Summary of What This Blog Covers:
- Clarifies Core Texas Tax Requirements for Startups
Learn why every Texas LLC must file franchise tax reports and public information reports annually—even if your business didn’t earn revenue—and how sales tax rules apply to both physical goods and certain services. - Guides You Through Sales Tax and Foreign LLC Registration
Understand when your startup needs a Texas sales tax permit, how to collect and remit sales tax correctly, and what steps to take if you’re doing business in Texas but registered in another state. - Outlines Strategies for Staying Compliant Across Multiple Jurisdictions
Discover how to stay on top of deadlines for franchise tax, payroll tax, estimated taxes, and multi-state operations, including W9 and 1099 filing obligations and how economic nexus laws may impact your business. - Explains When to Consider S-Corp Status and Additional Tax Planning Tools
Get insight into when electing S-Corp status makes sense, what additional responsibilities come with it, and how Insogna CPA can help with advanced tax planning, including capital gains tax, 1031 exchanges, and more.
You’ve done it. You’ve taken the leap, launched your startup, and put your vision into motion. But now, the part no one warned you about is creeping in: Texas tax compliance.
From franchise tax filings, to sales tax permits, to making sure you don’t accidentally trigger multi-state reporting, starting a business in Texas is filled with fine print that can trip you up fast.
But don’t worry, you’re not alone. At Insogna CPA, we help entrepreneurs across Austin, Round Rock, South Austin, and beyond sort out tax rules, avoid costly penalties, and stay focused on growth. Whether you’re hiring your first employee, managing your first contractor with a W9 tax form, or debating whether to elect S-Corp status, this guide is your roadmap.
Let’s walk through how to simplify Texas tax compliance and set your startup up for long-term success.
Why Texas Taxes Can Be So Confusing for Startups
Texas is well-known for having no state income tax, which is great for individuals but it doesn’t mean businesses are off the hook. In fact, navigating Texas tax regulations is one of the most misunderstood parts of launching an LLC here.
Here’s why founders get overwhelmed:
1. Franchise Tax Filings Are Required for Every LLC
Even if your LLC made zero revenue last year, Texas still expects a Franchise Tax Report and a Public Information Report (PIR) each year. Miss this, and you could lose your LLC’s good standing or worse, face fines and interest.
2. Sales Tax Rules Are Broader Than You Think
Texas applies sales tax not just to products, but also to certain services, software, and digital goods. So if you’re offering marketing services, hosting, or SaaS products, you may need a sales tax permit.
3. Multi-State Operations Add Compliance Complexity
If you’re doing business in multiple states (hiring remote workers, selling across state lines), you may need to register as a foreign LLC in Texas, while also navigating sales tax nexus in other jurisdictions.
Step 1: Know Your Texas Franchise Tax Requirements
Here’s the kicker: Franchise Tax is based on revenue, not profit. If your LLC makes over $1.23 million in annual revenue (as of 2024), you’ll owe tax. But even if you’re below the threshold, you still have to file.
What to Do:
- File your Franchise Tax Report by May 15 annually
- Submit your Public Information Report (which lists LLC ownership)
- File a “No Tax Due” report if you’re below the filing threshold
How We Help:
We handle this entire process for you: tracking deadlines, filing through the Texas Comptroller portal, and ensuring your business remains in good standing. We also tie your filings into your QuickBooks Help, QuickBooks Online Accountant, or FreshBooks system for a seamless year-end close.
This is where most “DIY” tax solutions like TurboTax Free, TaxFreeUSA, or TurboTax Online fall short. They don’t monitor your entity compliance or help you fix it when something goes wrong.
Step 2: Determine If You Need a Texas Sales Tax Permit
If your startup sells taxable goods or services, the state of Texas wants its cut. That means you must register for a sales tax permit, collect the correct rate (which can vary by locality), and remit your taxes on time.
You’re Required to Register If You:
- Sell physical products in Texas
- Provide taxable services (e.g., marketing, web hosting, IT support)
- Have economic nexus due to online sales
Filing Requirements:
- Register for your sales tax permit with the Texas Comptroller
- Submit sales tax returns monthly, quarterly, or annually
- Track taxable and non-taxable revenue in your accounting system
How We Help:
We walk you through the sales tax permit process, set up sales tax tracking in ZohoBooks, QuickBooks Self-Employed, or WaveApp, and file your returns on time. We also help reconcile account receivable and account payable balances to keep your records clean.
Sales tax compliance is also where services like H&R Block near me USD, Jackson Hewitt near me, or TurboTax Free File fall short. They rarely offer the local Texas-specific support that your business needs.
Step 3: Register as a Foreign LLC if You’re Doing Business in Texas
If your company was formed in another state (Delaware, California, etc.) but you’re now operating in Texas, you’re required to register as a foreign LLC.
Requirements Include:
- Filing a Certificate of Authority with the Texas Secretary of State
- Appointing a registered agent in Texas
- Complying with all Texas franchise tax and sales tax laws
If you skip this? You risk:
- Losing the ability to enforce contracts in Texas
- Paying penalties and back taxes
- Falling out of compliance with your state of formation
How We Help:
We’ll take care of your foreign LLC registration, handle the registered agent setup, and integrate your compliance into your startup’s existing systems whether you’re running on QuickBooks Help, Wave Accounting, or FreshBooks.
Step 4: Avoid Missed Deadlines with Proactive Compliance
Tax deadlines aren’t just a paperwork nuisance, they come with real consequences. Miss a filing, and you could be facing:
- Late penalties
- Interest charges
- Loss of LLC good standing
- Ineligibility for business funding
Common Startup Deadlines:
- Franchise Tax & PIR: May 15 annually
- Sales Tax: Varies—monthly, quarterly, or annually
- Form 1065, Form 1120, Form 1040: Depending on entity type
- Estimated Tax Payments: Via Form 1040 ES, due four times per year
- Payroll Tax Returns: Includes W2 forms, Form 941, Form 940
We automate tracking and send filing reminders. Our clients no longer search for “tax places near me” at midnight—they just call us.
Step 5: Plan for Multi-State Tax Compliance
If you operate across state lines, your startup could be responsible for:
- Registering as a foreign LLC in other states
- Paying sales tax in multiple jurisdictions (thanks to economic nexus laws)
- Managing multiple sets of state-specific rules
Other Multi-State Filing Considerations:
- W9 form USD and 1099 NEC Form compliance
- 1099-K reporting for online payment platforms
- Handling Form 1095-C for health insurance compliance
- Managing remote employee payroll taxes
This is especially important if your business is self-employed and you’re trying to handle compliance using basic software, that’s where we come in. Real people offering real support that tools like TurboTax Com, Tax Act, or Intuit TurboTax can’t match.
Bonus: When an S Corporation Might Make Sense
Once your business hits around $60,000 in net income, it may be time to consider electing S-Corp status by filing Form 2553.
S-Corp Benefits:
- Pay yourself a reasonable salary (reported on a W2 form)
- Take additional profit as distributions, which are not subject to self-employment tax
- File a corporate return via Form 1120-S
But there’s also increased responsibility:
- Managing payroll and filing Form 941 quarterly
- Staying compliant with ownership-based profit distributions
- Issuing W2s and possibly 1099s for contractors
How We Help:
From calculating your reasonable salary using a self employment tax calculator, to setting up payroll via Intuit QuickBooks, ADP, or Gusto, we help startups like yours execute an S-Corp election strategically—and compliantly.
Why Startups Choose Insogna CPA for Texas Tax Compliance
We’re more than tax preparers—we’re your startup tax strategy partner. Here’s what you get when you work with us:
Strategic Value:
- Certified CPA and chartered professional accountant guidance
- Help choosing between LLC, S corporation, or C corporation
- Assistance with capital gains tax, 1031 exchange planning, and short term capital gains tax strategy
Full-Service Support:
- Custom accounting packages for small business
- End-to-end support with sales tax, franchise tax, multi-state compliance
- Year-round access for planning, not just annual filing
Whether you’re just forming your LLC or running a high-growth startup, our expert team of enrolled agents, certified accountants, and bookkeepers ensures your business is protected and positioned for growth.
Contact Insogna CPA today to schedule a consultation with one of the top-rated accounting firms in Texas. We’ll help you register, file, and grow—with confidence.
Because when your tax strategy is strong, your business can go anywhere.