I don't own a franchise, so why do I have to complete a form and possibly pay franchise tax?

Franchise tax is an annual tax that the state charges for your corporation to be registered. Paying this keeps you in good standings with the state.  If you fail to pay this on time there is a $50 fee. If you continue not to file or pay, you will be out of good standings and you will eventually get a demand letter to stop doing business in the State of Texas. 

Your corporation may be a C-Corp, S-Corp, LLC, or an LLP.  You are not required to file a franchise report if you are a sole proprietor.  Even though the IRS does not recognize a single member LLC (to them you are a sole proprietor), the State of Texas does recognize it, therefore, you are required to pay the franchise tax.

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