Texas Small Business Compliance Guide: Every Filing You Owe in 2026
Running a small business in Texas means juggling several ongoing filings — a franchise tax report and Public Information Report by May 15, sales tax returns if you sell taxable goods, unemployment insurance tax if you have employees, and a registered agent that never lapses. Miss one and you can face penalties or even forfeiture of your entity. This guide walks through each obligation, who it applies to, and when it's due.
Disclaimer: This guide is for general informational purposes only and does not constitute legal or tax advice. Rules and dates change — always verify current requirements directly with the relevant agency before acting.
Step 1: Form your entity and get your ID numbers
Compliance starts at formation. Most Texas small businesses register an LLC with the Texas Secretary of State, though corporations, LPs, and LLPs follow similar rules. Once your entity exists, you'll typically need a few identifiers:
- EIN — a 9-digit federal Employer Identification Number from the IRS, free at irs.gov, used for banking, payroll, and federal taxes.
- Texas taxpayer number — an 11-digit number the Comptroller assigns for franchise and sales tax. It is different from your EIN.
- Sales tax permit number — issued when you register for sales tax (see Step 4).
Texas has no state income tax, so there is no state income-tax withholding ID to worry about.
Common mistake: Assuming your EIN and Texas taxpayer number are the same. They come from different agencies and serve different purposes — keep both on file.
Step 2: Appoint and maintain a registered agent
Every Texas LLC and corporation must maintain a registered agent at all times. The agent is the person or company designated to receive legal notices and service of process. The agent needs a physical Texas street address (no P.O. boxes) and must be available during business hours.
You can serve as your own registered agent at no cost if you have a qualifying Texas address, or hire a commercial service for roughly $50–$300 per year. To change your agent, file Form 401 with the Secretary of State. For the full rules, see our Texas registered agent requirements guide.
Common mistake: Letting the agent lapse after a move or a service cancellation. If your agent resigns and you don't update the record, you can miss a lawsuit notice — with default judgment entered against you.
Step 3: Franchise tax and the Public Information Report (due May 15)
This is the filing that trips up the most Texas businesses. Every taxable entity — including nearly all LLCs — must file an annual franchise tax report with the Texas Comptroller by May 15 (rolling to the next business day if that date lands on a weekend or holiday), even if no tax is owed.
For 2026, the no-tax-due threshold is $2,650,000 in annualized total revenue. Below that, you owe $0 in franchise tax but must still file the Public Information Report (Form 05-102), which lists your registered agent, principal office, and managers or members. Above the threshold, rates are 0.375% for retail/wholesale and 0.75% for other businesses on taxable margin; an EZ computation of 0.331% of total revenue (Form 05-169) is available for revenue from $2.65M to $20M, with the Long Form (05-158-A/B) above $20M.
You can file free through WebFile at comptroller.texas.gov/taxes/franchise/. Filing an extension request by May 15 moves the report deadline to November 15 (an extension to file is not an extension to pay).
Common mistake: Thinking "no tax due" means "nothing to file." The old No Tax Due Report (05-163) was discontinued in 2024. Below-threshold entities still must file the PIR — and an incomplete or unsigned PIR can trigger forfeiture even if all tax is paid. Late filing brings a $50 fee plus 5%/10% on any tax owed, with interest starting 61 days after the due date.
Step 4: Sales tax permit and returns
If your business sells tangible goods or taxable services in Texas, you must register for a sales tax permit with the Comptroller. The permit is free (Form AP-201); apply at comptroller.texas.gov/taxes/permit/.
The state rate is 6.25%, plus up to 2% in local tax, for a maximum combined rate of 8.25%. The Comptroller assigns your filing frequency — monthly, quarterly, or annually — and returns are due the 20th of the month after the period ends. Digital goods are not taxable, and groceries and prescription drugs are exempt.
Common mistake: Skipping a return in a slow month. You must file zero-dollar returns even when you had no taxable sales. Each late return carries a $50 penalty plus 5%/10% on tax owed.
Step 5: Employer duties if you hire
Bringing on W-2 employees adds several obligations:
- Unemployment insurance (UI) tax — Register with the Texas Workforce Commission and file a quarterly wage report and tax payment (Form C-3) by April 30, July 31, October 31, and January 31. The new-employer rate is about 2.7%. Because Texas has no state income tax, there is no state income-tax withholding.
- New hire reporting — Report each new or rehired employee to the Texas Attorney General within 20 days. Late reports cost $25 each; conspiracy not to report costs $500.
- Workers' compensation — This is optional in Texas, the only state that generally does not require private employers to carry it. Employers that opt out ("non-subscribers") must notify their workers and the Texas Department of Insurance and give up certain legal defenses.
See our Texas employer requirements for your first employee guide and our overview of when workers' compensation is required in Texas before you hire.
Step 6: Licenses and permits
Texas has no general statewide business license. What you may need instead depends on your industry and location: the sales tax permit above, local city or county permits, occupational or industry licenses (for example through TDLR, TABC, or TREC), and a DBA/assumed name certificate (Form 503, $25 with the SOS plus a county fee) if you operate under a name other than your legal entity name. Check with your city, county, and any licensing board that governs your field.
Step 7: Ongoing maintenance
Compliance is a cycle, not a one-time setup. Each year, keep your books reconciled for the May franchise filing, confirm your registered agent is active, update member/manager details on the PIR, file every sales tax and UI period on time, and issue W-2s and 1099-NEC forms to workers by January 31. A missed step compounds quickly, so a running checklist helps — see our Texas LLC compliance checklist and Texas LLC annual requirements guide.
Note that under FinCEN's interim final rule of March 21, 2025, entities formed in the U.S. are currently exempt from federal BOI reporting; only foreign entities registered to do business here must file. This is subject to change, so monitor fincen.gov/boi.
Your Texas small business obligations at a glance
| Obligation | Agency | Who owes it | When | Form | Cost / consequence |
|---|---|---|---|---|---|
| Franchise tax report | Comptroller | All LLCs, corps, LPs, LLPs, PAs | May 15 (ext. Nov 15) | 05-169 or 05-158-A/B | $50 + 5–10% late; forfeiture |
| Public Information Report | Comptroller → SOS | Same entities, regardless of revenue | May 15 | 05-102 | Free; forfeiture if not filed |
| Sales tax permit | Comptroller | Sellers of taxable goods/services | Before selling | AP-201 | Free to apply |
| Sales tax return | Comptroller | Permit holders | 20th after each period | Online return | $50 + 5–10% per late return |
| UI tax + wage report | TWC | Employers with W-2 staff | Apr 30, Jul 31, Oct 31, Jan 31 | C-3 | Penalties for late filing |
| New hire report | Texas AG | Employers with W-2 staff | Within 20 days | Online report | $25 per late report |
| Workers' comp (optional) | TDI | Employers (voluntary) | Ongoing if elected | N/A | Loss of legal defenses if opted out |
| Registered agent | SOS | All LLCs, corps, LPs, LLPs | Ongoing | 401 (to change) | $0–$300/yr; missed legal notices |
Quick reference
| Detail | Info |
|---|---|
| What | Core annual and ongoing compliance filings for a Texas small business |
| Who | Texas LLCs and other entities; add sales tax and employer filings as applicable |
| When | May 15 (franchise + PIR); 20th monthly/quarterly (sales tax); quarter-end (UI) |
| Where | comptroller.texas.gov, twc.texas.gov, sos.state.tx.us |
| Key forms | 05-102 (PIR), 05-169/05-158 (franchise), AP-201 (sales permit), C-3 (UI), 401 (agent) |
| Cost | Most core filings are free; franchise tax applies only above $2,650,000 revenue |
| Penalty | $50+ late fees, 5–10% on tax owed, and possible forfeiture of the entity |
FAQ
What does a Texas small business need to do to stay compliant?
A Texas small business must maintain a registered agent, file a franchise tax report and Public Information Report by May 15 each year, collect and remit sales tax if it sells taxable goods or services, and meet employer duties like unemployment insurance tax and new hire reporting if it has W-2 employees. Requirements vary by business, so confirm your specific obligations with each agency.
Does Texas have a general business license?
No. Texas has no general statewide business license and no state income tax. Instead, you may need a sales tax permit, local city or county permits, and industry-specific licenses depending on what your business does. Check with your city, county, and any licensing board that governs your field.
Is workers' compensation insurance required for Texas small businesses?
Texas is the only state where private employers generally are not required to carry workers' compensation insurance. It is optional, but employers that opt out (non-subscribers) lose certain legal protections and must notify their employees and the Texas Department of Insurance. Consult a licensed Texas attorney before deciding.
When are the main Texas small business filings due?
The franchise tax report and Public Information Report are due May 15, extendable to November 15 with a timely request. Sales tax returns are due the 20th of the month after each period, and unemployment insurance wage reports are due April 30, July 31, October 31, and January 31.
What happens if I don't file my Texas franchise tax and PIR?
Missing the May 15 deadline triggers a $50 late fee immediately, plus 5% of any tax owed within 30 days or 10% after that, with interest starting 61 days after the due date. Continued non-filing can lead to forfeiture of your entity's right to transact business, and members or officers can become personally liable under Texas Tax Code §§ 171.251–171.255. If you're behind, consult a CPA or licensed Texas attorney.
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: 2026-08-04
Sources: Texas Comptroller — Franchise Tax | Texas Comptroller — PIR/OIR Filing Requirements | Texas Comptroller — Sales Tax | Texas Workforce Commission | Texas Attorney General — Employer Services | Texas Secretary of State — Corporations | Texas Tax Code §§ 171.251–171.255