Maintaining Texas Business Compliance: Annual Requirements and Tips

Forming your Texas business is just the first step – keeping it in compliance every year is equally important. Fortunately, Texas makes ongoing compliance relatively straightforward. Here are the key annual (and periodic) requirements to keep your Texas business in good standing:

1. File Franchise Tax Reports: Almost all Texas LLCs and corporations must file a franchise tax report each year by May 15 with the Texas Comptroller, even if no tax is owed. If your revenue is below the no-tax-due threshold, you won’t owe any tax, and recent law changes mean you might not need to file a No Tax Due report. However, you still need to submit the accompanying Public Information Report (PIR) that updates the state on your company’s officers, directors, or members. Mark May 15 on your calendar and file on time to avoid penalties. (If your business is exempt from franchise tax or you’re a sole proprietor, you can ignore this – but most registered entities need to do this.)

2. Maintain a Registered Agent and Office: Texas requires that you continuously maintain a valid registered agent and registered office address on file with the Secretary of State. If your registered agent (or their address) changes, you must file a Form 401 (Statement of Change) promptly to update the state. Failing to have a reliable registered agent can lead to missed legal notices or even forfeiture of your company (if the state cannot deliver official mail). Ensure you’ve either retained a professional registered agent service or, if you serve as your own agent, that you promptly update any changes.

3. Renew Necessary Licenses and Permits: Review any state or local licenses your business holds and note their expiration dates. Many professional licenses must be renewed annually or biannually (often with continuing education). Sales tax permits generally don’t expire, but certain permits (like health permits for restaurants) might require annual renewal and inspections. Keeping a checklist or calendar for license renewals will help you stay compliant. The Texas Business License & Permits Guide and your city or county offices can help identify renewal requirements for your industry.

4. Update Business Records and Contracts: It’s wise to hold an annual meeting of owners or directors (even if not legally required for an LLC, it’s required for corporations). Record important decisions in meeting minutes. While Texas LLC law is flexible about formalities, having annual discussions about your business’s direction can be useful. For corporations, prepare annual shareholder and director meeting minutes to satisfy corporate formalities. Also ensure any changes in ownership are properly documented (and stock certificates or membership interest ledgers updated, if applicable).

5. Report Changes to the State: Aside from the registered agent, most routine internal changes (e.g., change of directors, officers, or business address) are reported in your annual PIR with the franchise tax filing. However, certain major changes require filing an amendment with the Secretary of State. If you change your company’s name, or make changes to your Certificate of Formation (like altering your business purpose or capital structure), you must file a Certificate of Amendment. If you add a new DBA (assumed name) or discontinue one, make sure to file the appropriate assumed name certificates or cancellations at state and/or county level.

6. Pay Attention to Taxes Beyond Franchise Tax: Ensure you file any required federal and other state tax returns. For instance, if you have employees, you’ll file quarterly IRS Form 941s and Texas Workforce Commission reports for unemployment tax. If you collect sales tax, file your Texas sales tax returns on time (monthly, quarterly, or annually depending on your volume). Texas has no personal income tax, but federal taxes are still applicable – stay on top of those to avoid liens or issues that could circle back to your business.

7. Keep Good Internal Accounting: This isn’t a state requirement, but having up-to-date books and records will make all compliance tasks easier. Use accounting software to track income and expenses. Come tax time, you’ll be glad you kept things organized. It also helps in case of any audits or if you need to provide financial reports to banks or investors.

By taking these steps, you’ll ensure that your Texas business remains in compliance year after year. Texas doesn’t bog you down with excessive reports, but the few requirements it does have are important to follow.

If you find it challenging to keep track of compliance deadlines or paperwork, consider seeking help. Many businesses set up reminders or work with professionals to manage filings. Our team at TexasRelocate can also assist you in staying compliant. Get started with us, and we’ll help you navigate Texas’s compliance requirements so you can focus on running your business confidently.