- Need Professional CPA?
Tag: Texas franchise tax
Texas Franchise Tax Guide: Who Must File And Pay
Introduction The Texas Franchise Tax is one of the state’s primary business taxes and applies to most entities operating in Texas. Even though Texas has no personal or corporate income tax, most business entities are required to file a franchise tax report each year with the Texas Comptroller of Public Accounts. This guide explains who […]
Starting a Business in Texas: Smart Tax-Saving Strategies for you
Introduction Texas continues to be one of the most business-friendly states in the U.S., attracting entrepreneurs with no state income tax, a strong economy, and low regulatory barriers. Whether you’re launching a startup, forming an LLC, or expanding an existing business, understanding Texas tax laws can help you minimize costs and stay compliant from day […]
Venture Debt Warrants: Franchise-Tax Classification in Texas
Venture Debt Warrants Texas startups raising capital through venture debt often issue warrants as incentives, but the classification of these warrants for Texas franchise tax purposes can create unexpected tax liabilities if misunderstood. Inexperienced advisors may misclassify warrant proceeds, leading to inflated taxable margins or compliance issues that deter investors. Are you ensuring your venture-debt […]
Texas Gross Receipts Tax Myths (Hint: It’s the Franchise Tax)
Many founders and out-of-state business owners believe Texas has a gross-receipts tax. While technically false, this myth exists because the Texas Franchise Tax – also known as the margin tax – functions similarly by taxing total revenue with limited deductions. Let’s debunk this and explain what Texas actually taxes in 2025. Is There a Gross-Receipts […]
No Personal Income Tax in Texas: What Founders Still Owe
Introduction Texas doesn’t tax personal income—but that doesn’t mean you owe nothing. Founders often confuse “no state income tax” with “no tax obligations.” In 2025, Texas-based entrepreneurs still face franchise tax, sales tax, local property taxes, and various regulatory fees. Here’s what you need to know to stay compliant while leveraging the Lone Star State’s […]
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 […]
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 […]
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 […]
PTET Copycat? Why Texas Has No Pass-Through Elective Tax
In 30+ U.S. states, pass-through businesses can elect to pay income tax at the entity level to bypass the $10,000 SALT deduction cap. But not in Texas. Why has Texas avoided adopting a PTET regime, and what does that mean for LLCs, S-Corps, and partnerships operating in the state? What is PTET? The Pass-Through Entity […]