Do I need to file a franchise tax report for my LLC?

[John Morgan]

I formed an LLC in Texas for my 6 rental properties last year. A letter from the Texas Comptroller of Public Accounts says my company's first franchise tax report is due in May. What is this and do I need to file it for my LLC? Are there any other annual fees with having an LLC? I'm new to this obviously so thank you for any info!

Also, one of my properties is a vacation nightly rental in Missouri. Do I need to file anything with MO for my one property there..like a foreign entity or any other annual permit? My attorney says I don't. Only if it generates a lot of money..like over a million. And he says I don't need to pay any annual fees or permit for my Texas LLC. He said once he set it up for me, we're good to go and nothing further needs to ever be done with keeping it registered. Just wanted to double check since he's not a CPA.

[Sam Shueh]

Talk to your CPA where you file tax. If you got none HR Block. Unless your lawyer is a CPA in Tx and Missouri I listen to my CPA.

[Eamonn McElroy]

@John Morgan

As the LLC was formed in TX, you have exposure to the TX Franchise Tax.

If the LLC revenues are under $1.13 million for 2018, you may file a "No Tax Due Report".

Note that you would also generally have to file a "PIR" (Public Information Report) as well with TX.

Your tax obligation exposure to MO depends on quantitative factors as well as qualitative factors.  Net taxable income level needs to be considered, as well as documenting MO NOL annually to use against an eventual substantial MO taxable event (e.g. sale of the MO real estate asset).

[Clifford Paul]

Ongoing Texas LLC Requirements

Forming your LLC is just the beginning. You must also take steps to maintain the business and keep it in compliance with the state.

For starters, you must file a franchise tax and public information report with the Comptroller's office. This report is due between January 1 and May 15 and must list the names and contact information of your managers, officers, and directors. The required fee is calculated according to a taxable margin, but the average cost is about $101.

Most states refer to this fee as an Annual Report, but its other names include:

• Annual List of Members
• Annual Certificate
• Biennial Report
• Annual Registration Fee
• Biennial Statement
• Periodic Report
• Decennial Report
• Business Privilege Tax Return
• Franchise Tax Report

Failing to pay your annual LLC fees can result in your business being dissolved. When you calculate all required fees and formation costs, you can spend anywhere from $1,000 to $3,000 on your business. Aside from the franchise tax, however, Texas imposes no additional annual fees on LLC

[Bart H.]

Originally posted by @John Morgan:

I formed an LLC in Texas for my 6 rental properties last year. A letter from the Texas Comptroller of Public Accounts says my company's first franchise tax report is due in May. What is this and do I need to file it for my LLC? Are there any other annual fees with having an LLC? I'm new to this obviously so thank you for any info!

Also, one of my properties is a vacation nightly rental in Missouri. Do I need to file anything with MO for my one property there..like a foreign entity or any other annual permit? My attorney says I don't. Only if it generates a lot of money..like over a million. And he says I don't need to pay any annual fees or permit for my Texas LLC. He said once he set it up for me, we're good to go and nothing further needs to ever be done with keeping it registered. Just wanted to double check since he's not a CPA.

 You have to file an annual report, if it is less than a certain amount. (I forget the amount) you can just file that you are exempt from any tax payment.  but it does have to be filed annually.

[Phillip Lanier]

@John Morgan, Yes you do.  Even though you probably will pay zero dollars in fees.  If you made over $1,130,000 in 2018, then you have to pay the franchise tax.  If you made under that amount, you just file, state what you made and the amount will be zero.  But... You still have to file.  If you don't, you will pay a $50 penalty.  

You can start by creating an account:  www.comptroller.texas.gov

Info here:  https://comptroller.texas.gov/taxes/franchise/