How much should I set aside for taxes for my LLC in Texas?
Since Texas has no personal state income tax, the main focus should be on federal taxes. For most LLC owners, this means planning for federal income tax & self-employment tax.
A concrete rule of thumb is to save 25% to 30% of the net profit. It should be recognized that this is a starting point for the planning, not a fixed rate set by the state. You can refine this number as you see how the profit fluctuates throughout the year.
How do you estimate the correct amount?
There isn’t a "one-size-fits-all" percentage, as every business is distinct. The specific rate is parallel to the total profit and federal tax bracket, as well as whether you have employees or sell taxable goods.
| Item | Importance |
|---|---|
| Federal income tax | Generally the largest tax bucket on LLC profit |
| Self-employment tax | Covers Social Security & Medicare for active owners. |
| Texas franchise tax or reports | Required for many businesses — even if you don't owe a payment |
| Sales tax collected | Money you collect from customers that belongs to the state |
| Payroll taxes | Only applies if the LLC has W-2 employees |
What is a simple starting method?
The easiest way to stay ahead is to move a portion of every draw or customer payment into a dedicated tax savings account immediately.
Example: If the LLC brings in $8,000 in net profit this month — moving $2,400 (30%) into savings helps make sure you aren't caught off guard. It should be remembered that the IRS generally requires these payments to be made quarterly — rather than in one lump sum at the end of the year.
Dimov Partners supports Austin LLCs
We assist Texas business owners in taking the guesswork out of their taxes. No matter if you require help assessing quarterly estimates, managing the bookkeeping process or Texas-specific filings in Austin, we are here to help. Contact us today for professional support.