What is Franchise Tax?
The Texas franchise tax is a privilege tax imposed on corporations, including banking corporations and limited liability companies, that are chartered in Texas. The tax is also imposed on non-Texas corporations that do business in Texas.
Who has to report Texas Franchise Tax?
The franchise tax is imposed on each corporation that is chartered in Texas. Non-Texas corporations doing business in Texas are also liable for the tax. See Franchise Tax Rule 3.546 for a list of some activities considered to be "doing business in Texas."
For franchise tax purposes, the term "corporation" also includes a bank, state limited banking association, savings and loan association, limited liability company, professional limited liability company, a corporation that elects to be an S corporation for federal income tax purposes, and a professional corporation. However, professional associations and partnerships are not subject to the franchise tax.
A corporation's first (initial) report is due one year and 89 days after the corporation's beginning date. After the initial report is filed, the corporation will file annual reports each May 15.
Contact Dan Martinez & Associates today with any questions you have regarding your Texas Franchise Taxes, no matter where you are in the process!
