How to File an LLC Annual Report in Texas? (Full Guide)

Atty. Danya Shakfeh
Published by Atty. Danya Shakfeh | Author
Last updated: April 11, 2024
Methodology
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Once you have created your Texas business, you must ensure it remains in good standing with the Texas Secretary of State.

To ensure it remains compliant with state laws, your business will have to file an annual franchise tax report.

We have worked with experienced legal experts who have handled numerous Texas LLC annual franchise tax reports.

In this article, you will find all the information regarding the franchise tax report, including who must file and when you must file.

Quick Summary

  • To file a Texas LLC annual report, known as the Texas franchise tax report, businesses must submit it to the Texas Comptroller of Public Accounts.
  • The franchise tax report is due on May 15th each year, and businesses with less than $1,230,000 in revenue can file a report with no tax due.
  • The penalty for failing to file a Texas annual report is a $50 penalty fee.
  • According to the Texas Economic Development Report, Texas leads the nation with 710,215 minority-owned small enterprises.


What Is A Texas LLC Annual Report?

A man reading a Texas LLC annual report

A Texas LLC annual report is called the Texas franchise tax. The franchise tax is a tax imposed on every taxable entity by the Texas Comptroller of Public Accounts for doing business in Texas.

This report is particularly vital given that, according to the Texas Economic Development, Texas ranks #1 in America for small minority businesses, boasting 710,215 minority-owned small enterprises, highlighting the diversity and entrepreneurial spirit within the state's economy [1].

Franchise tax is calculated based on an entity's taxable margin.

The margin can be calculated in a few ways:

  • Total revenue times 70 percent
  • Total revenue minus the cost of any goods sold
  • Total revenue minus compensation
  • Total revenue minus $1 million

Free Download Texas LLC Annual Report 2024

How To File A Texas Franchise Tax Annual Report?

To file a Texas Franchise Tax Annual Report, businesses can either submit their report online through the Comptroller’s Webfile service or opt for traditional mail filing.

1. Online

A guy working on his laptop

We always file and pay our franchise tax online using the Comptroller’s Webfie service. The service has mathematical computation and built-in edits to avoid mistakes.

Electronic filing is available 24 hours a day.

To use Webfile, you will need your business’s 11-digit taxpayer number and the 6-digit XT Webfile number on your tax notice.

We do not recommend Weblife for groups with over 10 members. According to the Comptroller, Franchise reports can also be filed using tax prep software with an approved provider [2].

"Should your business generate under $1,230,000 in revenue, it will be exempt from owing any franchise tax. However, if your earnings surpass this threshold, you will be required to complete the EZ Computation report forms online."

- Jon Morgan, Co-Editor & Co-Founder of Venture Smarter

Below is how to fill out these forms:

  • Visit the Texas Comptroller’s Webfile system online. You will need your business’s 11-digit taxpayer number and the 6-digit Webfile number, which can be found on your tax notice.
  • Once logged in, choose the option for the EZ Computation report if your business made less than $1,230,000 in revenue.
  • Fill in the required fields with your business information. This typically includes details like your business name, address, and taxpayer number.
  • The EZ Computation form simplifies the process of calculating your taxable margin. Follow the instructions on the form, which usually involve entering your total revenue and applying the standard deduction or exemption, if applicable.
  • Carefully review all the information entered for accuracy. Any errors could lead to complications or delays.
  • If your business made more than $1,230,000, you might owe tax. Submit the form and make any necessary payments using the available online payment options.

2. By Mail

Your Texas franchise tax can also be filed by mail.

The EZ Computation Report Forms can be downloaded from the Comptroller, filed out, and sent to this address:

Texas Comptroller of Public Accounts
PO Box 149348
Austin, TX, 78714-9348

What To Include in the The Franchise Annual Report?

A woman reading a document on a table

The Texas Franchise Tax Report requires the inclusion of information like company address, manager details, or purpose of business, with specific exclusions for certain entity types.

You must provide the following information when filing a Texas franchise tax report:

  • Company Address: Your limited liability company should have a local Texas address where your LLC does business.
  • Managers: Managers are the people who run your LLC on a day-to-day basis. 
  • Purpose of Business: If your business operates in a specific industry, it must be explained when you file LLC annual reports.
  • Business ID Numbers: Your business ID number includes an EIN, but if you do not have any employees, it may be your SSN.
  • Registered Agents: The registered agent may be a member of your LLC. You may also hire a third-party registered agent. They must have a legal address in Texas and be able to accept mail on your behalf during regular business hours.

The following entity types are excluded from franchise tax [3]:

  • Sole Proprietorships
  • General Partnerships Owned by one person
  • Entities Exempt Under Chapter 171
  • Unincorporated Passive Entities
  • Certain Grantor Trusts, Estates of Persons & Escrows
  • Real Estate Mortgage Investment Conduits
  • Real Estate Investment Trusts
  • Non-Profit Self-Insurance Trust
  • Trusts Qualified Under IRS Section 401(a)
  • Unincorporated Political Committees

How Early Can I File My Franchise Report?

Stacks of office documents

You can file your Texas Franchise Report as early as January 1st of each year.

This early filing option allows ample time to prepare and ensure accuracy.

We recommend filing early to avoid last-minute rushes and potential errors.

What Is the Filing Fee for the Franchise Annual Report?

The franchise report filing fee is $0. There is no fee for the filing of franchise reports in Texas.

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What Is the Due Date for Submitting the Report?

The due date for submitting the Texas franchise annual report is May 15th each year. If this date falls on a weekend or holiday, the deadline is extended to the next business day.

We consistently prioritize punctual submission of our reports to prevent penalties, comply with state regulations, and uphold our business's good standing with the Texas Comptroller of Public Accounts.

What Are the Penalties for Not Filling Out the LLC Annual Report?

There is a $50 penalty for any LLC annual report filed after the due date, even if the business has no tax due. If the franchise tax is paid within 30 days after the original due date, a 5 percent penalty is charged, and if the tax is paid more than 30 days past the due date, a 10 percent penalty is charged.

FAQs

Are New LLCs in Texas Required to File an Annual Report in Their First Year?

No, new LLCs in Texas are not required to file an annual report in their first year but must file a franchise tax report by May 15th of the following year, regardless of their revenue or business activity level.

Can I Get an Extension for Filing My LLC Annual Report in Texas?

In Texas, you can request an extension for filing your LLC's annual franchise tax report. This extension grants an additional time of up to six months beyond the original due date of May 15th for submission.

 

 

 

Will You Receive a Reminder to File the Texas Annual Report?

Yes, in Texas, businesses typically receive a reminder from the Comptroller's office to file their annual franchise tax report. This reminder is usually sent before the May 15th deadline, helping businesses stay compliant and avoid late filing penalties.

References:

  1. https://gov.texas.gov/business/page/veteran-minority-women-resources
  2. https://comptroller.texas.gov/taxes/franchise/approved-providers.php
  3. https://comptroller.texas.gov/taxes/publications/96-1045.php

About The Author

Author
Atty. Danya Shakfeh, with over ten years of experience as a corporate attorney, leads Motiva Law, offering strategic legal advice to entrepreneurs. She is skilled at transforming complex legal concepts into clear strategies, allowing clients to pursue their goals. A "Rising Star" by Super Lawyers and an alumna of Northwestern University Pritzker School of Law, Danya is distinguished in business law.
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Growth & Transition Advisor
LJ Viveros has 40 years of experience in founding and scaling businesses, including a significant sale to Logitech. He has led Market Solutions LLC since 1999, focusing on strategic transitions for global brands. A graduate of Saint Mary’s College in Communications, LJ is also a distinguished Matsushita Executive alumnus.
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