Quarterly Estimated Taxes For Texas business owners

We work with owners across Texas

The practice is based in Dallas. If you're somewhere else in Texas, we meet by video, so you don't need to drive in. Bring last year's federal total tax, or tell us you didn't file last year. An owner in El Paso and an owner in Corpus Christi get the same help with the next due date.

Texas has no personal income tax

Living in Texas doesn't change your federal dates. Calendar-year payments are still due April 15, June 15, September 15 and January 15, and June still covers only April and May. Texas has no personal income tax, so there's no state estimated payment to add.

A Texas company does have one spring filing that the federal dates don't cover: the franchise tax report. It's normally due May 15. When May 15 is a Saturday or Sunday, file it on the Monday after.

That report comes after your April federal payment and before June. If you only watch the federal dates, it's easy to miss. Forming a company in Texas, or doing business here, is what puts the May report on your calendar.

A company that owes no franchise tax may still owe a report

The franchise tax applies to LLCs, corporations and most other companies doing business in Texas. A one-owner LLC is still a company for this tax. If you work only as a sole proprietor, with no company registered with the Secretary of State, you usually don't file a franchise report.

The Comptroller publishes the current franchise tax rates and the no-tax-due threshold, and they can change from year to year. We look them up with you for your own company.

Even when no franchise tax is due, a company usually still files a Public Information Report or an Ownership Information Report. If you skip it, the Comptroller can take away the company's right to do business in Texas. That's a state matter, separate from any late federal payment.

Federal extensions, like Form 4868 or Form 7004, don't extend the May report. A franchise tax extension is a separate request to the Comptroller, with its own later deadline. If you extended your federal return, tell us, and we'll check whether May was handled too. Your June federal payment doesn't count toward the May report.

Sales tax is due on the 20th

Sales tax is the other Texas deadline that can land near a federal payment. If your company holds a sales tax permit, the return is due on the 20th. A monthly filer sends January's sales tax by February 20. A quarterly filer sends the first three months by April 20, and the other quarterly returns follow in July, October and January, each on the 20th. None of those are federal estimated tax dates.

If your company has a permit, file on time even in a period with no sales. If it doesn't have a permit, there's no sales tax return to file.

April and January sales tax returns can come close to a federal payment, but they're separate. Your federal payment is income tax. Sales tax is money you collected from customers, and it was never your profit.

A common problem is leaving collected sales tax in the operating account and spending it before the 20th. Up-to-date books show that money as something you still owe. The Comptroller's website has the current state and local sales tax rates.

Keep state letters and IRS letters separate

A letter from the Comptroller and a letter from the IRS are about different things. Check the envelope to see which office sent it. We match a Comptroller letter to the May report or the 20th. We match an IRS letter to April, June, September or January.

Paying the wrong office is how an owner can think they're current and still be late. If you got letters from both, bring both. We'll go through what each one asks for and which payment it's about.

Whether your company is in Houston, Austin, San Antonio or a small town, the call is the same short video call. Your federal dates don't change with your city, and neither does the May 15 franchise report.

What to have ready for the call

Bring last year's federal total tax, or tell us you didn't file last year. Tell us the next federal due date. Tell us whether you formed a company, because that's what the May report is about. If you collect sales tax, tell us whether you file monthly or quarterly.

If this year is very different from last year, recent up-to-date books help. Paycheck withholding still counts toward your federal estimated tax, but it doesn't cover the franchise report.

The rest of this site covers the federal side: the four periods, the June payment, who pays, last year's total tax, dividing by four and paycheck withholding. This page adds the Texas dates. If the May report and a federal payment are both coming up, mention both in your note so we can plan for each one.

Questions Texas owners ask

Does Texas have a personal income tax I should add to my estimate? No. Your estimated payments are federal only. The extra dates for a Texas company are the May 15 franchise report and, if you collect sales tax, the 20th.

If my company owes no franchise tax, can I skip May? Usually you still file the information report. Skipping it can put the company's right to do business on hold. Tell us whether a report was filed, and we'll keep May separate from the June federal payment.

I own two businesses. Do I need two sets of federal payments? No. If both businesses report on your personal return, one set of estimated payments covers both. Each Texas company still files its own franchise report.

I moved to Texas this year. Do I still owe my old state? You may. A state with an income tax can still tax what you earned while you lived there. Check that state's estimated tax rules for the months before you moved. Your federal dates stay the same.

Can the franchise report and my June payment be paid together? No. The franchise report goes to the Texas Comptroller, and your estimated tax goes to the IRS. They're separate payments to separate offices, even when the dates are a month apart.

Does collected sales tax affect my federal estimate? It can. Sales tax you collect isn't income. If your books count it as sales, your profit looks higher than it is, and your estimate can come out too high.

Is the franchise tax based on my profit? No. It's figured on the company's margin, which is a different number from the profit on your federal return. The Comptroller's report instructions explain the methods.

Keep reading on this site.