Franchise tax reports and the Public Information Report prepared and filed with the Comptroller, including the years you owe nothing but still have to file.
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Texas franchise tax is a privilege tax on entities doing business in the state: corporations, LLCs, partnerships and several other structures. It is not an income tax and it does not work like one. It is calculated on margin, and there are several permitted methods of computing that margin, which is where the planning opportunity sits.
The part that catches businesses out is that the annual report is due whether or not any tax is payable. Entities below the revenue threshold still have a filing obligation, and missing it can put the entity's right to transact business in Texas at risk. The report is generally due May 15 each year.
Prepared and filed with the Texas Comptroller by the deadline.
The PIR or Ownership Information Report filed alongside, which is a separate requirement people forget.
If you are under the threshold, the required report still goes in so your standing is protected.
We compute across the permitted methods and use the one that produces the lowest liability.
Affiliated entities reported together where the rules require it.
If forfeiture has already happened, we file what is outstanding to restore good standing.
If any of these describe your situation, this is the right place to start.
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Almost certainly yes. Being under the no-tax-due revenue threshold removes the payment, not the filing. The report is still required, and skipping it is what leads to forfeiture.
Penalties and interest first. Left long enough, the entity forfeits its right to transact business in Texas, which can mean losing the liability protection the LLC exists to provide and being unable to bring a lawsuit in Texas courts. It is fixable, but it is far cheaper to file.
Generally May 15 each year, with extensions available. It is a different deadline from your federal return, which is exactly why it gets missed.
No, and the two are often confused. The tax you collect from customers at the point of sale is remitted on their behalf and was never your money. Franchise tax is levied on the entity itself for the privilege of doing business in Texas. Many businesses have to deal with both.
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