Get TX Comptroller 05-167 2015

Minimum Franchise Tax An entity that calculates an amount of tax due that is less than $1,000 or that has annualized total revenue less than or equal to $1,130,000 is not required to pay any tax. (See note for tiered partnership exception.)

comptroller.texas.gov/taxes/franchise. The limit on the compensation deduction has been adjusted, as required by Tax Code Section 171.006(b), and is now $370,000 per person for reports due on or after Jan. 1, 2018, and before Jan. 1, 2020.

The no tax due threshold is as follows: $1,110,000 for reports due in 2016-2017.

How to file your Texas Franchise Tax Report: The Texas Secretary of State does not require corporations, LLCs and LLPs to file an annual report. Instead they submit an information report when they file and pay their annual franchise tax with the Texas Comptroller of Public Accounts. The report is not simple.

A company's franchise tax bill is determined by a formula that takes into account total revenue, cost of goods sold and compensation. Start with the lesser amount of three calculations: total revenue minus cost of goods sold; total revenue minus compensation; or total revenue times 70 percent.

Even if your business does not owe taxes, it is required to file a Franchise Tax Report each year. The no-tax-due threshold for 2017 is $1,110,000 and increases in 2018 to $1,130,000.

The amount of franchise tax due depends on a business' revenue. Companies whose annual revenue falls below a certain threshold are not required to pay franchise tax. However, all businesses in Texas must file a franchise tax report, regardless of whether they are actually required to pay the tax.

Select Yes when the entity's total annualized revenue is less than or equal to the no tax due threshold. The no tax due threshold is as follows: $1,110,000 for reports due in 2016-2017. $1,080,000 for reports due in 2014-2015.

All Texas LLC business members or managers who take profits out of the LLC will need to pay self-employment tax. This tax is also known as FICA, Social Security or Medicare tax. It applies to all the earnings you withdraw from your Texas business. The current self-employment tax rate is 15.3 percent.

The IRS treats one-member LLCs as sole proprietorships for tax purposes. This means that the LLC itself does not pay taxes and does not have to file a return with the IRS. As the sole owner of your LLC, you must report all profits (or losses) of the LLC on Schedule C and submit it with your 1040 tax return.

State Business Tax By default, LLCs themselves do not pay federal income taxes, only their members do. Texas, however, imposes a state franchise tax on most LLCs. ... In some cases, the owners of an LLC choose to have their business treated like a corporation for tax purposes.

As with all businesses, the no-tax-due threshold and E-Z Computation rules apply to corporations. At 1%, the tax rate on Texas corporations ranks very low nationally, making the state a popular place for businesses of all sizes.

Select Yes when the entity meets the definition of a passive entity found in Section 171.0003 of the Texas Tax Code. ... Select Yes when the entity's total annualized revenue is less than or equal to the no tax due threshold. The no tax due threshold is as follows: $1,110,000 for reports due in 2016-2017.

Combined Reporting Taxable entities that are part of an affiliated group engaged in a unitary business must file a combined group report in lieu of individual reports. The combined group is a single taxable entity for purposes of calculating franchise tax due and completing the required tax reports.

Passive income includes, for example, dividends, royalties, interest, foreign currency, rental income or property gains (the precise legal definition is in the FATCA and CRS legislation). An Active Entity may broadly be described as one where less than 50% of the entity's gross income and assets are passive.