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The objective of the annual report is threefold. The annual report keeps the Government informed about all the updates, it communicates about all the modifications or changes, & it keeps the LLC members informed about the necessary taxes and costs. This article has all the information about the Texas LLC annual report filing in Texas.
An annual report can be called an address book, as it features all the relevant addresses of the company & the members. This yearly report is a record of all the company’s activities in an entire year. It is also referred to as the Annual Franchise Tax Report because it helps in filing the franchise tax.
Content of the Annual Report
Typically, the annual report filed by an LLC in Texas (or any other business entity for that matter) will include all the information related to its business & members. The standard contents of the annual report or the annual franchise tax report are
- Office Address of the LLC
- Names & Addresses of the Members & managers.
- Identification Documents
- Social Security numbers of the key members of the LLC
- The objective of the business of the LLC
- List of all the signatories of the LLC
- Information of the registered agent, if any
LLC Tax Update: Before you file your LLC annual report in Texas, make sure to pay all the tax dues for the year.
Texas LLC Annual Report
An annual report filing is a mandatory requirement for all LLCs. An Annual report ensures that all the information provided by an LLC is accurate & updated. This information is essential for the State officials to ensure that all the companies pay taxes.
You might have come across articles stating that LLC annual reports are not required in Texas, or that LLC reports are filed with a different authority in a different format.
So, to clear the clutter, let’s just say that the LLC Annual report is called “the Franchise Tax Public Information Report” in Texas. This Franchise Tax Public Information report is filed with the office of the Texas Comptroller of Public Accounts (Not with the Secretary of the State, as it is filed in any other state.) Note that the LLC Annual Report is not the same as the Certificate of Fact-Status in Texas.
Does the State of Texas Require an Annual Report Filing?
The State of Texas does not have any Initial Report Requirements. But, it is mandatory to file the Texas annual report (known as the Franchise Tax Public Information Report) with the Texas Comptroller of Public Accounts.
All the legal entities, such as C Corporations, Limited Partnerships, and Limited Liability Companies, are bound to file the Franchise Tax report along with the Franchise Tax.
How to File a Texas LLC Annual Report
As mentioned earlier, the Texas Annual Report, also known as the Annual Franchise Tax Report, must be filed with the Office of the Texas Comptroller of Public Accounts. It must be filed by May 15 every year; otherwise, an LLC will incur a $50 fine. There are two ways to file the Annual Report: online and by mail.
To file the report online, LLCs have to register with the Texas Comptroller of Public Accounts’ official website. If the individual or the LLC is already registered, signing in to the portal allows one to start filing the yearly LLC report. Here are the steps to file an LLC annual report in Texas online.
- Step 1: Visit the Texas Comptroller of Public Accounts site to create an account or sign in to the portal.
- Step 2: If you are new to this portal, you must create a profile here. To create your profile, click on the ‘Create Profile’ button on the Home Page of the portal. You will receive a form to complete.
- Step 3: The online form consists of four sections. Firstly, provide the user with information such as their name, email address, and phone number, along with a unique user ID and password. In the second section, provide the security questions and add the answers. In the third section, read and accept the terms of use. Finally, in the last section, verify your email and phone number by accepting a one-time passcode.
- Step 4: Once profile creation is complete and verification is completed, you can log in to the portal using your user ID and password. Proceed with the filing of the Annual Franchise Report online.
- Step 5: The final step in filing the report is to review the information provided in the Annual Report and make the required payment. Read the instructions for filling out the Annual Report carefully before you make the payment.
Filing Texas LLC Annual Report By Mail
To file the Annual Franchise Report in Texas by mail, follow the steps below,
- Go to the Texas Comptroller Downloadable Forms page.
- Get the Annual Franchise Report Form from the list of forms.
- Download the form (.pdf) on your personal computer.
- You need Adobe Reader installed to fill up the form.
- Fill out the forms with the correct information and save them.
- Print the forms and attach the supporting documents.
- Write a paper check properly to make the payment. See the instructions!
- Send the printed copies of the forms and documents to the address, Texas Comptroller of Public Accounts P.O. Box 13528, Capitol Station Austin, Texas 78711-3528.
Texas LLC Annual Report (Domestic & Foreign)
| State Office: | Texas Comptroller of Public Accounts P.O. Box 13528, Capitol Station Austin, Texas 78711-3528. Links to Website, Forms, File & Pay |
| Due Date: | May 15, Every year |
| Filing Fee: | The Texas Comptroller of Public Accounts charges a $50 penalty on a report that is filed late, plus he charges a 5% penalty on the tax that is due. If the annual report is not filed even after 30 days past the due date, an additional 5% penalty is charged on an LLC. |
| Penalty: | The Texas Comptroller of Public accounts charges a $50 penalty on a report that is filed late, plus he charges a 5% penalty on the tax that is due. If the annual report is not filed even after 30 days past the due date, an additional 5% penalty is charged on an LLC. |
| Filing Method: | Online Or by Mail |
| Forms: | Once a Domestic or Foreign Texas Limited Liability Company submits the Franchise Public Information Report along with the prescribed taxes to the Texas Comptroller of Public Accounts, there is no need for an LLC to file it again with the Texas Secretary of State. |
| Important Information: | Once a Domestic or Foreign Texas Limited Liability Company submits the Franchise Public Information Report along with the prescribed taxes to the Texas Comptroller of Public Accounts, there is no need for an LLC to file it again with the Texas Secretary Of State. |
Annual Report Deadline
The Franchise Tax Public Information Report must be filed by May 15 each year. Every LLC is bound by this rule, except for an LLC in its first calendar year of business. For the first calendar year of business, an LLC will file the annual report next year. For example, the LLC, which was formed in January 2021, will submit its annual report on May 15, 2022.
Penalties for Non-filing or late filing
Filing the Franchise Tax report is essential for every type of entity in the State of Texas, so much so that there can be penalties for non-filing of the Franchise Tax Public Information Report. The non-filing penalty or the late filing penalties for the annual report with the Comptroller are $50. Most States charge additional penalties in case of a lapse in filing. Texas Authorities have the power to dissolve an LLC in certain circumstances, specifically when the annual report has not been filed on time.
Tax Structure in Texas LLC
For an LLC in Texas, the tax structure is very simple and flexible. First of all, every LLC has the advantage of a pass-through taxation. On the other hand, an LLC can choose the desired tax structure at the time of formation. There are two ways an LLC can be taxed,
Default Status:
When filing your LLC in Texas, entrepreneurs have the opportunity to select a desirable tax structure. If they do not choose a specific structure, the LLC will be taxed under the ‘Default Status’. That means the tax will be levied based on the number of LLC members.
For a single-member LLC, it is considered a ‘disregarded entity’. This means that a single-member LLC does not have to file a federal income tax return, but the individual (or the LLC member) must file it personally. In the case of a single-member LLC, it is treated as a sole proprietorship.
In the case of a multi-member LLC, it is considered a partnership for tax purposes. Hence, the default status for a multi-member LLC is a partnership firm. LLCs are required to file a separate ‘partnership form’ with the IRS.
LLCs with Spouses: There are specific states (like California) where starting an LLC with a spouse is considered a single-member LLC instead of a partnership or multi-member LLC. In such cases, both husband and wife will be liable to pay taxes
Elective Status:
For an elective status, the LLC can choose the tax structure while filing the formation documents. LLCs in Texas should file a separate tax form if they do not wish to be taxed by default. Many LLCs choose to be taxed as a corporation to enjoy corporate benefits, especially if the LLC is large.
LLCs can choose between S-Corp and C-Corp tax status when filing the formation document in Texas. In that case, the concerned LLC needs to submit a separate form for each type it chooses. For the S-Corp type, Form 2553 must be submitted; for the C-Corp type, Form 8832 must be submitted.
In Texas, there may be local taxes (inquire with the local government body for details) that LLCs must pay to be updated. Make sure to pay and update your tax dues before you file your annual report in Texas.
Annual Report vs Certificate of Fact-Status in Texas
The Certificate of Fact-Status is a legal document that certifies that an LLC in Texas is in good standing and compliant with all applicable laws. That includes an updated annual report as well. While Annual Reports show if your company is up to date.
They are both similar documents (although not identical) and serve as proof of the company’s good standing. The Annual Report is a domestic document, whereas the Certificate of Fact-Status in Texas is a mandatory document if the LLC is going beyond the home state to a foreign state. There are several ways to obtain a Certificate of Fact-Status in Texas.
In Texas, you must request a Certificate of Good Standing through the online portal. You can log in to Request Certificate of Fact-Status by visiting the link. A filing fee of $15 must be paid to the SOS to obtain the Certificate of Fact-Status. The amount might be more depending on the number of copies you request. If you request additional copies of documents, you may incur an additional fee.
Generate Certificate of Fact-Status:
- Online application: Log in to Request Certificate of Fact-Status
- Offline application: No offline request form
- Fees: $15
Why Do LLCs Have to File the Annual Report?
Some of the states are not required to file this yearly report, commonly known as the Annual Report. However, there are some reasons why states should file an LLC Annual Report. Here are some reasons,
To Maintain the Accuracy of the Information
An annual report filed by the LLC has all the updated information about its official addresses & the names or addresses of all its officials. This updated information allows the State authorities to track down any LLC when communicating.
To provide the Correct Correspondence
Many times, any creditor or other entity willing to transact with the LLC requires the correct correspondence address. If this information (which can only be modified with the help of an annual report) is not updated every year, such entities will not be able to communicate with them.
To Notify the Government About All the Significant Changes
If you have changed your main business address or had new business appointments of managers or members, the annual report notifies the State Government Entities about it. So, the next time someone questions a newer reform that you have introduced in your LLC, you will be saved because you had submitted the information to the Government.
To Provide an Activity Log of an LLC
The Annual report is like an activity log of the LLC. It brings on record all the transactions, new associations, appointments, etc. & keeps those records intact for all future references.
To Help You With the One-time Filing of Taxes
The annual report is an excellent means to keep you on your toes in case of your dues payment. Every LLC must pay taxes through the annual report filing. By filing the report on time, the LLC can manage the exemptions & can avoid penalties imposed by the Government.
To Enable the State to Track the Payments
The government authorities use all the information filed through the annual report for tracking the payment of State Taxes.
Seek the Help of a Registered Agent
Every State will have a different rule for filing the Annual Report. Usually, it is submitted annually, but in some states, it is submitted every other year. Some states require the filing of the report only once in ten years.
Not only the timing, but also the mode of filing, proper addresses, exemptions, legality, annual report compliance, etc., must be taken care of when paying taxes or filing reports with state authorities. In many such scenarios, it is advisable for an LLC to appoint a Registered Agent to manage all these matters. Check out the best LLC service that offers all the services at an affordable price. An experienced agent is required for:
- Streamlining the mandatory processes & filing.
- Sending or receiving any documents.
- Reminding you of important tax filing and payment dates.
- Simplifying the filing procedures.
- Avoid any penalties.
- Flexibility in working.
- Maintaining Privacy (as it keeps your personal records off the public record)
You can read more about a Texas Registered Agent here.
FAQs
Yes, an annual report is essential for every business entity in most states. Some states also require filing biennial or decennial reports.
A Yearly Business Report or the annual report typically incorporates the address of the business, names & addresses of the members, a list of all the signatories, SSN of the members, & details of the registered agent.
A Registered Agent is well-aware of all the filing requirements, annual report filing fee, & overall Annual Report compliance. The knowledge & proficiency of the registered agent allow the smooth filing of reports & other fees.
The most important thing for filing an Annual Report is record-keeping. Ensure that you document every transaction thoroughly.
Yes, the fees may vary depending on the type of entity or the type of legal entity you are representing.
In Conclusion
An LLC must file various types of reports, such as the Application for Reinstatement and the Periodic Report of a Limited Partnership (typically filed by an exempt nonprofit organization), depending on the entity’s type. The Annual Report is mandatory irrespective of the entity type. It requires compliance across entities.
Additionally, please note that an annual report is not the same as a Certificate of Fact-Status in Texas. They might look similar, as many parts of the certificate are the same as those in the annual report; however, it is a completely different document and should be compliant with the filing requirements for the annual report in Texas.