You did it. Your Texas LLC is officially up and running, ready to take on challenges, roll in the profits, and change the world.
There’s no doubt that this is an exciting time in your business journey. After starting your LLC, it’s easy to get carried away in all the excitement and expectations. After all, as a new business owner, you’ve got a lot on your plate.
But the state does too. They need to keep updated records on thousands of businesses so that they can effectively reach out with any important tax or legal communications down the road. How do they do it? With your cooperation, of course.
In Texas, an LLC’s annual report consists of two parts: a Franchise Tax and a Public Information Report. Each LLC must submit these filings to the Texas Comptroller every year to keep their information current. Unsure how to go about it? Never even heard of it? No worries at all. That’s why we’re here. Keep reading for everything you need to know.
For brevity’s sake, we’ll refer to these two combined filings as the “Annual Report” in this guide.
What is the Texas Annual Report? Why is it Important?
Consider these filings the state’s yearly checkup on your LLC. It’s similar to a census in that its purpose is to collect the necessary contact and structural information about each Texas business.
Each state has its own annual reporting requirements, and some don’t even require them. But in most states, you’re required to submit one per year that includes your LLC name, principal office address, registered agent information, and member/manager names and addresses. Whether you run a domestic or foreign LLC, you should plan on submitting a Franchise Tax and Public Information Report.
Don’t be intimidated, but it’s not something you want to take lightly. This is how the state updates your LLC’s record with the most recent information. They need to know how to reach you with important information about your business status, upcoming filings, taxes, and service of process.
For example, if you change your registered agent, or your current agent resigns, you’ll need to keep the state informed so they can update their contact information. Miss one of their communications and your LLC in Texas might end up falling out of good standing or, even worse, administratively dissolved.
Moreover, keeping your information current will help other businesses and potential customers find you. If the Comptroller has the most updated data on record, anyone – including future partners and clients – can find your business by performing a name search.
How Much Does the Texas LLC Annual Report Fee Cost?
If you’re putting together a budget for all your LLC’s costs – like formation costs, name reservation fees, and initial operating expenses – it’s important to include annual filings like this one, just so that there are no surprises.
Costs vary from state to state. Some are free while others can be several hundred dollars. How much you pay for the Texas Franchise Tax depends entirely on your LLC’s total annual revenue. If your business revenue falls under the “no tax due” threshold, it will not owe a tax. The current threshold is $1,180,000, so if your LLC doesn’t make that much in a year, you won’t be responsible for any payments. But businesses that bring in more than that will be subject to a 0.375% Franchise Tax on retail and wholesales goods and 0.75% on all other revenue.
Due Date and Frequency for an Annual Report in Texas
Your LLC will need to file its Franchise Tax and Public Information Report once per year, but not on April 15th like the rest of your taxes. Instead, these filings are due on May 15th each year. If May 15th falls on a weekend or holiday, the due date will simply move to the next business day.
After you file a Certificate of Formation to form your LLC, you will need to file a Franchise Tax and Public Information Report every year, even if you don’t owe a tax payment.
What Happens if You Don’t File?
You might be thinking, “that sounds like a pain. How bad could it be if I just fly under the radar?” The short answer: don’t try it. Failing to file your Franchise Tax and Public Information Report can yield some serious consequences.
Reports filed after May 15th will automatically incur a $50 late fee, plus an additional 5% penalty if a tax is paid 1-30 days after the due date or a 10% penalty if paid more than 30 days late. Plus, the Comptroller can revoke your LLC’s authority to do business in the state.
If it’s come time to file your Franchise Tax and Public Information Record, you might be wondering what you’re in for. It’s a good idea to have your business and financial information ready beforehand, so you can cruise right through the filing. Most LLCs fall below the “no tax due” threshold and therefore need to file a No Tax Due form. Here’s what you’ll need to complete it:
- Taxpayer number
- Taxpayer name
- LLC mailing address
- NAICS code (you can find all NAICS codes here)
- Accounting year begin and end dates
- Total revenue
If your LLC earns more than $1,180,000 per year, you will instead need to compute your tax using a Franchise Tax EZ Computation Report or a Long Form. Either way, you’ll also need to submit a Public Information Report, and here is the information it requires:
- Taxpayer number and name
- LLC mailing address
- Principal office address
- Name, title, and address for each member/manager
- Any subsidiaries of which the LLC owns 10% or more
- Any business that owns 10% or more of the LLC
- Registered agent name and address
Because this is both a financial and informational filing, it requires a bit more data than other states’ annual reports. However, if you have all of it ready by the time you file, the forms shouldn’t take you long at all.
The Texas Comptroller provides both electronic and hard copy versions of these forms, so you can file online or by mail.
Online Filing: You can complete the entire process through the Comptroller’s WebFile portal. If you don’t already have an account, you’ll need to create one. After you’ve logged in, select “Pay Franchise Tax” and enter your LLC’s taxpayer number (which you can find on your Welcome Letter from the Comptroller’s office). Choose the appropriate form and you’ll be directed through a series of pages where you can enter your information for both required forms.
Texas Comptroller of Public Accounts
P.O. Box 149348
Austin, TX 78714-9348
Does the State Send Reminders?
Reminders are always nice. They help you stay on top of your business requirements and ensure that you won’t fall out of good standing.
The Texas Comptroller won’t send out any reminders about your Annual Report due date, so you’ll be responsible for staying on top of it. Whether or not you need to make a Franchise Tax payment, this is an important filing, so we recommend setting up your own series of reminders, just so you don’t forget.
Can I Hire a Service to Handle it?
You probably have a full plate as it is, and the thought of adding one more responsibility to your to-do list might make you shudder. You’re not alone.
Plenty of other LLC owners have outsourced their reporting duties to LLC services. These companies will take the entire process off your hands, handling your Annual Report filings each year. If that piques your interest, we recommend ZenBusiness, which is an experienced and trustworthy LLC company.
But their services aren’t restricted to forming an LLC or managing Franchise Taxes and Public Information Reports. They can also help you form your business, draft an operating agreement, handle registered agent responsibilities, and much more, all for a reasonably low price.
If thinking about your LLC responsibilities ties your stomach in knots, let ZenBusiness take some of those worries off your plate.
There you have it, everything you need to know about Texas’s reporting requirements. Follow this guide to a T and your LLC will be prepared to operate smoothly and in good standing long into the future.
And remember, if at any point it seems overwhelming, you’re not alone. A good LLC service like ZenBusiness (or LegalZoom) can be a valuable resource, taking care of all the little details, so you can focus on growing your business.