If you’ve formed a Limited Liability Company (LLC) in Texas, it’s important to understand the ongoing annual requirements to maintain good standing and compliance with state regulations. These requirements ensure that your LLC continues to operate smoothly and avoids potential penalties or dissolution. In this guide, we’ll outline the essential annual requirements for Texas LLCs.
1. File the Texas Franchise Tax Report
All LLCs in Texas are subject to the state’s franchise tax, which is an annual fee based on your LLC’s gross revenue. To maintain compliance, you must file the Texas Franchise Tax Report (Form 05-163) with the Texas Comptroller’s office every year. The due date for this report is May 15th, but if that date falls on a weekend or holiday, the deadline is extended to the next business day.
Failure to file this report on time can result in penalties and interest charges, so it’s essential to mark this date on your calendar and ensure timely submission.
2. Pay the Texas Franchise Tax
In addition to filing the Texas Franchise Tax Report, you must pay any franchise tax owed. The amount you owe depends on your LLC’s gross revenue and the method you choose for calculating the tax.
The franchise tax rate for most LLCs is 1% of gross receipts, with a minimum tax due of $175. However, there are different calculations for certain types of LLCs, so it’s advisable to consult with a tax professional or use the Comptroller’s resources to determine your exact tax liability.
3. File Annual Public Information Report (PIR)
Texas LLCs are required to file an Annual Public Information Report (Form 802) with the Texas Secretary of State. This report provides updated information about your LLC’s registered agent, office address, and governing authority. It’s due each year on or before the anniversary of your LLC’s formation date.
The filing fee for the Annual PIR is $5. Failure to submit this report can result in administrative dissolution of your LLC, which means your company may lose its limited liability protection.
4. Maintain Records and Record Minutes
While not an official filing requirement, it’s essential to maintain accurate and up-to-date records for your LLC. Keep records of financial transactions, contracts, and meeting minutes. This documentation can help in case of legal disputes, audits, or if you ever decide to sell your business.
It’s also a good practice to hold annual meetings of members or managers, where key decisions and changes can be discussed and documented.
5. Renew Business Permits and Licenses
Depending on your industry and location, your LLC may need specific business permits or licenses to operate legally. These permits and licenses often require renewal on an annual basis. Be sure to check with the Texas Department of Licensing and Regulation and your local government to determine if any renewals are necessary.
6. Stay Informed About Regulatory Changes
Laws and regulations can change over time, so it’s essential to stay informed about any updates that may affect your LLC. This includes tax law changes, licensing requirements, and any new compliance obligations.
Consider working with a legal or tax professional who can help you navigate any changes and ensure your LLC remains compliant.
Staying compliant with annual requirements is crucial for the continued success of your Texas LLC. Failing to meet these obligations can result in penalties, fines, or even the dissolution of your LLC. To avoid these issues, mark important filing and payment dates on your calendar, maintain organized records, and consider seeking professional assistance when necessary. With proper attention to compliance, your Texas LLC can thrive and operate smoothly for years to come.