Tuesday, September 7, 2010

The Importance of Filing Your Texas Franchise Tax Return

When you organized your business, you likely chose to do so using a corporate, limited liability company, or limited partnership form. You did this in an effort to insulate your personal assets from the assets of your company. Let’s say an employee of your company is involved in an accident in which the employee is deemed “negligent” (ideally, your company would have insurance covering such an accident). A lawsuit by any injured parties would be against your company, rather than you individually. As I have mentioned in prior newsletters, it is imperative that you undertake certain “corporate formalities” in order to ensure that your company is indeed treated “separately”.


One such formality is the filing of your annual Texas franchise tax return (even when no tax is due). A failure to file that return on an annual basis will cause the State of Texas to revoke your corporate privileges, resulting in your company being synonymous with you individually.