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TEXAS

Why Form a Corporation in Texas?


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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

  1. Fees for forming a corporation in Texas: Learn about standard filing costs here for TX corporations.

  2. Texas State Annual Report Fee: A yearly fee when you file your Annual Report.

  3. 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>

Franchise Tax

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:

  • 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.

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

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.

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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

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).

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.

Start Your S Corp with Incfile Start Your C Corp with Incfile

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What are the fees and requirements to form a business in Texas?

Filing Time and Price

The state charges this amount to file a new business entity. This fee goes directly to the Secretary of State.

State Fee State Filing Time Expedited Filing Time
$300 1 Week 2 Business Days

Compliance Requirements

This report is mandatory and must be filed within the specified time frame in order for the entity to remain in good standing with the state. Failure to file this report can lead to the company being revoked or administratively dissolved.

Public Information & Franchise Tax Report

Frequency: Annually

Due Date: Both reports are due between January 1st and no later than May 15th.

Filing Fee:There is no charge for the Public Information Report. The Franchise Tax Fee is based on the revenue of the LLC.

Learn more about starting a business in Texas

Additional resources, guides, and articles for better decision making.

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