1. Texas Business Filing Tips
2. Texas Franchise and Business Opportunity Laws
3. Texas Sales Tax Return

Texas Business Filing Tips

When it comes to filing for a Texas business, there are several tips you should consider:

  • Search for an available name. If you submit a formation document with a corporation or limited liability company name that is already in existence, the secretary of state will reject it. Likewise, if your name is similar to that of another business, the office may reject your filing. Complete a Texas business name search before submitting your documents.
  • Appoint a Texas registered agent. All Texas companies need a Texas registered agent, and without one, your business can become involuntary dissolved by the secretary of state.
  • File online. You can mail and fax documents to the secretary of state, but a quicker option is through Texas SOSDIrect.
  • Consider franchise tax. Most Texas businesses pay an annual franchise tax. The amount depends upon several factors, but you can use the franchise tax calculator provided by the Texas comptroller to get a rough estimate of how much you must pay at the end of the fiscal year.

Texas Franchise and Business Opportunity Laws

Although Texas hasn't enacted franchise laws, it did enact business opportunity laws. The Texas secretary of state regulates and oversees the Texas Business Opportunity Act, which applies to franchises. However, if you remain in compliance with the Federal Franchise Rule and the requirements of the franchise disclosure document (FDD), you can claim an exemption.

When submitting a Texas franchise filing, you must include the Business Opportunity Exemption Notice, also known as Form 2703, which includes the following information:

  • Franchise company name.
  • Assumed names for your franchise system.
  • Franchise company address.
  • Authorized signature stating the franchise offering is in compliance.
  • Check payable to the secretary of state.

You must make sure that you have a current or compliant FDD; otherwise, the exemption is invalid. If this occurs, you must comply with the Texas Business Opportunity Act, which requires registration of your business and a pre-sales disclosure process.

Texas Sales Tax Return

Filing a Texas sales tax return requires submitting sales information and sending the collected tax dollars to local and state tax authorities. Business owners can fill out a Texas sales tax filing document and either mail or submit it online to the Texas Comptroller of Public Accounts.

Business owners must provide specific information about their sales, such as the total amount, the amount of sales tax received, and where they obtained it. The comptroller's office wants to remain informed of your company's growth to be sure that it receives its tax dollars. The comptroller assigns business owners a timeline as to when to file, and this frequency typically depends upon your company's size.

You should file and pay sales tax returns simultaneously. However, if you outsource your sales tax sales and use a tax filing service, a bookkeeper or accountant can pay sales tax on your behalf.

If you fail to pay your sales tax payment on time, you may be required to pay a fine or penalty. During the first 30 days of an outstanding balance, a 5 percent penalty is applied. If the late payment stretches into another 30-day period, the amount increases to 10 percent. After 60 days, the penalty stays at 10 percent, but you incur interest on any remaining amount. If you fail to pay the remaining balance, a collection agency might come after you.

Even if you don't collect any sales tax in Texas, you must file a return. Once you register for and receive a sales tax permit, you must file a return at the end of your filing date. This process, called zero-tax filing, is mandatory for all Texas businesses. If you fail to file, you may face penalties. In addition, if you close, sell, or transfer ownership of your business, you must file a final sales tax return.

You can receive vendor discounts or rebates from the Texas comptroller for collecting, filing, and remitting sales tax on time. This discount, also known as a dealer collection allowance, is .5 percent. If you file monthly or quarterly and prepay 90 percent of the entire amount of sales tax due, you can earn an extra 1.25 percent discount.

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