Annual Tax Filing Guide for Texas LLC Owners (Fully Expanded 2026 Edition)

Most Thorough Compliance Guide for U.S. and Non-U.S. Businesses Forming Texas LLC

Texas opened its arms to and attracted U.S. and international entrepreneurs, small business owners, and investors, and for good reason; a strong economy, business-friendly environment, and no state income tax. Thousands of customers every year form LLCs in Texas because of its favorable legal structures and business-friendly ecosystem.

While Texas is very business-friendly, holding a Texas LLC comes with diligence and care because of ongoing filings and compliance rules. Each LLC, no matter what industry or income level, is required to fulfill a few key annual tax and reporting responsibilities.

This Texas LLC Annual Filing Guide is the most complete in addressing every need of customers. This guide is geared towards startup founders, e-commerce sellers, consultants, Amazon FBA sellers, real estate investors, and international business owners with Texas LLCs to maintain their compliance at state and federal levels.

1. Annual LLC Compliance Requirements in Texas

Texas differs from many states because it does not require a typical “Annual Report.” Instead, Texas uses its own compliance structure, built around:

A. Texas State Requirements

• Texas Franchise Tax Report
• Public information report
• Agent registered information
• Local (if required) permits

B. US Federal Requirements

• Tax Return (based on LLC Structure)
• Employer payroll documents (if required)
• Form 5472 ( LLC Foreign Owned Compliance)

C. OPTIONAL

• Register sales tax
• Accounting
• Business licenses compliance renewals
• required renewals in specific industries

It should be noted that regardless of if the LLC had income, clients, or was even operational, all domains and reports that require compliance must be filed if required reports and information required to be submitted

LLC administrative compliance in Texas can be strict and if other documents appropriately to be forfeited and shut down.

2. Franchise Tax Report Texas Deep explanation

For all LLC’s in the state, Franchise Tax Report compliance is the most salient and important part of an LLC’s compliance. The report is dealt (but not) by the IRS, by the Texas Comptroller of Public Accounts.

2.1 What are Franchise Taxes for the State of Texas?

Franchise Taxes for Texas is unlike an income tax because, in this case, it is considered to be:

• Cumulative revenue taxes
• Applicable to all businesses operating in Texas
• Required for all corporations irrespective of profit
• All LLCs must complete this every year

Most small businesses do not have to pay an actual tax, as the state has a revenue limit above which no tax is required

2.2 Explanation of the ‘No Tax Due’ Limit

Texas modifies its limit every other year. By 2025, the ‘no tax due‘ limit is roughly:

➡️Less than 2.47 million in revenue yearly

• If the LLC makes less than this amount, you are not required to pay any money toward the franchise tax
• However, you are still required to complete the Franchise tax report
• Also, the public information report must be filed

If you do not complete the reports, especially the $0 documents, you may incur substantial fines

2.3 Calculating Franchise Taxes for Companies over the Threshold

When the revenue is over the threshold, you must use the following to calculate your tax:

• EZ Computation Method
• Margin Tax Method

EZ Computation is easier,

• tax rate is about 0.331%, and minimal accounting is necessary.

This method is mostly used by most small and medium-sized businesses.

Margin Tax Method is more complex.

You calculate the margin by taking Your Total Revenue and then subtracting whichever one of the following is the most favorable:

• Cost of Goods Sold,
• Compensation,
• 30\% of the Total Revenue.

This is especially relevant for larger Texas LLCs and e-commerce businesses with significant sales.

2.4 Filing Deadline

Annually by May 15

If you miss this deadline:

• Immediate Penalties including:
• “Not in Good Standing”
• Texas may begin forfeiture proceedings

2.5 Franchise Tax Extensions

You may be able to obtain an extension by filling in:

• Form 05-164 (for requesting an extension)
• Estimated tax payment (if one is owed)

You may expect to have filing deadline moved to:

• November 15 onwards for most entities

2.6 Penalties for Late Franchise Tax Filing

• $50 minimum penalty for filing after deadline
  
• 5% penalty on any tax due (if applicable)
  
• 10% additional penalty if filed more than 30 days late
  
• Loss of LLC protection if forfeited
  
• Reinstatement costs and administrative delays
  

Texas is strict about compliance, even if you owe $0, late filing still triggers penalties.

3. Texas Public Information Report (PIR) – Fully Expanded

The Texas Public Information Report is submitted at the same time as the Franchise Tax Report.

3.1 Purpose of the PIR

The PIR are Texas’s means to keep some of the most vital details about own business, particularly when it comes to :

• Legal business name
• EIN number
• Registered agent details
• Principal office address
• Officer or managerial details
• Ownership data
• New or removed member details

This ensures accurate public record keeping on the part of the state.

3.2 PIR Filing Requirements

Irrespective of anything else, it is expected of every Texas LLC to file a PIR every year.

Even if:

• You had no income
• Nothing changed
• Your business is inactive
• Your business operates outside the U.S.
• You are a foreign owner

You still must file.

3.3 Does the PIR Cost Anything?

No.

The PIR is filed together with the Franchise Tax Report at no cost.

3.4 What Happens if You Don’t File the PIR?

• LLC falls “Not in Good Standing”
• Difficulty opening bank accounts
• Texas may start forfeiture
• Reinstatement filings become necessary
• May affect future financing or permits

Many foreign owners mistakenly skip the PIR, this often leads to forfeiture.

4. Federal Tax Filing Requirements for Texas LLCs (In-Depth Breakdown)

Although Texas has no state income tax, your LLC still must satisfy IRS requirements.

Below is a detailed explanation for each LLC structure.

4.1 U.S.-Owned Single-Member LLC (Disregarded Entity)

This is the most common structure for small businesses.

How Taxes Work:

• The income from the LLC gets disclosed along with the owner’s personal income
• No LLC-level federal tax return is required

Required IRS Filing:

• Schedule C (Profit or Loss from Business Filing) along with
• Form 1040

Other Schedules:

• Schedule SE (Self-Employment Tax)
• Schedule E (Rental
• Schedule F (Agricultural)

Deadline:

• April 15
• October 15 is an option if extensions filed

4.2 Multi Member LLC (Partnership)”)

The IRS treats multi-member LLCs as Business Partnerships by default.

Required IRS Filing:

• Form 1065 — U.S. Return of Partnership Income along with
• Schedule K-1 for each member

Taxation:

• The LLC as an entity does not pay tax
• The members pay tax on K-1 income individually

Deadline:

• March 15
• Extensions available until September 15

4.3 LLC Electing C-Corporation Status

Certain businesses choose corporate taxation by filing Form 8832.

IRS Required Filing:

• Form 1120 — U.S. Corporation Income Tax Return

Taxation:

• The corporation is taxed on its profits.
• The owners may also pay tax on the dividends earned which is an additional tax

Other Requirements:

• Quarterly estimated tax payments are required
• Annual corporate minutes are suggested

4.4 Foreign Owned Single Member LLC (MOST COMPLEX)

There are many LLC owners from outside of the U.S. in Texas, and this category is subject to particular IRS rules.

Required Federal Filings:

• Form 5472
• Pro Forma Form 1120
• Record-keeping documentation

Deadline:

• April 15
• Extension to October 15 with Form 7004

Penalty for Missing Form 5472:

➡️ $25,000 per year

➡️ Additional $25,000 every 30 days after notice

This is the most common mistake foreign owners make, and the penalties are severe.

Bizstartz helps foreign clients avoid all Form 5472 penalties.

5. Texas Sales Tax Requirements (Extended Guide)

In Texas, you must register for a sales tax permit if you sell any merchandise \* or a taxable service/service (as defined by Texas sales tax law).

5.1 When is Sales Tax Required?

You must collect Texas sales tax if you:

• sell tangible personal property (physical products),
• sell taxable digital items (including music, e-books, videos, apps, etc.),
• offer taxable services,
• operate any drop-shipping arrangement,
• sell products via Amazon, Shopify, Etsy, eBay, etc.,
• have employees or inventory located in Texas, or
• have economic nexus in Texas.

5.2 Filing Frequency

The Texas Comptroller assigns filing frequency based on revenue:

• Monthly (high volume sellers)
• Quarterly (moderate volume sellers)
• Annually (low volume sellers)

5.3 Sales Tax Rates Explained

• State Tax (on taxable sales at retail) = 6.25%
• Local Tax (on taxable sales at retail) = up to 2%
• Combined Maximum Rate = 8.25%

Automated systems (Shopify, Avalara, TaxJar, etc.) for calculating transaction tax are good to use, considering that different places have different tax rates.

5.4 Penalties for Sales Tax Non-Compliance

• 5% Penalty for Late Filing
• 10% Penalty after 30 Days
• Interest Accrual
• Risk of Business License Suspension
• Comptroller Collection

Employer Payroll & Workforce Taxes (Deep Dive)

If your LLC employs workers, you must file the following:

Texas State Requirements:

• Texas Unemployment Tax (TWC)
• Reports filed quarterly

Federal Requirements:

• Form 941 (Quarterly)
• Form 940 (Annually)
• W-2 and W-3
• Employee withholding

Payroll compliance errors are common and can trigger IRS penalties.

Bizstartz can complete payroll for employers based in Texas.

County & City-Level Requirements (Expanded)

Texas does not have a business license that covers the entire state. However, individual jurisdictions may require region-specific business rules.

Local Requirements May Include:

• County DBA filings
• City business permits
• Sales & use tax registrations
• Licenses for specific industries (food, real estate, construction)
• Permits for home-based businesses
• Zoning permits
• Fire department clearances

Local rules can result in fines and business closure.

Registered Agent Obligations for Texas LLCs (Fully Expanded)

Texas requires every LLC to have a registered agent.

The Registered Agent Must:

• Have a physical address in Texas
• Be reachable during business hours
• Receive legal documents (lawsuits, government mail)
• Inform you of changes to state filings

Consequences of Losing Your Registered Agent:

• State will mark your LLC as “Not in Good Standing”
• You may lose liability protection
• Administrative dissolution of your LLC
• Bank account freezes
• Contract disputes

Bizstartz can help with Texas Registered Agent services and will make sure you don’t miss important submissions.

What Happens if Your Texas LLC Had No Activity? (Key Part)

If your LLC had:

• No revenue
• No transactions
• No sales
• No expenses

You still must file:

• Franchise Tax Report
• Public Information Report
• Federal IRS filings
• Recorded Agent maintenance

Many inactive LLCs get dissolved because the owner thinks “No income = No filing.” This is wrong. This can make your LLC much more expensive to reactivate in the long run.

Annual Maintenance Costs for Texas LLCs (Expanded Breakdown)

Texas is affordable compared to states like California or New York, but compliance must still be maintained.

What Are the Penalties for Not Complying with Texas and IRS Filings?

Texas State Penalties include:

• Late filing fees
• Tax penalties (up to 20%)
• Suspension of your business license
• Forfeiture of the LLC
• Loss of asset protection

If you are not compliant with the IRS, you can receive:

• $25,000 penalty for Form 5472
• Penalties for not filing income taxes
• Possible Audits
• A frozen EIN

Long term problems and expensive reinstatements come from ignoring compliance.

How Bizstartz Helps You Maintain Your Texas LLC (Expanded Services)

Business owners around the world can access full compliance services:

✔ Texas LLC Formation

✔ EIN and ITIN Applications

✔ Annual Franchise Tax Report Filing

✔ Public Information Report (PIR) Filing

✔ IRS Tax Filings (1065, 1120, 5472, Schedule C)

✔ Registered Agent Services

✔ Annual Bookkeeping & Accounting

✔ Sales Tax Registration & Filing

✔ Payroll Setup & Management

✔ Amazon / Stripe / PayPal Compliance Support

✔ Business Bank Account Assistance

✔ Ongoing Annual Reminders & Compliance Tracking

We ensure your Texas LLC remains active and in compliance and is free of penalties.