Texas offers a top-tier business environment with an expensive setup cost, whereas Colorado allows you to set up and maintain a company for pocket change.
Annual State Maintenance
Annual State Maintenance
* Please note: The amounts above are the mandatory state fees. We charge a minimal $170/year filing fee for the IRS return (Forms 1120/5472) on top of the state fee to keep your LLC 100% compliant and provide ongoing support throughout the year.
For internet startups, dropshippers, and course creators, Colorado is a fantastic alternative to Wyoming if you don't care about having your name on public records. The $10 annual fee makes the lifetime cost of a Colorado LLC among the cheapest in America. Texas, on the other hand, is generally avoided by remote sole-proprietors simply because the $300 setup fee is brutally expensive, and maintaining the annual reporting requires jumping through unnecessary bureaucratic hoops—despite it eventually costing $0 in actual taxes.
This is the most common question we get: "If I choose Texas or Colorado, do I pay zero taxes?"
For a non-US resident running an online business (dropshipping, software, freelancing, agency),
your LLC is considered a "Disregarded Entity" by the IRS. As long as you have no physical presence in the US
(no US employees, no physical office, no dependent agents operating in the US), you are classed as Not Engaged in a Trade or Business in the US (No ETBUS).
This means you owe 0% US Federal Income Tax on your business profits, regardless of whether you form in Texas or Colorado. You only pay the Annual State Maintenance Fees listed above, and file Forms 1120 and 5472 every year (which we can help you with).
Both Texas and Colorado have local tax structures, but single-member foreign-owned LLCs with purely digital operations outside the US once again bypass this via the ETBUS structure. That means your ultimate tax rate stays at 0%, but the ease of maintaining that status is much simpler in Colorado.
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