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
Fees for forming a corporation in Texas: Learn about standard filing costs here for TX corporations.
Texas State Annual Report Fee: A yearly fee when you file your Annual Report.
Texas Permits and Licenses: 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.
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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
Payroll Tax Payable to the IRS
Your Texas corporation will need to pay employer payroll tax to the IRS on salaries paid to employees.
Sales and Use Tax Payable to the State of Texas
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. <link>
You may need to pay a franchise tax if your annual revenue is above a certain amount.
Employee Insurance and Taxes for Your Texas Corporation
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.
Estimated Taxes for Your Texas Corporation
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:
Most Texas S Corporations and C Corporations will pay estimated taxes four times a year. Speak to your accountant for more information.
Other Taxes in Texas
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
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.
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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.
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Texas C Corporations — Additional Tax Liabilities
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).
Ready to Start Your Texas Corporation?
Incfile provides a cost-effective service to help you create your Texas corporation. We guide you through the process and handle most of the administrative steps, such as filing the necessary forms on your behalf.
Our basic package also provides a free Registered Agent service for the first year. If you're looking for help starting an S Corporation or C Corporation, our comprehensive services provide outstanding value.
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