Texas LLC Annual Filing Requirements

Learn about annual report and tax filing requirements for Texas LLCs.

By , Contributing Author

If you want to start and run a Texas limited liability company (LLC), you'll need to prepare and file various documents with the state. This article covers the most important ongoing reporting and state tax filing requirements for Texas LLCs.

Annual Report

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

State Business Tax

When it comes to income taxes, most LLCs are so-called pass-through tax entities. In other words, the responsibility for paying federal income taxes passes through the LLC itself and falls on the individual LLC members. By default, LLCs themselves do not pay federal income taxes, only their members do.

Texas, however, imposes a state franchise tax on most LLCs. The tax is payable to the Texas Comptroller of Public Accounts (CPA). In general terms, the franchise tax is based on an LLC's "net surplus" (the net assets of the LLC minus its members' contributions). The details for computing the tax can be complicated. If no franchise tax is due, file Form 05-163 (No Tax Due Information Report). If tax is due, you will have to use one of several different report forms (E-Z Computation or Long Form) depending on the details. Check the CPA website for more information.

In some cases, the owners of an LLC choose to have their business treated like a corporation for tax purposes. This choice is made by filing IRS Form 2553 with the IRS. (See the IRS website for the form.) Texas's franchise tax also applies to LLCs taxed as corporations. Again, the details can be complicated. Check the Comptroller website for more information.

State Employer Taxes

Does your LLC have employees? If so, you'll need to pay employer taxes. Some of these taxes are paid to the federal government (the IRS) and are not covered here. (But note that federal employer tax obligations start with obtaining a federal employer identification number (EIN).) However, Texas employers also may have to pay taxes to the state.

More specifically, you'll probably need to register to pay state unemployment insurance (UI) taxes. These taxes are handled through the Texas Workforce Commission (TWC). You can register for these taxes online or using TWC Form C-1 (Status Report). Then, each quarter, use TWC Forms C-3 and C-4 to report on wages and pay the UI taxes. For more information, check the TWC website.

Sales and Use Taxes

If your LLC will sell goods to customers in Texas, you will need to collect and pay sales tax. This means you'll have to register for this purpose with the Comptroller of Public Accounts and then make periodic sales tax payments for goods sold. You can register online, by mail (using Form AP-201, Texas Applications for Sales Tax Permit), or in person at a CPA field office. After you've registered, you'll receive a sales and use tax permit. Then, on a periodic basis (for example quarterly), you must submit sales tax returns to the CPA. File online or use the applicable form (there are several). For more information, check the CPA website.

Registration in Other States

If you will be doing business in states other than Texas, you may need to register your LLC in some or all of those states. Whether you're required to register will depend on the specific states involved: each state has its own rules for what constitutes doing business and whether registration is necessary. Often activities such as having a physical presence (a business location) in a state, hiring employees in a state, or soliciting business in a state (such as by telephone, print ads, mail, or the Internet) will be considered doing business for registration purposes. Registration usually involves obtaining a certificate of authority or similar document.

For more information on the requirements for forming and operating an LLC in Texas, see Nolo's article, 50-State Guide to Forming an LLC, and other articles on LLCs in the LLC section of the Nolo website.

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