S corp filingFor Texas owners May is still open after March.

Books, the wage setup, and Form 1120-S are prepared in Dallas. An owner past Fort Worth, or south of it, does not hear a made-up storefront on their block. The meeting is a video call. The books are shared. The month closes on the day we named, the same day it closes for a file in Dallas.

Readers outside Dallas and outside Fort Worth are on a video, not in a room we pretend is on their street. We are all Texans. What follows that line is the acknowledgment, each K-1, and the wage forms, plus the Texas report that belongs to this company. A morning wind that sticks a shop door is a feeling Dallas knows, and then the feeling has to turn back to the file. Wind never produces an acknowledgment, a K-1, or a wage form that matches the payroll register.

The practice is in Dallas. Owners in other Texas cities are served on purpose from here, by video and by a shared set of books. We do not claim an office in those cities, and we do not claim we have walked their streets.

The Texas Secretary of State can hand the company a certificate of formation. That paper says the company exists under Texas law. It does not say the IRS accepted an S corporation election. Form 2553 is the federal election. The letter that comes back is the gate we trust. Until that letter is in the file, we do not start the three proofs, even when the state certificate is framed on the wall.

A registered agent change is filed with the Secretary of State. It is not written on the franchise information report. An officer who moved, and a registered agent who moved, are two different filings. Mixing them is how a company thinks both offices have the new name when only one of them does.

People sometimes treat the state receipt as the acceptance letter. The receipt shows what Texas recorded. The letter shows what the IRS accepted. We want the letter before the annual count of an acknowledgment, a K-1 in each owner's hands, and wage forms that match the payroll register.

Each year Texas taxes the privilege of operating a company in the state, and that charge is the franchise tax. An S corporation is one of the entities the Comptroller treats as taxable, in the same list as a limited liability company and as other companies formed here or carrying on business here. Someone who never formed a company, and who reports only under a personal name, generally stays off that list. A single member limited liability company stays on it.

On an ordinary calendar both the franchise report and the short report aim at 15 May. If May 15 lands on Saturday, Sunday, or a holiday, the following business day becomes the day that counts. For both the 2026 report year and the 2027 report year, yearly revenue at or under two million six hundred fifty thousand dollars means the franchise tax itself is zero and the tax report is not the paper that goes in. The short information report still has to be sent, unless the Comptroller skip list already covers this company. Leave that short report unsent and the company can lose the right to transact business in Texas.

The Comptroller prints the rules on its franchise tax page. The threshold we follow is the figure published for the year this file is in. A number from an older report year stays in that older year.

Form 05-102, the public information report, is the short report for a Texas corporation, a Texas limited liability company, a Texas limited partnership, a Texas professional association, or a Texas financial institution, and also for one of those with the Texas connection the Comptroller calls nexus. Everyone else on the taxable list uses Form 05-167, the ownership information report. An officer, a director, or another person the company has authorized signs the public report. What the ownership report says about who owns the company stays confidential.

That short report shares the franchise report's day, and it shares that day in a year when the tax itself is zero. The Comptroller's own exceptions include exempt entities, a company with no Texas organization and no Texas nexus, a passive entity, and a qualifying new veteran owned business during its first five years. A combined group does not share one short report. Each member organized in Texas, and each member with nexus, files alone.

Miss the short report and the Comptroller can take away the company's right to sue, and the right to defend a case, in a Texas court. Officers, directors, partners, members, or owners can be reached for certain debts of the company. A financial institution is outside that forfeiture rule. An officer who changes after this filing is written onto next year's report, or onto an amended report when the change is an error or a critical need.

Above the no-tax line the computation is margin, or it is the EZ computation when the company both qualifies and chooses that route. The Comptroller's margin worksheet has four doors, and this S corporation picks one. Door one keeps 70 percent of revenue. Door two removes the goods cost before the tax base is named. Door three removes compensation before the tax base is named. Door four removes one million dollars before the tax base is named. The revenue figure begins with amounts reported on the federal return, then drops the exclusions the tax code allows.

For cost of goods sold, the Comptroller looks at what the company spent to acquire or produce goods, and at real property sold in the ordinary course. A company whose work is services, with no goods, often has nothing the Comptroller will allow in that subtraction. Compensation takes in W-2 wages and cash pay to officers, directors, owners, partners, and employees, and it takes in net distributive income paid to a natural person, each person capped, plus benefits the company may deduct such as health care and retirement. Left out of compensation are amounts reported on a 1099 and the payroll taxes the company itself pays. After that, margin is apportioned to Texas by gross receipts.

If this S corporation sells goods at retail or wholesale, the 2026 and 2027 chart taxes margin at 0.375 percent. If the trade is anything else, that same chart taxes margin at 0.75 percent. The cap on the compensation subtraction is four hundred eighty thousand dollars. EZ is open when annualized total revenue is twenty million dollars or less, and the EZ rate is 0.331 percent. The EZ route means the margin subtractions are not available. The long form is the one that gets filed when revenue is over the no-tax line and EZ is not the choice, and also when the company will take a margin subtraction.

An extension starts as tentative when money, or a Comptroller form, is in by the original day. The money is generally the whole prior-year tax, or 90 percent of the tax this year's report will show. On a first annual report, a company that only became subject to the tax during the prior year cannot lean on that whole prior-year figure.

Paying outside electronic funds transfer means the Comptroller web system or Form 05-164, and the pushed-out day is November 15. Electronic funds transfer is required after a prior state fiscal year of ten thousand dollars or more. For that electronic path the first pushed-out day is August 15 and a further push reaches November 15. At five hundred thousand dollars or more in that prior year, the request itself is a timely TEXNET payment, and Form 05-164 stays unsent. The Comptroller page names the clock time that makes the payment count as timely. Read that clock on the live page before you trust the last hour of the day.

When Texas nexus is gone, a final report is due inside 60 days. Meet the payment rules and that final report can be pushed 45 days past its own original day. Whether to close the company, or to end the Texas connection, is a decision the owner makes. The closing packet includes that final report and a certificate of account status from the Secretary of State. We read the Comptroller close instructions before we name the order of those steps.

File the report after its day and the penalty for the report is fifty dollars. Pay the tax in the first 30 days after the day and the added charge on the tax is 5 percent. Once the tax payment is more than a month late, that added charge doubles to 10 percent. The Comptroller starts interest only after the due date has been behind the company for 61 days. The percent of that interest stays on the Comptroller interest page, so a later change in the rate is not frozen into this page.

Selling taxable goods or taxable services in Texas opens a sales-tax filing that is not the franchise report. Texas sales and use tax at the state level is 6.25 percent. A city, a transit authority, or another local body can add as much as 2 percent. Put the state 6.25 together with any city or transit add-on and the sales rate has to stop at 8.25 percent. The Comptroller keeps those sales rules on its sales tax page.

When sales tax is filed every month, the payment for one month leaves on day 20 of the following month. A quarterly sales filer uses the 20th of April, the 20th of July, the 20th of October, and the 20th of January. A yearly sales filer uses January 20. A sales-tax letter from the Comptroller is a different letter from the IRS acknowledgment. That letter does not put a K-1 in an owner's hands, and it does not make wage forms match the payroll register. We keep the letter with the file. The three federal proofs stay empty until their own papers exist.

From the closed books we close the months, prepare the company return, and prepare the franchise report. The wage account is opened with the payroll company the owner already pays, and our part stops at that setup. Payday, the payroll returns, and the morning people are paid stay with that company. Texas unemployment tax is a filing with the Texas Workforce Commission. Naming that filing is separate from running payroll. We do not run payday.

A signed report that gives assurance on a financial statement is a different engagement, and it belongs with a firm that can sign it. The franchise report is a tax report. Computing margin from the books and filing the information report are part of the year we prepare.

When a protest of the tax needs a lawyer, that work is the lawyer's. If the IRS opens an argument about the federal return that feeds Texas revenue, speaking for the company there is a separate engagement. We can stack the records beside the three papers. An IRS dispute stays a separate engagement, and the three papers remain the file we already built.

Have the acceptance letter in hand, or tell us it has not arrived. Have the acknowledgment if Form 1120-S already shows a received date. Have the owner list and a count of who holds a K-1. Have the wage forms beside the payroll register. Have the last franchise report, or say the May filing has not been made. If the company collects sales tax, have the permit and the last sales return.

The call is the same shape whether the shop is in Dallas or in another Texas city. The year is called filed, in the words this address uses, when the three federal papers exist and the Texas report that applies to this company has a date of its own.