Texas Franchise Tax for Single-Member LLCs

Texas franchise tax for single-member LLCs: General Rule: Single-member LLCs are generally NOT subject to Texas franchise tax. Disregarded Entity Status: Single-member LLCs are disregarded entities for tax purposes. Franchise tax applies to taxable entities, which excludes disregarded entities. Exceptions: Multi-Member LLC: If LLC has multiple members, it becomes subject to franchise tax. Entity Election: If SMLLC elects corporate tax treatment, it becomes subject to franchise tax. Subsidiary of Corporation: If SMLLC is owned by corporation, may be subject based on parent company structure. Key Thresholds: $1,230,000 Exclusion: LLCs with total revenue under $1,230,000 owe no franchise tax (2024). E-Z Computation: Entities with revenue between $1,230,000-$20M can use simplified calculation. Filing Requirements: No Activity Report: May still need to file if specifically required by state. Name Reservation: Need to maintain registered agent and comply with LLC requirements. Related Considerations: Sales Tax: Still responsible for sales tax if selling taxable goods/services in Texas. Employment Taxes: Subject to Texas unemployment tax if have employees. Best Practice: Monitor membership changes that could trigger franchise tax liability. Confirm disregarded entity status annually.