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Simply put, regulatory compliance is an unavoidable burden of running a business. Virtually every business entity, regardless of legal structure, is required to register with appropriate regulatory authorities, and file revenue and tax reports. A summary overview of registration requirements, and applicable tax and license fees required for Texas entities follows:

Business Name and Identification Registration

Registration of the entity with the local governing authority is often required to conduct business in a local jurisdiction.

Registration with state agencies is required to do business in Texas and most other states.

  • File entity formation documents with the Secretary of State as required; and
  • Establish an account with the State Comptroller’s office for filing financial reports and payment of taxes.

Registration of an Assumed Name (DBA) with the state and local governing authority if the business intends to operate under any name other than its legal name.

  • Filed with County; and
  • Filed with State.

Obtain Employer Identification Number (“EIN”) from the U.S. Treasury, Internal Revenue Service.

  • For use when filing government employment and tax reports, and with informational returns filed with various regulatory agencies.

Taxes & License Fees

Sole Proprietor

  • Sole proprietorships are generally not required to file or be registered with the state in order to conduct business, but may be required to register or obtain an operating license from the city or county in which business operations are located;
  • All income and loss from a sole proprietorship is reported on the business owner’s personal tax return;
  • Sole Proprietorships are not currently required to pay Texas state franchise tax; and
  • Sole proprietorships may be required to pay local business taxes and license fees which vary by jurisdiction.

General Partnership

  • Same as Sole Proprietorship
  • LLP (Limited Liability Partnership)
  • LLP’s are required to file articles of formation with the Texas Secretary of State (if formed in Texas) and pay a one-time filing fee;
  • LLP’s are required to also file an annual Franchise tax report and pay taxes on revenues in excess of the annual threshold as stated in the Texas Business Code (“TBC”);
  • LLP income flows through to the partners’ personal tax returns for reporting purposes; and
  • The LLP is required to file an informational return but the entity does not pay taxes on its income.

LLC (Limited Liability Company)

  • LLC’s are required to file articles of formation with the Texas Secretary of State (if forming in Texas) and pay a one time filing fee;
  • LLC’s are required to also file an annual Franchise tax report and pay taxes on revenues in excess of the annual threshold as defined in the Texas Business Code (“TBC”);
  • LLC income flows through to the member’s (owner’s) personal tax returns for reporting purposes; and
  • The LLC is required to file an informational return, but the entity does not pay taxes on its income.

Corporation

  • Corporation’s are required to file articles of formation with the Texas Secretary of State and pay a one time filing fee;
  • Corporations are required to also file an annual Franchise tax report and pay taxes on revenues in excess of the annual threshold as stated in the Texas Business Code (“TBC”);
  • Corporations are required to file income tax returns with both the state and the federal government and pay taxes on income earned; and
  • Corporations are additionally required to prepare and submit reports to regulatory agencies if the corporation’s stock is publicly traded.