Texas Small Business Tax Checklist & Deadlines

Texas has no personal or corporate income tax, so a Texas small business’s core tax calendar comes down to a short list: the state franchise tax report due May 15, periodic sales-and-use tax returns, and the federal income, payroll, and estimated-tax deadlines. This checklist walks through each one, the recordkeeping rules behind them, and the deductions owners most often miss. Dates below reflect the 2026 filing year; confirm specifics for your business with your accountant.

Being a Texas business is a genuine tax advantage — no state income tax on you or your company — but it does not mean no obligations. Missing a franchise tax report or a payroll deposit creates penalties that dwarf the work of staying organized. Start by putting the key dates on a calendar.

Key Texas and Federal Deadlines

If you need more time to file (not to pay), partnerships and S corporations can extend to September 15 and C corporations and sole proprietors to October 15. An extension to file is never an extension to pay — estimate and pay by the original date to avoid interest and penalties.

Texas Franchise Tax

The Texas franchise tax is a “margin” tax on entities doing business in the state, and the annual report is due May 15. Most small businesses owe little or nothing because of the no-tax-due threshold, which the Comptroller adjusts for inflation. For reports due in 2026, that threshold is $2.65 million in annualized total revenue (up from $2.47 million for 2024–2025).

A recent change matters for paperwork: an entity at or below the no-tax-due threshold is no longer required to file a No Tax Due Report. However, taxable entities must still file the required Public Information Report (PIR) or Ownership Information Report (OIR) each year, even when no tax is due. Skipping that filing can put your entity’s right to do business in Texas at risk, so don’t treat “no tax owed” as “nothing to file.”

Texas Sales and Use Tax

If you sell taxable goods or services, you collect and remit Texas sales and use tax. The Comptroller assigns each business a filing frequency — monthly, quarterly, or annually — based on how much tax you collect, and returns are generally due on the 20th day of the month following the reporting period. A small discount is available for filing and paying on time. Confirm your assigned frequency on your Comptroller account rather than assuming a quarterly schedule.

Federal Payroll and Employment Taxes

If you have employees, you are responsible for withholding and depositing federal employment taxes: federal income tax withholding, Social Security and Medicare (FICA), and federal unemployment tax (FUTA). Deposits are made on a monthly or semi-weekly schedule depending on your prior tax liability, while the returns (such as the quarterly Form 941 and annual W-2s) follow their own calendar. Payroll tax is held in trust for employees and the government — the IRS treats shortfalls here far more seriously than most other tax issues, so this is the last deadline to let slip.

Estimated Taxes

Owners whose income is not subject to withholding — sole proprietors, partners, and S corporation shareholders — generally must pay quarterly estimated taxes if they expect to owe $1,000 or more for the year. C corporations make estimated payments if they expect to owe $500 or more. The 2026 quarterly due dates are April 15, June 15, September 15, and January 15, 2027. Underpaying during the year can trigger a penalty even if you pay in full at filing.

How Long to Keep Your Records

The blanket advice to “keep everything seven years” is close but not quite right. The IRS retention periods actually depend on the situation:

• 3 years — the general rule, tied to the standard audit window, measured from when you file (or two years from when you paid, whichever is later).
• 4 years — employment tax records (Forms 941, W-2s, and supporting documents).
• 6 years — if you underreported income by more than 25%.
• 7 years — for claims involving bad debts or worthless securities.
• Indefinitely — if you file a fraudulent return or file no return at all.

Also keep records tied to property and long-term assets for as long as you own the asset, plus the limitations period after you sell it, since they establish your basis. When in doubt, keeping records longer is cheap insurance.

Deductions Texas Owners Often Miss

Many small businesses overpay simply because they don’t track ordinary, deductible expenses. Common ones include:

• Cost of goods sold — inventory and materials for businesses that sell or make products.
• Employee pay and benefits — wages, plus health plans, education assistance, and qualified retirement contributions.
• Home office — a portion of rent or mortgage, utilities, and upkeep, if the space is used regularly and exclusively for business (simplified or actual-expense method).
• Vehicle use — the IRS standard mileage rate (which changes each year) or actual expenses for business driving.
• Business travel — airfare, lodging, and other on-the-road costs for genuine business trips.
• Business meals — generally 50% deductible when they have a business purpose. Note that entertainment expenses are generally not deductible since the 2017 tax law changes, so the old “deduct the ballgame with a client” approach no longer works.
• Advertising and marketing, software and supplies, and professional fees — including your attorney and accountant.

Rules and percentages change, so confirm current treatment before you rely on a deduction — but the bigger risk for most owners is failing to track these at all.

Frequently Asked Questions

When is the Texas franchise tax due? May 15 each year. Most small businesses owe nothing because they fall under the no-tax-due threshold ($2.65 million in annualized revenue for 2026), but many still must file an information report.

Do I have to file anything if my business owes no franchise tax? Often, yes. Entities at or below the threshold no longer file a No Tax Due Report, but taxable entities must still file a Public Information Report or Ownership Information Report annually.

How long should I keep my business tax records? Three years is the general rule, four for employment records, six if income was significantly understated, seven for bad-debt or worthless-securities claims, and indefinitely if no return was filed or a return was fraudulent.

Can I still deduct client entertainment? Generally no. Entertainment expenses have not been deductible since the 2017 tax law changes. Business meals remain deductible, generally at 50%, when there is a legitimate business purpose.

Want a Texas business set up to stay compliant and lean? Reidel Law Firm helps Texas owners choose the right entity, meet their filing obligations, and keep clean records — flat-fee where we can, with direct attorney access. A good starting point is our guide to forming an LLC in Texas. Talk to a Texas business attorney →