confirm extraterritorial coverage or purchase a separate Texas policy. The nonsubscriber election is specific to Texas; a California LLC cannot elect Texas nonsubscriber status via its California policy.
No publication requirement in Texas — unlike New York or Nebraska, you do not need to publish notice in a newspaper after filing.
FAQ
Common Texas LLC formation questions
Is workers' comp required for Texas LLCs?
Not for most private employers. Texas Labor Code §406.002 makes workers' comp optional for private-sector employers. However, 'optional' does not mean 'without consequences.' Nonsubscribers lose tort immunity and can be sued for full damages. Government contracts, construction GC agreements, and enterprise client contracts frequently require coverage regardless of state law. Evaluate your specific contracts and industry before deciding.
What is a Texas nonsubscriber?
A nonsubscriber is a Texas employer that has chosen not to purchase workers' compensation insurance. Nonsubscribers must file annual notice with the Texas DWC (Form DWC-5) and notify employees of their status. Nonsubscribers lose three common-law defenses against employee injury lawsuits: they cannot argue the employee was contributorily negligent, that a fellow employee caused the injury, or that the employee assumed the risk of the job.
What is a Texas nonsubscriber occupational benefit plan?
Some Texas employers implement an ERISA-governed occupational benefit plan as an alternative to traditional workers' comp. These plans can provide medical and wage-loss benefits for job injuries while including arbitration clauses, benefit caps, and offset provisions not allowed under Texas workers' comp law. They are governed by federal ERISA law rather than Texas DWC rules. ERISA plans require careful plan documentation and administration — they are not a simple substitute for insurance. Consult an ERISA attorney before implementing one.
Do Texas LLC owners have to be covered by workers' comp?
Not automatically. LLC members and working officers can be excluded from the workers' comp policy via standard endorsement. The exclusion must be documented on the policy declarations page. On a Texas public project where coverage is required under §406.096, even excluded owners working on the project site may need to be added back to the policy to comply with the contract.
Does Texas have a state workers' comp fund?
Texas Mutual Insurance Company is the largest workers' comp carrier in Texas and plays a market-stabilizing role similar to a state fund, but it is a mutual insurance company, not a state agency. There is no Texas assigned-risk plan equivalent to the CAARP in California or NYSIF in New York. Texas Mutual is available to most Texas employers and writes coverage through brokers and directly.
When does Texas law require workers' comp even for private employers?
Texas Labor Code §406.096 requires certain contractors and subcontractors working on public projects to carry workers' comp. Additionally, any contract with a Texas state agency, county, municipality, or school district typically requires coverage as a contractual condition. Federal contracts performed in Texas also typically require workers' comp. Check every contract you sign — the contractual obligation often exists even where state law does not mandate coverage.
How do Texas workers' comp rates compare to other states?
Texas voluntary market rates are generally lower than California, New York, and New Jersey for comparable industries, particularly in construction and restaurant. The competitive market keeps rates in check — no state monopoly sets a single rate. Your actual premium depends on payroll, NCCI class code, experience modification (EMR), and carrier schedule credits. Get multiple quotes before binding.
Not sure yet?
Should I form an LLC?
Still deciding between an LLC, sole proprietorship, S-Corp, or C-Corp? Our entity-type comparison breaks down formation cost, tax treatment, liability shield, and compliance complexity for all four structures side by side.
LLC vs S-Corp vs Sole Prop vs C-Corp — compare all four →Reduce your tax bill
Should you elect S-Corp status for your Texas LLC?
Once your LLC clears ~$80K in annual net profit, an S-Corp election (IRS Form 2553) typically saves $5,000–$15,000/year in self-employment taxes by splitting owner income into a W-2 salary + tax-free distributions. The election is free — Form 2553 has no IRS filing fee. The key decision factors: your net income level, a defensible reasonable-compensation salary, and the 75-day Form 2553 filing window after LLC formation.
S-Corp election guide — $80K breakeven, Form 2553 deadline & reasonable salary →Is a DBA enough?
DBA vs LLC — do you actually need a full LLC?
Already operating as a sole proprietor, or wondering whether a cheap county DBA filing ($10–$100) is enough instead of forming an LLC? A DBA lets you operate under a trade name — but provides zero liability protection. Our DBA vs LLC comparison breaks down exactly when a DBA is sufficient and when you need a state LLC filing.
DBA vs LLC — cost, liability shield & when to upgrade →After you file
Next steps after forming your LLC
Your Articles of Organization are filed — now make your LLC operational. Four actions every new LLC owner needs to take:
Legal resources
Online legal services for LLC owners
Formation gets your LLC into existence; contracts, trademark protection, operating agreement review, and vendor-document review keep it usable. Compare subscription and per-document legal platforms before you rely on a template or pay a local attorney retainer.
LLC legal services comparison — contracts, trademarks, OA review & attorney access →§ A Building permits in Texas
§ B Other states & comparisons
- Workers' Comp for LLCs — national guide covering all states, owner exclusions, and COI requirements→
- Texas LLC Formation Guide — formation steps, franchise tax, and ongoing compliance→
- Texas LLC Formation (Austin) — 2026 filing guide for Austin-based LLCs→
- Texas LLC Formation (Dallas) — DFW formation guide including insurance next steps→
- General Liability Insurance for LLCs — covers third-party injury; separate from workers' comp→
- Construction LLC — Texas public-project contractors frequently have no workers' comp opt-out→
- 1099 vs. W-2 Classification — misclassifying Texas employees as contractors does not remove workers' comp liability→
- All states — LLC formation guides→
§ C Companion tools
Disclaimer: Informational only — not legal advice. LLC laws change; verify with a Texas business attorney or CPA before filing.