Before you form an LLC in Texas or incorporate a business in Texas, it’s important that you know what your responsibilities will be in reporting on your business in future years. If you’ve already formed an LLC or corporation, you need to be aware of an important deadline on May 15.
That’s the date your Annual Report — also called Franchise Tax Report — is due. Here’s what you need to know to ensure that you stay compliant with the state of Texas.
The Rules are Different For Your First Year
When you first incorporate in Texas or file an LLC, you have one year and 89 days from your start date to file your initial report. After that, your Annual Report is due May 15 each year.
What Goes on a Texas Annual Report
When you fill out this document, either online through the Texas Secretary of State website or on paper, you will fill out some basic information about your company. If anything has changed in the past year, it’s essential that you update that information in the report, whether your business changed addresses or you made any alterations to your Board of Directors.
You’ll also need to calculate what you owe in franchise taxes to the state of Texas. Both businesses incorporated and operating in Texas, as well as non-Texas corporations doing business in Texas, are responsible for paying this tax. However, neither professional associations or partnerships have to pay the franchise tax.
You’ll pay your franchise tax on net taxable capital or net taxable earned surplus for the previous calendar year — whichever is greater.
You’ll Pay More if You Miss the Deadline
If you don’t file your Annual Report and pay your franchise taxes by May 15, you’ll incur a 5% penalty fee on the taxes you owe. If you still haven’t paid those taxes 30 days after the due date (so June 15), you’ll pay an additional 5%. So it pays to pay on time!
When You Need to File a Final Franchise Tax Report
If your Texas corporation is no longer functioning as a business, you must file a Final Franchise Tax Report within 60 days of the end of operations of your business. This is part of the process to dissolve a business in Texas, and a necessary one.
Why add filing your Texas Annual Report to your task list? Let CorpNet handle it for you. We will file your Annual Report in the state of Texas starting at $89. Contact us to get started.