Understanding the Texas Tax Registration Process and Key Entity Obligations

Understand the Texas tax registration process and essential tax obligations. Discover how Harbor Compliance’s services ensure seamless registration.

After filing your entity’s formation document in Texas, you’ll need to meet several tax obligations to remain in good standing. These typically include setting up tax accounts, remitting taxes, and submitting reports to the state.

Texas businesses must adhere to various tax requirements, from the franchise to the unemployment insurance tax, which are handled by different regulatory authorities. To avoid penalties, entities must understand their tax obligations, identify the authority responsible for each, complete the registration process, and report taxes.

By outsourcing some of these responsibilities to experts like Harbor Compliance, businesses can ensure accurate, timely registration and reduce administrative burden.

This article will provide an overview of the Texas tax registration process, primary taxes, and corresponding regulatory agencies. We will also explain how Harbor Compliance can support your entity in meeting state requirements.

Key Tax Obligations in Texas

Before setting up your business in Texas, it’s essential to get familiar with the tax requirements imposed by the state. These can vary depending on the structure and nature of your business.

Typically, the tax responsibilities entities face in Texas include:

1. Payroll tax
2. Franchise tax
3. Sales and use tax

Payroll Tax

Payroll taxes are fees employers pay on behalf of their workers to cover social support programs. The only state-imposed payroll tax in Texas is the state unemployment insurance tax (SUTA), which funds benefits for workers who lose their jobs through no fault of their own.

This tax is administered by the Texas Workforce Commission (TWC), and the rate employers pay typically varies. New employers start with a standard rate, which may be adjusted over time based on how frequently their employees file for unemployment benefits.

Franchise Tax

The franchise tax is the business privilege tax imposed on certain entities formed, organized, or doing business in Texas. Businesses required to pay this fee are called taxable entities and include:

• Limited liability companies (LLCs)
• Corporations
• Banks
• Trus
• Professional and business associations
• Joint ventures
• Partnerships (general, limited, and limited liability)
• Savings and loan associations

The franchise tax is overseen by the Texas Comptroller of Public Accounts, and tax filings are due on May 15 of each year. However, if this date falls on a legal holiday or weekend, the due date is extended to the next business day.

Sales and Use Tax

The sales and use tax in Texas is imposed on businesses that sell tangible physical property or offer taxable services within the state. The standard Texas sales tax rate is 6.25%, although local jurisdictions might impose additional rates not exceeding 2%. The Texas Comptroller of Public Accounts oversees this tax.

How To Navigate the Texas Tax Registration Application Process

Before navigating the Texas tax registration process, you should understand that different authorities handle different tax obligations. This means businesses need to register with the designated regulatory bodies for each tax requirement. The registration process is generally divided into three parts:

1. Employer Identification Number
2. Texas Workforce Commission Registration
3. Texas Comptroller Registration

1. Employer Identification Number

An employer identification number (EIN) is a tax ID issued by the Internal Revenue Service (IRS) for businesses, tax-exempt organizations, and other entities. Typically, you will need an EIN when registering tax accounts.

Before requesting an EIN, you must have filed formation documents for your entity. You can apply for an EIN online via the IRS portal or by mail. However, online applications are processed faster.

2. Texas Workforce Commission Registration

Texas employers are required to register for the unemployment insurance tax with the TWC within ten days of becoming liable. To streamline this process, the TWC provides an online platform called the Unemployment Tax Registration (UTR). During registration, employers will typically be asked for the following details:

• Email address
• Owners’, partners’, or officers’ Social Security numbers and residence address
• The trade name and physical address of each business location in Texas
• Current U.S. mailing address for the registered entity
• Payroll information, which includes details, such as the date the first wages were paid and the first employee was hired
• Acquired businesses must provide the name and address of the previous business owner
• The principal activities or products of the business

Once the registration is complete, you will receive a Texas registration number called the TWC tax account number. Additionally, you will be issued an Employer Liability Notice via mail to confirm your obligations and account details.

3. Texas Comptroller Registration

To complete the Texas sales and use tax registration, entities must open an account via the eSystems portal on the Texas Comptroller of Public Accounts website. This account setup will typically require details about the entity, including its name, business type, and contact information.

Once the account is created, entities can use it to register for sales and use tax in Texas. Processing generally takes two to three weeks, after which businesses will receive their sales and use permits. This account can also be used to remit franchise tax payments.

Outsourcing the Texas Tax Registration Process To Harbor Compliance

Forming your entity in Texas doesn’t end with filing the formation papers. You’ll also need to register with various regulatory authorities and regularly file tax reports to maintain good standing.

Managing the entire registration process independently can be stressful and time-consuming as it involves opening multiple tax accounts to remit state taxes. As such, outsourcing your tax registration needs to experts is often beneficial.

Harbor Compliance specializes in helping entities meet their diverse obligations, from formation to tax registration. Our comprehensive tax support services include:

• EIN Application—We assist entities in securing their EIN.
• Payroll Tax Registration—We assist in setting up unemployment tax insurance accounts so you can remit taxes to the Texas Workforce Commission.
• Sales and Use Tax Application—We handle the application process so your business can legally sell, lease, and provide taxable services in Texas.

Simply provide us with your contact details, and our team will handle the registration process, ensuring it’s done correctly and efficiently.

Overseeing Your Tax Obligations With Harbor Compliance’s Tax Manager

At Harbor Compliance, we understand that fulfilling tax obligations extends beyond registration. Maintaining accurate records of tax filings is crucial for audit purposes, and having a centralized platform to manage various tax accounts is essential for efficiency.

We offer a proprietary Software Suite featuring a key module called Tax Manager to address these needs. This platform is specifically designed to streamline the management of your tax obligations. Tax Manager’s key features include:

• Centralized storage for tax filings, ensuring easy access during audits
• Monitoring of the federal, state, and local tax registrations and exemptions
• Tracking of tax IDs

How To Order Harbor Compliance’s Tax Registration Solutions

Before proceeding with tax registration, the first step is obtaining an Employer Identification Number, often used in setting up other tax accounts. Harbor Compliance can streamline this process on your entity’s behalf when you follow these steps:

1. Visit the Employer Identification Number page.
2. Select Order Online.
3. Provide your entity’s details.
4. Submit your order.

After securing your EIN, if you’d like us to assist you in opening payroll tax accounts and securing the sales and use tax permit, follow these steps:

1. Visit our Payroll Tax Registration and Sales and Use Tax Registration pages.
2. Select Order Online.
3. Fill out the forms with your contact details.
4. Submit the online forms.

Entities who are interested in our Tax Manager module can learn more about our software solution by following these steps:

1. Visit our Tax Manager page.
2. Click on Schedule a Demo.
3. Provide your contact details and entity information.
4. Submit your demo request, and our team will contact you to discuss the capabilities of the module.

Other Services Harbor Compliance Offers

Aside from assisting entities in registering tax accounts and providing a software solution to manage tax obligations, Harbor Compliance also offers ongoing filing support for other regulatory obligations. The table below outlines the category of services we offer:

Texas Tax Registration FAQs

This section will answer some common questions about the Texas tax registration process. To learn more, explore the Information Center.

Enjoy a Seamless Texas Tax Registration Process With Harbor Compliance

In Texas, as in most U.S. states, entities must open tax accounts, remit taxes, and file returns to maintain their right to operate. With different taxes overseen by various regulatory authorities, entities must identify the appropriate agency for account registration and filing.

Partnering with Harbor Compliance can simplify this process, allowing you to focus on growing your business. Additionally, our proprietary software solution, Tax Manager, helps keep track of tax obligations and filings, ensuring nothing is overlooked.

Schedule a demo session to explore the Tax Manager module and order our comprehensive tax support services, which include:

• Employer Identification Number (EIN) Application
• Payroll Tax Registration
• Sales and Use Tax Registration

You can also use the Harbor Compliance Score™ to assess your standing with state requirements and find the areas of your business that need improvement. From there, you can contact us and get started with the services you need.