Small Business Compliance Guide
for Texas Business Owners and Operators
2026 Guide to Texas Compliance for Small Businesses
A practical, public‑facing overview of the core Texas obligations most businesses run into: franchise (margin) tax, sales & use tax, payroll/unemployment, and property tax & renditions. We keep this page updated as rules change.
Our Promise: Plain English. Current thresholds. Actionable checklists. If you sell in multiple states or operate as a group of entities, we’ll tailor this to your facts.
Quick checklist (owners & operators)
Texas franchise (margin) tax: due May 15 each year; consider extensions if needed.
Public/Ownership Information Report (PIR/OIR): file annually with your franchise filing—even if you owe no tax—unless an exception applies.
Sales & use tax: get a permit if you sell taxable goods/services or exceed Texas remote‑seller thresholds; file on time (usually the 20th of the following month/period).
Payroll/Unemployment (TWC): register, file quarterly wage reports, and pay on time.
Property tax: file business personal property (BPP) renditions by April 15 (extensions available) and pay property tax by Jan 31.
1) Texas franchise (margin) tax — the essentials
Who’s generally in scope? Most entities formed in or doing business in Texas (LLCs, corporations, limited partnerships, professional associations, etc.). A few are out of scope (e.g., certain passive entities); ask us about your structure.
When due? May 15 each year (or next business day if it lands on a weekend/holiday). Valid extensions are available (see below).
Current thresholds & rates (report years):
2024–2025: No‑tax‑due threshold $2,470,000. Rates: 0.375% (primarily retail/wholesale) and 0.75% (all others). EZ Computation available under $20M total revenue at a simplified 0.331% rate.
2026–2027 (announced): No‑tax‑due threshold $2,650,000. Rates unchanged; compensation cap increases.
(We monitor updates and adjust client filings automatically.)
How the tax base works (your “margin”): choose the method that yields the lowest margin for you:
70% of total revenue, or
Total revenue − cost of goods sold (COGS), or
Total revenue − compensation, or
Total revenue − $1,000,000.
Apportionment (multi‑state sales): Texas uses a single‑factor gross‑receipts formula. In simple terms, you pay Texas on the share of your revenue tied to Texas. (Services have sourcing rules; we’ll map them for you.)
“No Tax Due” filing change (effective with 2024 reports): If you’re at or below the threshold, you no longer file the old “No Tax Due” report. Most entities still file a PIR (corporations/LLCs) or OIR (partnerships/LPs) each year. Notable exceptions exist (e.g., qualifying new veteran‑owned businesses during their initial period, and certain passive entities) — we’ll confirm your category.
Combined reporting (groups): If your entities are commonly owned (generally >50%) and unitary, Texas treats them as a combined group for franchise tax. The thresholds and rates apply to the group as a whole, and all members use the same margin method. Some members may have no Texas receipts but are still included in the group math. We’ll tell you when combined filing applies and how to document it.
Extensions (high level):
A first extension typically moves the due date to Aug 15 (pay a qualifying amount with the request).
Certain taxpayers (e.g., mandatory electronic payers) can request a second extension to ~Nov 15 if requirements are met.
Extensions extend time to file, not time to pay; penalties/interest apply if amounts aren’t covered.
2) Sales & use tax — permits, rates, and filings
State & local rates: State rate is 6.25%; local jurisdictions may add up to 2%, for a maximum 8.25% combined rate.
Who needs a permit? If you’re engaged in business in Texas and sell taxable goods or services, you likely need a permit. Remote sellers must register and collect if their Texas revenue exceeds $500,000 in the prior 12 months (counts taxable, nontaxable, and exempt sales).
Marketplace rules: Marketplace providers generally collect for sales through the marketplace. Remote sellers still count marketplace sales toward the $500,000 threshold.
Remote sellers — simplified local rate option: Eligible remote sellers may elect a single local use‑tax rate (currently 1.75%) instead of destination‑based local rates. (Not available to marketplace providers.)
Filing frequency & due dates: Monthly, quarterly, or yearly (assigned by the Comptroller). Returns are typically due on the 20th of the month following the period. Timely filers get a 0.5% discount; qualified prepayments can add 1.25%.
Common taxable services (examples):
Data processing services (includes many software/SaaS, hosting, storage): Texas taxes 80% of the charge (a 20% exemption is allowed).
Information services (database access, research, reports): also 80% of the charge is taxable.
Security services, credit/debt collection, telecommunication, amusements, and others may be taxable. We’ll map your exact mix and exemptions (e.g., resale, manufacturing).
Use tax reminder: If your vendor didn’t collect Texas tax on a taxable purchase used in Texas, you owe use tax. We handle this in your filings.
3) Payroll & unemployment (Texas Workforce Commission)
Register with TWC when you hire employees in Texas.
You pay state unemployment tax (SUTA) on the first $9,000 of each employee’s wages per year.
New employers generally start at 2.7% (or the NAICS industry average if higher) and get an experience‑rated rate after enough quarters.
Quarterly wage reports & payments are due by the last day of the month following each quarter: Apr 30, Jul 31, Oct 31, Jan 31.
4) Property tax & business personal property (BPP)
BPP renditions (lists of business assets) are due to your county appraisal district by Apr 15. You can usually extend to May 15 with a written request; a further short extension may be available for good cause.
Property tax payments are generally due by Jan 31 for the prior tax year. On Feb 1, taxes become delinquent and penalties/interest begin.
5) Secretary of State & licenses (what Texas actually requires)
Texas does not have a general statewide business license. You must register your entity with the Secretary of State (or county clerk for DBAs) and obtain any industry‑specific or local permits.
For corporations/LLCs/LPs, Texas does not require a separate SOS annual report. Instead, you file the PIR/OIR with your franchise report each year.
Foreign (out‑of‑state) entities must register before transacting business in Texas.
6) Compliance calendar at a glance
Jan 31: Property tax payments due (most jurisdictions).
Apr 15: BPP renditions due (request extension to May 15 if needed).
Apr 30 / Jul 31 / Oct 31 / Jan 31: TWC quarterly wage reports/payments.
May 15: Franchise (margin) tax report due; PIR/OIR due; extension options available.
Sales & use tax: Generally due 20th of the month after each filing period (monthly/quarterly/annually). Prepayment discount deadlines apply mid‑month.
How NFS helps (and what you’ll see from us)
A Texas compliance map for your entities (including combined reporting where applicable).
An apportionment page that shows how much of your revenue Texas really taxes—and why.
A living credit/exemption matrix (e.g., data processing & information‑services 20% exemption, manufacturing exemptions, resale, etc.).
A filing calendar + alerts (estimates, prepayments, extensions).
Plain‑English memos for decisions (entity structure, inventory locations, remote‑seller status, marketplace relationships, and exit planning).
Let’s customize this to you. If you operate across states, sell software/services, or run multiple entities, we’ll tailor the margin method, apportionment, sales‑tax setup, and calendar so you stay compliant and minimize after‑tax cash drag.
Texas Small Business Compliance Guide
Business Starts Here™