A Texas LLC that is "not in good standing" has lost its legal right to transact business in the state — typically because it missed required franchise tax or Public Information Report filings with the Comptroller, or because it failed to maintain a registered agent with the Secretary of State. The consequences are immediate and serious: officers and directors become personally liable for company debts, and your LLC cannot sue or defend itself in court. The fix requires clearing all delinquent filings and going through a formal reinstatement process.
What "not in good standing" actually means in Texas
Texas does not use the exact phrase "good standing" the way many other states do. Instead, the Texas Comptroller can forfeit your LLC's right to transact business when required filings are missed. The Texas Secretary of State can separately involuntarily terminate an entity that fails to maintain a registered agent.
Both statuses — Comptroller forfeiture and SOS termination — result in a non-active LLC that cannot legally operate in Texas. When you check your entity on the Texas Comptroller's Taxable Entity Search, you will see one of these statuses:
- Active — in good standing
- Forfeited — Comptroller has revoked your right to transact business
- Involuntarily Ended — Secretary of State has terminated the entity
A "Certificate of Good Standing" (officially called a Certificate of Account Status in Texas) is issued by the Comptroller's office and confirms your LLC is current on all franchise tax obligations. Banks, lenders, and out-of-state businesses routinely request this certificate.
What causes a Texas LLC to lose good standing
Cause 1: Missing franchise tax filings
Every Texas LLC must file a franchise tax report with the Comptroller by May 15 each year — even if the LLC owes $0 in tax. The 2026 no-tax-due threshold is $2,650,000 in annualized total revenue, but below-threshold LLCs must still file. The old "No Tax Due Report" was discontinued in 2024; LLCs below the threshold now file a Public Information Report instead.
Miss one year's filing and the Comptroller will send a Notice of Intent to Forfeit. Keep missing it and forfeiture becomes official.
Common mistake: Many owners assume that because they owe no tax, they do not need to file. Wrong. The filing obligation exists regardless of the tax amount owed.
Cause 2: Missing the Public Information Report (PIR)
The Public Information Report (Form 05-102) is due every May 15, filed alongside the franchise tax report. It lists your LLC's managers, members, and registered agent. Failing to file a completed, signed PIR — even when all taxes are paid — can trigger forfeiture on its own under Texas Tax Code § 171.251.
Cause 3: Registered agent failure
Every Texas LLC must maintain a registered agent with a physical Texas street address at all times. If your registered agent resigns, moves without updating their address, or you simply stop using a registered agent service and forget to file a change, the Secretary of State can issue a notice and ultimately terminate your entity. See our Texas registered agent requirements guide for the rules.
Step 1: Identify exactly what is wrong
Go to the Texas Comptroller's Taxable Entity Search and look up your LLC by name or EIN. Note:
- Current franchise tax account status
- Which report years are listed as delinquent or unfiled
Then check the Texas Secretary of State entity search for your registered agent status and formation standing.
This gives you a complete picture before you start filing.
Step 2: File all delinquent franchise tax reports and PIRs
For every delinquent year, file the appropriate franchise tax report:
- EZ Computation (Form 05-169) — if annualized total revenue was ≤ $2,650,000 in that year
- Long Form (05-158-A/B) — if revenue exceeded the threshold
Include Form 05-102 (PIR) for each delinquent year. You cannot skip years — the Comptroller requires all delinquent periods to be cleared before issuing a tax clearance. File them in order, oldest first, through the WebFile portal.
Estimated time: 15–30 minutes per year filed.
Step 3: Pay all back taxes, penalties, and interest
Once your reports are filed, your balance will reflect:
- Any franchise tax owed for each delinquent year
- $50 late-filing penalty per report
- 5% penalty on tax owed if filed 1–30 days after the deadline
- 10% penalty on tax owed if filed more than 30 days late
Pay through WebFile or by check. Save your payment confirmation — you will need it for the next step.
Step 4: Get a tax clearance from the Comptroller
After filing and payment are processed, obtain a Certificate of Account Status (tax clearance) from the Comptroller. This document confirms your LLC is current and is required to reinstate with the Secretary of State.
You can request it online through WebFile or by contacting the Comptroller's Franchise Tax division at 1-800-252-1381.
Step 5: File for reinstatement with the Secretary of State
Bring your tax clearance to the Texas Secretary of State and file a certificate of reinstatement. The SOS will review your filing and, if everything is in order, restore your LLC's right to transact business.
Visit sos.state.tx.us for current forms, fees, and instructions. Also confirm your registered agent information is current — a lapsed registered agent must be updated as part of this filing. See how to reinstate a forfeited Texas LLC for a full walkthrough.
Step 6: Verify active status
After reinstatement is processed:
- Search your entity on the Comptroller's Taxable Entity Search — status should read Active
- Search on the SOS portal — status should show active formation
Save your reinstatement certificate. You may need it to reopen bank accounts or prove good standing to contracts partners.
Quick reference
| Detail | Info |
|---|---|
| What | Texas LLC "not in good standing" — loss of right to transact business |
| Who | Any Texas LLC that missed franchise tax filings, PIR, or registered agent upkeep |
| Triggered by | Non-filing (franchise tax or PIR) or registered agent lapse |
| Annual deadline | May 15 (franchise tax report + PIR) |
| Penalty | $50 per late report + 5–10% on tax owed |
| Personal liability | Officers/directors liable under TX Tax Code §§ 171.251, 171.252, 171.255 |
| Fix | File delinquent reports → pay balance → get Comptroller clearance → reinstate with SOS |
| Check status | mycpa.cpa.state.tx.us/coa/ |
FAQ
What does it mean when a Texas LLC is not in good standing?
In Texas, a LLC that is "not in good standing" has either had its right to transact business forfeited by the Comptroller (for missing franchise tax or PIR filings) or has been flagged by the Secretary of State for failing to maintain a registered agent. The LLC cannot legally do business in Texas, and officers or directors may become personally liable for company debts under Texas Tax Code §§ 171.251–171.255.
How do I check my Texas LLC's good standing status?
Search for your LLC on the Texas Comptroller's Taxable Entity Search at mycpa.cpa.state.tx.us/coa/. The status field will show "Active," "Forfeited," or "Involuntarily Ended." You can also check the Secretary of State's portal at sos.state.tx.us for your entity's formation and registration status.
What happens if my Texas LLC is not in good standing?
Your LLC loses its legal authority to transact business, sign new contracts, and sue or defend itself in Texas courts. Officers and directors become personally liable for debts the LLC incurs after forfeiture under Texas Tax Code § 171.255. Banks may freeze accounts, and vendors or lenders may refuse to do business with you once they discover the status.
How long does it take to restore Texas LLC good standing?
Timeline depends on how many years of filings are delinquent. Filing delinquent franchise tax reports and PIRs is immediate. Comptroller processing and issuing a tax clearance letter can take several days to a few weeks. The Secretary of State then reviews your reinstatement certificate. Budget at least two to four weeks from start to final active status for a straightforward case.
Can I still operate my LLC while it's not in good standing?
No. Operating a forfeited LLC in Texas is legally risky — contracts may be unenforceable and officers face personal liability for obligations incurred during the forfeiture period. You should stop transacting business under the entity until reinstatement is complete.
Not sure what else your Texas LLC owes?
Most business owners are surprised by how many filing obligations they have. Ortholo's free compliance checker shows you everything you owe, when it's due, and what happens if you miss it — personalized to your entity.
Last verified: 2026-05-06
Sources: Texas Comptroller — Franchise Tax | Texas Comptroller — Taxable Entity Search | Texas Secretary of State | Texas Tax Code §§ 171.251–171.255