Fees and Taxes for Your Texas Corporation
You’ll need to pay certain taxes and fees for your Texas S Corp or C Corp. We’ve included the more common ones below.
Texas Corporation Fees
Learn about standard filing costs here for TX corporations.
A yearly fee when you file your Annual Report.
These are the fees for creating or renewing your licenses and permits on a regular basis. These depend on the type of Texas corporation you’re operating and where you’re located.
Taxes Payable by Your Texas Corporation
The way that Texas S Corporations and C Corporations pay taxes is different. We’ll take each one separately.
Both S Corporations and C Corporations in Texas Need to Pay These Taxes
Your Texas corporation will need to pay employer payroll tax to the IRS on salaries paid to employees.
If your TX corporation is selling products or services in Texas, you may need to pay a state sales tax. Find out more on the Texas Department of Revenue website.
You may need to pay a franchise tax if your annual revenue is above a certain amount.
If your TX corporation employs workers, you will need to pay insurance and taxes to the state for each employee.
Get more requirements from the Texas Department of Labor website..
Most Texas corporations will need to pay estimated taxes throughout the year, depending on the amount of income and profit you expect to make. The most common types of estimated tax are:
- Federal income tax
- Federal self-employment tax
- Texas state tax
Most Texas S Corporations and C Corporations will pay estimated taxes four times a year. Speak to your accountant for more information.
You may need to pay other taxes and fees, depending on the type of Texas corporation you run. Find out more on the Texas Comptroller of Public Accounts website.
Taxes Payable by All Individuals Working for Texas Corporations
Pay Federal Income Tax on Texas Corporation Earnings, Dividends and Distributions.
You will need to pay regular federal income tax when you file your tax return every year.
Texas S Corporations — Additional Tax Liabilities
Self-Employment Tax
Because your Texas corporation income flows through to your personal tax return, you must pay self-employment tax (also known as FICA, Social Security or Medicare tax) on your earnings. This is typically at a rate of 15.3 percent. You will be able to deduct your business expenses from your income when working out how much self-employment tax you owe.
You will be able to deduct your business expenses from your income when working out how much self-employment tax you owe. Here are some examples of how much self-employment tax you may need to pay, depending on your earnings:
- On profits of $30,000, you would pay self-employment tax of $4,590
- On profits of $70,000, you would pay self-employment tax of $10,710
- On profits of $100,000, you would pay self-employment tax of $15,300
- On profits of $160,000, you would pay self-employment tax of $24,480
In some cases, part of the income from an S Corporation can be paid as a “distribution” rather than “salary,” so it would not be subject to self-employment tax.
File Your Texas S-Corp Tax Election with IncfileTexas C Corporations — Additional Tax Liabilities
Corporation Tax
Unlike the the Limited Liability Company and the S Corporation, a Texas C Corporation is required to file a corporate tax return and pay corporation taxes on any profits. When those taxed profits are paid to shareholders as dividends, they will also be subject to taxation on that individual’s tax return. This is known as “double taxation.”
Stock Dividends From C Corporations
A Texas C Corporation may pay shareholders dividends as a share of the profits of the company. The value of dividends that each shareholder is entitled to depends on how many shares they own.
Dividends that are distributed to shareholders are taxed twice: first at the corporate level as profit (on the corporation’s Form 1120) and again at the individual level as stock dividends (on the shareholder's Form 1040).
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