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Tag: Anshul Goyal CPA
Texas Franchise Tax vs Sales Tax: Which One Hits You First?
Starting a business in Texas? You’ll likely face two major state-level taxes: the Franchise Tax and the Sales and Use Tax. But which one applies first? Which one costs more? This guide will break down how each tax works, when it kicks in, and what startups, e-commerce sellers, and service providers need to prioritize in […]
Asset vs Stock Sale Exit: Margin-Tax on Built-In Gain in Texas
Whether you sell your business via an asset sale or a stock sale, Texas may tax the gain , but how and when depends on the deal structure. Unlike federal capital gains, Texas imposes a Franchise (margin) tax on certain receipts, including built-in gain from asset sales. Here’s how to structure exits in 2025 to […]
Texas Unitary Group Rules Explained
If your business operates multiple entities under common control, Texas may require you to file a combined Franchise Tax Report as a unitary group. Ignoring this rule could lead to underreporting, penalties, and even forfeiture. Here’s what every holding company, affiliate group, and multi-LLC structure must know in 2025. What Is a Unitary Group? Under […]
Arm’s-Length for Margin Tax Purposes in Texas
If you operate multiple business entities , especially across states or internationally , and charge management fees between them, Texas wants to ensure these are arm’s-length and not being used to reduce Franchise Tax improperly. Here’s how to structure intercompany fees to withstand scrutiny from the Texas Comptroller in 2025. What Are Intercompany Management Fees? […]
Cost of Goods Sold for Software
Texas allows businesses to reduce their Franchise Tax by deducting Cost of Goods Sold (COGS) , but what counts as COGS for software developers, SaaS firms, and digital product sellers? The answer lies in Texas Administrative Code Rule 3.588, which offers specific guidance for tech-based companies. Here’s how to apply it in 2025. What Is […]
Compensation Deduction Cap ($370K) for 2025
Texas Franchise Tax law allows a deduction for compensation paid to employees , but it’s capped. For 2025, the maximum deduction per person is $370,000. For founders and key employees, smart planning around this cap can reduce your Texas Franchise Tax without triggering IRS or state-level scrutiny. What Is the Compensation Deduction Cap? Under Texas […]
How Stripe Tax Handles Texas Local Sales Tax Rates
Stripe Tax helps businesses automate sales tax collection, but when selling to Texas customers, things get more complex. Texas not only imposes a 6.25% state sales tax, but also adds up to 2% in local sales tax. Does Stripe handle this for you? Here’s how Stripe Tax manages local rates and what Texas sellers need […]
Do API Vendors Trigger Collection in Texas?
If your tech startup sells digital goods, software, or services through an API or platform, you may be surprised to learn that Texas classifies some API-driven ecosystems as marketplaces. Under Texas law, marketplace facilitators are responsible for sales tax collection. So do API vendors qualify? Let’s break it down. What Is a Marketplace Facilitator? According […]
Texas Sales Tax Exemption on R&D Equipment
Tech and R&D-driven businesses in Texas can qualify for a sales-tax exemption on certain equipment and software purchases used for research and development. Under the 20% discount rule, you don’t need to apply for full exemption status , you can claim an automatic 20% sales tax reduction at point of sale. Here’s how it works […]
$500K Economic Nexus: Remote Seller Threshold for SaaS in Texas
If your SaaS company sells to Texas customers , even without a physical presence in the state , you may be required to register, collect, and remit sales tax. Why? Because Texas enforces a $500,000 economic nexus threshold on remote sellers, including digital and cloud-based platforms. What is Economic Nexus? Economic nexus means a business […]