The Texas franchise tax is a privilege tax imposed on each taxable entity formed or organized in Texas or doing business in Texas. A part of this privilege includes liability protections provided by state law. The Texas Comptroller of Public Accounts runs the franchise tax.
A Texas franchise tax public report must be filed by all Texas LLCs, no matter activity, revenue, or how the IRS taxes them.
To successfully file your texas franchise tax public report, you’ll get to complete these steps:
- Determine your due date and filing fees.
- Complete the report online OR download a paper form.
- Submit your report back to the Texas Comptroller of Public Accounts.
Each taxable entity formed in Texas or doing business in Texas must file and pay tax. These entities include:
- corporations;
- limited liability companies (LLCs), including series LLCs;
- banks;
- state limited banking associations;
- savings and loan associations;
- S corporations;
- professional corporations;
- partnerships (general, limited and limited liability);
- trusts;
- professional associations;
- business associations;
- joint ventures; and
- other legal entities.
Franchise tax relies on a taxable entity’s margin. Unless a taxable entity qualifies and chooses to file using the EZ computation, the tax base is the taxable entity’s margin and is computed in one among the following ways:
- total revenue times 70 percent;
- total revenue minus cost of products sold (COGS);
- total revenue minus compensation; or
- total revenue minus $1 million
Total revenue is decided from revenue amounts reported for federal income tax minus statutory exclusions.
Exclusions from revenue include the following:
- dividends and interest from federal obligations;
- Schedule C dividends;
- foreign royalties and dividends under internal revenue code;
- certain flow-through funds; and
- other industry-specific exclusions.
Cost of products sold generally includes costs associated with the acquisition and production of personal real estate and real estate. There are other costs of products sold allowances for certain industries. Taxable entities that only sell services won’t generally have a price of products sold deduction.
No matter which form you file, your texas franchise tax public report is due May 15th annually. The report is often filed online or with a paper form. Online filings are going to be charged a $1 service fee.
If you file late Taxes will assess a $50 penalty fee for all reports filed late. If your tax payment is 1 – 30 days late, you’ll be charged 5% of your total tax due. If your tax payment is over 30 days late, you’ll be charged an extra 10% of your total tax due.
If you file online, you’ll pay any taxes due with a credit card or electronic check. Online payments also will incur an extra $1 service charge.
If you select to file by mail, you need to include a Texas franchise tax Payment Form and check or money order made payable to “Texas Comptroller.” you need to also write your entity’s taxpayer number and reporting year on the check.
Avoid incurring late fees and penalties by hiring a registered agent to submit your texas franchise tax public report for you.
