3 Easy Steps to File Texas Franchise Tax – Save Hours & Avoid Costly Mistakes!

Did you just find out that you need to file your franchise tax return? Well, you're in luck. I'm about to show you in this video exactly how to get that done. I'm going to try to make this as quick and easy for you as possible. It doesn't take very long. The requirements of what to file are even easier now because they changed the law January 1st, 2024, and now you only have one report to file as long as you made less than $2.47 million. Because that's the threshold. So if you're a Texas entrepreneur and you made less than $2.47 million last year, I'm going to show you exactly how to file your franchise tax return. The first thing you're going to do is go to comptroller.texas.gov, and when you get there, this is what the website looks like. In order to file your franchise tax return, the first thing you're going to have to do is set up a profile in the eSystems portal. If you've never filed franchise taxes before and this is your first time, you'll want to set up a profile first, and I've got another video that shows you exactly how, step by step, how to set up that profile. And it also shows you how to connect your tax account to your profile so that you can start filing your tax return. In this video, we're going to show you how to actually file the tax return once you've already finished those steps. But if you haven't finished those steps, go watch that video, then hop back here to watch the rest of this video. Okay, so on the home page, you're going to see Webfile eSystems login. Click there. Go ahead and log into your account, and then you should see a box that says Franchise Tax File and Pay. Go ahead and click there. Okay, on this next screen, you'll see options here for different things you can do while you're logged into your portal for your franchise tax account. You'll see the— under Web File/Pay, there's an Easy Option Computation Report. Doesn't apply to you if you made less than $2.47 million. There's the File a Long Form Report. Again, does not apply to you. Then you've got a File a Public Ownership Information Report. Report, that does apply to you. That's what we're going to be filing today. The one after that says file a No Tax Due Information Report. That report is no longer required for any reports that are due from 2024 going forward. So we're in 2025 from the date of this video, and you do not have to file a No Tax Due Information Report anymore. All you have to do, if you made less than the threshold of $2.47 million last year, you only to file the Public Ownership Information Report. There are some other options, uh, other things you can file while you're on this page. It says request a first or second extension and include payment if required. I don't see any reason why anybody would actually want to file an extension unless you have information missing, but I don't advise waiting till past the due date. So I would recommend you file as quickly as possible. It's too simple of a report not to just file and get it done and off your to-do list. It offers an option to make a payment only. These options here are usually geared towards somebody who made more than the $2.47 million threshold. So again, does not apply to you. And you've got a File Common Owner Information Report. This doesn't apply to most Texas small business owners. Then on the right side, you see your option to view your transaction history. If you watched my last video, it explained how you can actually look inside this portal and see the transaction history for what's been already filed. That way you can see, did you file already? If you did, then you can checkmark it off your to-do list. If you haven't filed yet, you'll see that that one is missing if you're behind. So being able to view your transaction history is very helpful. That way it helps you keep on top of your compliance and make sure that you're not behind. Now the next section right here that says Account Self-Service— in this section you've got options that'll help you take care of other types of self-service requests. For example, if you've closed down your business and you're ready to notify the Comptroller that it's— that your business is closed, then you would choose that Account Self-Service option to request certificate for termination. Once you click that, you'll get a letter from the Comptroller that you'll be able to submit to the Secretary of State in order to officially close your tax account with the Secretary of State and with the Comptroller. Those— it's a two-part process. You got to make sure you notify the Comptroller as well as the Secretary of State when you shut down your business. The second self-service option is to request a clearance letter for reinstatement. This applies to a business that is behind on filing their franchise tax return, and the Secretary of State will change your active status to inactive if you don't file your franchise tax return. If this is you, or you're not sure if this is you because you're, you're not sure how far behind or whether or not your franchise tax status has been revoked, what you can do is click on the link in the description. The link will take to a guide that I created that'll take you step by step on checking to see what the status of your franchise tax account is. It'll show you exactly what is showing up in the Comptroller and the Secretary of State's system. It'll give you all the steps you need to find out whether or not your franchise tax account is active or inactive. If when you check your franchise tax account status, it shows that your company is inactive, it'll give you access to a resource of how to get your franchise tax account back in good standing in an active status. Now, the third account self-service option here is to change your franchise tax mailing address. It's very important to keep your mailing address up to date because this is how the Comptroller communicates with you. They also communicate via email, so make sure you keep your contact information updated. Your email address, your phone number, and your mailing address is very important. You want to make sure you keep all of those up to date with the Comptroller, and the Comptroller will share that information with the Secretary of so that your information stays up to date across the board. Now that we've gone over what's available on this page, we're going to go ahead and click on File a Public Ownership Information Report so we can get your franchise tax report filed. One more thing that's worth mentioning here is in that orange box, they let you know that you do not owe the $50 late filing fee if you are below the no tax due threshold and file your information report late. That means the report that I'm showing you how to file today. If you file it late, because the deadline is May 15th every year, if you file it late, you will not get charged a penalty. Normally in the past, the comptroller was charging $50 for every year that you were behind on filing your franchise tax return. But when they changed the rules January 1st, 2024, that's when they made this rule as well, where they would no longer charge the $50 penalty to anybody who is below the 2.47 million threshold, you no longer have to worry about a $50 penalty, but you do have to worry about losing your franchise tax active status. Because if you file late and several months go by, at some point, I think it's around October, the Secretary of State will take action deeming that your company is no longer authorized to do business in Texas. So it's very important to keep up with your franchise tax return to make sure that you get it filed and filed on time, because the repercussions are not fun. You would have to go through the whole reinstatement process. And there is a $75 fee with the Secretary of State that you'd have to pay if you end up needing to get reinstated. I'm just trying to give you guys a heads up on that type of issue and how to avoid it. Once you click Continue, you'll see the franchise tax information report. It'll show you any of the outstanding franchise tax reports that you need to file. It also shows you the due date for that franchise tax return. If you're not behind, you'll just see that one annual report that's due. Coming up on May 15th. You'll click the bubble and then click Continue. Notice that the tax report year shows as 2025 even though 2025 is not yet over. The reason why it has that is because it's not referring to your income for 2025, it's actually referring to your income for 2024. So it's based on the income you made from January 1st all the way to December 31st of 2023. 4, and this is how they label their report years. They label it for the current year even though it's referencing the previous year's income. But this is different from what the IRS does. The IRS says your 2025 tax return is due in 2026. So you'll see how the franchise tax report is labeled a little bit differently from the way the IRS does it, or how you might be used to understanding what the tax year is, and that's why they call it a report year. So they go based on the year you're actually reporting it, not based on the actual tax year, but the IRS goes based on the tax year that you're reporting for, even though it's due in a future year. So it can be confusing, but keep that in mind that the franchise tax reports are based on the report year, and they're regarding the previous year's income in when you evaluate whether or not you met the $2.47 million threshold. I just want to make sure I put that out there because I noticed in previous comments there was confusion about the tax years and the tax report years, so I just wanted to clear that up. On the next page, you're going to get the opportunity to update your mailing address if you need to. If everything is correct, you don't have to change anything. Go ahead and just click Continue on this page. But if you need to update your mailing address, go ahead and update that here and then click Continue. And that way it'll get updated with the Comptroller and also with the Secretary of State. On this next page, you'll be actually filing your Public Information Report. And the first section, it shows you who the taxpayer is. It should show your company name, your taxpayer ID, and your Secretary of State file number. Then in the next section, it shows the mailing address. If you updated it, that update should show up right here in this box. Then the third section is the principal office. Now that might be a little bit confusing about what exactly they're looking for right here. You've already provided a mailing address, so the principal office is where you conduct most of your office business, meaning any— like where you take care of paying your bills, where you might do payroll, where you might, uh, do research. If— and this is only in the case if that location where you do your work is different from where you actually conduct the business itself. The next line says principal place of business. That's actually where you conduct business, not where you're doing the paperwork for the business. But for most businesses, all three addresses— the mailing address, the principal office, the principal place of business— they could all three be the same, and there's no problem with it, them all being the same. You could actually use the same address across the board. Just make sure that your mailing address is good for you to receive mail from the Comptroller or the Secretary of State because that information needs to be kept up to date. And then this is your opportunity once a year when you file your franchise tax report. This is your opportunity to update the Comptroller on what your principal office address is, where you conduct your paperwork, uh, business, and then your principal place of business where you actually do your business. So you have the opportunity to update that here once a year. And I want to just take a second to tell you that things change over the year, and if you were to need to make an update other than the mailing address or your contact information, if you need to update anything else, like the next section is regarding your officers, directors, managers, members, or general partners. This is where you list anybody who has control of the business. If you need to update the any of that information or your principal office or principal place of business, then what you need to do is file an amendment, and you'd end up having to pay a fee to file an amendment with the Secretary of State. So making the update here in the franchise tax report is the most cost-effective way to take care of any updates like this. So I would always recommend that you make sure that you have the most up-to-date information. If anything has changed, like if you're a manager-managed LLC, for example, then if you end up needing to change who the manager was from the previous year, when it's time to file this report, you can update that information here and just not include that person's name, and you can include the new manager's name here. Or if you have different directors or any other members and things like that, so any of these people that you need to change out, now's the time to get it done where you will not have to pay a fee to change that information. If you wait past this date and for some reasons, say if you're applying for like a credit application and the creditor wants to be able to look on the Comptroller's website and verify that the correct owners are showing up, or the correct managers or directors are showing up in the Comptroller's website to verify what you're saying on your application. You would literally have to file an amendment with the Secretary of State, and that is not cheap. You'd have to look on the Secretary of State's website to see exactly how much that would cost you, but that would be a way to get your information updated if the timing doesn't work out with when you need to file your franchise tax report versus when you're needing to change information in correlation with when you're putting in an application for credit. That's just an example. Okay, so now we're going to go down to the officers, directors, managers, members, general partner. Okay, so in this section you'll want to review to make sure that you have the correct people who are able to make business decisions on behalf of the business and take responsibility for making those decisions. And, and most of the times it's going to be just yourself if you are the only owner and you don't have have a separate manager or a separate director or anybody else involved in your business regarding the ownership or the management of the company, then your name would go, uh, in the first box. And then for the title, you would list what title you're giving yourself, either an officer, which would be like a CEO, CFO, COO, anything like that, vice president, secretary, any of those titles. or if a manager-managed LLC, for example, then you would put Managing Member if you're the managing member. And then if you're just a member, you can just put Member. There's not necessarily a right or wrong answer here. It's just about clarifying what your title is regarding this company so that when a third party like a creditor or a bank looks at your information in the Comptroller system, they know, okay, who— this person has the authority authority to open a bank account. This person has the authority to open up a new credit card or a line of credit. So it's important to be careful about who you list here and what their titles are regarding the company. I can't advise on exactly which title you should give yourself, but generally speaking, if when you first registered your LLC with the Secretary of State, if you chose that the company would be manager-managed, then in the title section you would put manager. Or you would put, uh, managing member. You can put either of those two and you should be safe, especially if you're the owner as well. And then the next part asks if this person is a director, yes or no. I would mark yes if this person is yourself and you have the authority to make the decisions across the board for the company. So marking yourself as a director gives you the authority to make these type of decisions, and it also allows the banks and creditors and whatnot understand that you have the authority to make decisions. So when you go in, they won't question whether or not you're allowed to make these decisions for the company. Now, the next box says Term Expiration Date. Unless you're planning to fire the person you're listing in the future or relieve them of duty, then I would leave the Term Expiration Date blank. Now, if it was a manager that you're listing here that is temporary, or they're a director and they're temporary, and you're you're planning to have like a vote, uh, in your LLC or with your board members, or you're going to have a vote with your corporation. If you've got special situations like that coming up, if you want to make sure that the person that you list here only has the authority for a certain period of time, then that would be a scenario in which you'd write the term expiration date and list exactly what date their authority ends. So that way it's on the Comptroller's website and, and banks and creditors and whatnot, they can see that's the term of that person's authority. Now, if you are only listing you here and you're making yourself the manager, or you're just listing yourself as a member, and then you click yes for the director, I don't recommend you put anything in the term expiration date. In the next section, you'll put the address. This address can be your home address or this person that you're listing here can use the company's address. It is completely up to you, but they need to be able to have access to the mail that could be issued to them from anyone at that address that they list here. So make sure that it's a good mailing address. That way, in case somebody reaches out, they can actually reach them. But like I said, you can, you can always list the same address across the board. As long as it's a good mailing address. If it's just you running the company and you don't have anybody else that runs the company or that you give authority to run the company, then once you've listed yourself, if you're the only person that's going to be listed here, you're done with this section and we can move on to the next section. Here it says Owned Entities. Okay, if you open the business yourself as an individual and you're the direct owner of the company, then you would skip this section because that means it's owned by an individual not by another entity. And the next section is similar because it's asking you if this company is owned by a corporation. But if that's not the case and you own your own company as an individual, then you would skip this section as well. Now we're at the registered agent section. I have a couple of tips for you about this. When you first formed your LLC or corporation with the Secretary of State, you were required to hire a registered agent. And if you filed yourself, you could have listed yourself as the registered agent. And the registered agent is responsible for receiving any formal documents that the company gets issued, like if there's a court letter that goes out, uh, if you're being sued, anything from the, uh, Secretary of State, things like that. The person who's listed or the company that's listed as your registered agent, they're responsible for receiving that type of information because the state wants to make sure that you've got an actual person or a company that is open for regular business hours Monday through Friday to receive any court documents that you get issued. And if you don't have a valid registered agent on file with the Secretary of State, that can also get your franchise tax account revoked. A valid registered agent is required at all times, so you got to make sure you keep that information up to date. If you have a new registered agent, you can list that here in this section where it says registered agent and office, and it asks you for agent name, which could be yourself or it could be a third party that you hired, and then the address for your registered agent. And again, this address has to be good for receiving mail and also being able to receive court documents, like if you're being served. So that's very important to make sure you update that information. But if you update it here, this information is the only information that does not get forwarded to the Secretary of State. You have to go to the Secretary of State's website and file a separate form to update your registered agent on file. It doesn't cost very much, it's only $15 to update it, but you need to make sure that you update it there. You can provide the updated information here, but it will not transfer over to the Secretary of State, and that would make you not in compliance with the Secretary of State, and you risk the chance of losing your LLC or corporation. And you want to make sure you keep that information up to date directly with the Secretary of State. Now we're at the last section, and that is the declaration statement. They want you to declare that all the information you provided is true and correct to the best of your knowledge and belief. And they also want to make sure that you give a copy of this public information report to anybody who's listed here on this report, such as yourself, or if you have an assigned manager or director or whatnot. So they want to make sure everybody has the updated information so that that you're not assigning somebody a role as running your company when they haven't agreed to run your company, which can happen. Seems crazy, but hey. So after you read this section and you agree, go ahead and check the box and then go ahead and click Continue. You're now— you're going to get a chance to review everything that you put on the Public Information Report. Make sure you check every section, make sure it looks good. If everything looks good, you're ready to click Submit Report. All right, you've done it! You have successfully filed your franchise tax report. Make sure you click on Print This Page for your records. That way you can save a copy of what you just got through filing, and you'll have proof that you did file it on the date that you filed it and the time that you filed it. Because this submission has been assigned an ID number, the date that it was filed, and the actual time to show as your proof that you did file it by the time that you actually filed hopefully on time. Once you've saved the report, you can go ahead and log out, or if you have another business that you need to file a franchise tax report for, when you scroll to the bottom, you'll see an option to return to the main menu in case you need to file another tax report. If you're one of the business owners that are not sure whether or not your company status is still active because you're behind on filing, click the link below to check the status of your company, and if you find out you're not showing as active, the guide will also provide some resources on what to do to get reinstated. And get back in good standing with the Secretary of State. So be sure to click the link below in the description. If you're a small business owner in Texas and you have questions on how to file your franchise tax return, or you have other business questions that you'd like to ask me, I do have a membership where I offer a private community where you can ask questions. It also gives you access to a live monthly video call that I do with all my members where they're able to ask me questions directly there as well. And my members get access to all the courses that I have available as I create them, and they get notified when I add new ones to them. The membership is called BAM Boss Membership, and BAM stands for Business and Money Management. I created the membership to be able to support small business owners that have one-off questions. If you're interested in learning more about the membership, go to lomarisper.com. If you have any questions, please put it in the comments below. I read all of my comments, and I also reply to all of my comments, so please put that there if you do have any questions. I hope you enjoyed this video, and I appreciate your support. Until next time.