A friend of mine is a business owner and told me to watch out for the Texas franchise tax! What is that tax and how can I minimize it?
The Texas franchise tax is a tax levied on corporations and limited liability companies doing business in the State of Texas with gross annual revenues over $150,000.00. Partnerships are not subject to the franchise tax at this time, but legislation was presented in the last session to tax partnerships with gross revenues in excess of $150,000.00 (the law did not pass). For example, if you own John Smith Corporation and your gross annual revenues are $200,000.00, the corporation will be subject to a franchise tax equal to the greater of .25% of taxable capital or 4.5% of net income.
