LLC Annual Report and Tax Filing Requirements in Texas

If you've formed a Texas limited liability company (LLC), then you should already be somewhat familiar with the legal requirements Texas imposes on LLCs. Just like Texas has laws on how to create an LLC, the state has laws for how to operate and maintain your LLC.

Let's review the most important ongoing reporting and state tax filing requirements for Texas LLCs.

No Texas LLC Annual Report

Unlike most states, Texas doesn't require LLCs to file annual reports with the Secretary of State. However, LLCs must file annual franchise tax reports (see below).

State Business Taxes in Texas

For tax purposes, LLCs are considered pass-through tax entities by default. So, the LLC's income passes through to the owners, who pay taxes on their proportional share of the income.

Might pay a franchise tax. Texas imposes a franchise tax on taxable entities for the privilege of doing business in the state. The franchise tax is calculated based on the LLC's revenue with some sort of deduction. The franchise tax must be paid by any entity that meets the threshold for that year. For example, in 2022 and 2023, the threshold was $1.23 million. Regardless of whether your LLC owes any tax, you must submit a public information report every year by May 15. You can file and pay your tax online using the Comptroller's eSystems/Webfile. (Find more details on the Texas Comptroller's franchise tax overview webpage.)

Electing corporate tax status. In some cases, the owners of an LLC choose to have their business treated like a corporation instead of a partnership for tax purposes. This choice is made by filing IRS Form 8832 with the IRS. Texas is one of the few states that doesn't have a corporate income tax. Instead, the franchise tax would still apply to your LLC regardless of whether it's taxed as a corporation or partnership.

For more guidance, read our article on Texas business income tax.

Texas Employer Taxes

If you plan to hire employees under your LLC, then you'll likely need to pay employer taxes. Employers owe taxes to the federal and state governments. We won't cover federal employer taxes here. In both cases, you should obtain an employer identification number (EIN) for your LLC.

No withholding of employee wages. Texas doesn't have a personal income tax. So, unlike many other states, you don't need to withhold employees' wages for this state tax.

Unemployment insurance (UI) tax. Texas does, however, have a UI tax. The Texas Workforce Commission (TWC) administers the state's UI tax. You can use the TWC's Unemployment Tax Services system to file your reports and pay taxes. Each quarter, you'll need to file wage reports and pay the UI taxes. For more information, check the TWC website.

Texas Sales and Use Tax

Texas imposes a sales tax on the following:

• retail sales
• leases and rentals of most goods, and
• some services (such as amusement services, data processing, laundry, and jewelry repair).

If you sell any of these taxable goods and services, you'll need to apply for a sales tax permit. You can apply for your permit through the Comptroller's eSystems. You'll need to file and pay sales tax every month, quarter, or year.

The Comptroller provides additional details and guidance on its sales and use tax webpage.

In addition to state sales and use tax, you might be responsible for reporting and paying sales and use tax to your city or county. Make sure you check with your local taxing authorities for your reporting responsibilities.

LLC Registration in Other States

If you'll be conducting business outside of Texas, then you might need to register as an out-of-state (foreign) business in the states where you'll do business. You should check these state's laws for the legal requirements of when you must register your business. If you must register, you'll need to follow the appropriate registration or qualification process. Registration usually involves obtaining a certificate of authority or a similar document.

For more on foreign registration, see our state guide to qualifying to do business outside your state.

More Information About Texas LLCs

Operating a business can be challenging. For more on how to operate your LLC, see our section on running an LLC. If you have any legal questions, reach out to a business lawyer in Texas. They can help you determine your filing and tax responsibilities as well as help you with other business matters.

If you need more information about other states' maintenance requirements, read our article on LLC tax and filing requirements.