The Texas franchise tax, tracked in your books all year.
Texas’s “margin” tax is computed from figures your books produce — revenue, COGS, compensation. We keep those reconciled and the position tracked so your CPA can compute the margin and file accurately, and crossing the no tax due threshold is flagged early. We keep the books; your CPA computes and files.
If your file needs our paid diagnostic first, its fee is credited in full against the cleanup. Either way, you get a fixed fee in writing before any work starts.
Texas rule: for reports due in 2026 and 2027 the no tax due threshold is $2,650,000, and the annual franchise tax report is due May 15; total revenue is tracked against that threshold in QuickBooks month by month. Source: Texas Comptroller, franchise tax.
Texas franchise tax is figured on margin, not income, and for reports due in 2026 and 2027 an entity at or below $2,650,000 in annualized revenue owes none but still files. TechBrot keeps revenue, cost of goods sold and compensation reconciled in your QuickBooks file and flags the threshold early; your CPA computes and files by May 15.
They took something that felt overwhelming to me as a first-year business owner and made it simple.
What stood out the most was TechBrot Inc’s attention to detail.
Three franchise-tax facts your books must support.
The margin tax is computed from your books — these three decide what has to be tracked cleanly.
A tax on margin, not income
The Texas franchise tax is a privilege tax on each taxable entity formed or organized in Texas or doing business in Texas, and its base is margin, not net income: total revenue times 70%, or total revenue minus cost of goods sold, minus compensation, or minus $1 million (Texas Comptroller: Franchise Tax Overview). Which method applies is a CPA calculation; we keep the books that feed it.Below the threshold — a report, not a payment
For reports due in 2026 and 2027, an entity whose annualized total revenue is at or below the $2,650,000 no tax due threshold owes no franchise tax. Since the 2024 report year it files no No Tax Due Report, but it must still file a Public Information Report or Ownership Information Report (Texas Comptroller: franchise tax). We track the revenue figure so crossing the threshold is flagged early; your CPA confirms and files.Filed with the Texas Comptroller
The franchise tax is administered by the Texas Comptroller of Public Accounts, and the annual report is due May 15 (the next business day if May 15 falls on a weekend or holiday). We keep the books reconciled and the figures ready; your CPA computes the margin and files.The figures your CPA needs, kept clean all year.
We keep the revenue, COGS, and compensation figures reconciled — the margin computation and filing stay with your CPA.
Revenue tracked cleanly
COGS & compensation separated
Threshold monitored
Books reconciled before May
Sales tax handled alongside
Cleanup before handoff
What we do — and what we don’t.
What TechBrot does
- Track total revenue, COGS, and compensation cleanly in QuickBooks
- Monitor revenue against the no-tax-due threshold
- Reconcile and close the books ahead of the May franchise-tax deadline
- Keep sales tax configured and reconciled in the same file
- Clean up a behind or miscategorized file before the CPA handoff
- Hand reconciled, computation-ready figures to your CPA
What your CPA does
- Compute the franchise-tax margin or choose the deduction method
- Determine whether you owe franchise tax
- File the franchise-tax report or the Public Information report
- Represent you before the Texas Comptroller or provide tax advice
- Step 1
Free file review
A QuickBooks ProAdvisor reviews whether your books track the revenue, COGS, and compensation figures the margin tax needs, at no cost. - Step 2
Written fixed-fee scope
Within 3 business days you get a written scope and fixed fee for cleanup and ongoing reconciliation. - Step 3
Reconcile the margin figures
We get revenue, COGS, and compensation clean and distinct, and monitor the threshold. - Step 4
Hand off to your CPA
Ahead of the May deadline we hand reconciled, computation-ready figures to your CPA, who computes the margin and files.
Automation handles the data entry. We handle the judgment.
The franchise tax trips Texas businesses up not because it’s hard to file but because the books behind it are messy — revenue overstated, COGS and compensation blended, the threshold crossed without anyone noticing. Every one of those is a bookkeeping problem, and every one is what a QuickBooks ProAdvisor keeps clean so your CPA’s computation is accurate.
Records example: total revenue by income account, cost of goods sold and compensation (W-2 wages, officer pay and benefits) in separate accounts, and the annual Profit and Loss built from them, so your CPA can compare the margin methods. 1099 labor and employer payroll taxes sit in their own accounts, because the Comptroller excludes them from the compensation deduction.
We hold the line clearly: we keep the figures reconciled, your CPA computes the margin, chooses the deduction method, and files with the Comptroller. Thresholds and rates change — we flag movement, your CPA confirms the current numbers.
If a Comptroller notice has already arrived: the Comptroller can forfeit an entity’s right to transact business in Texas when a required report is not filed, or the tax or penalty not paid, within 45 days after the forfeiture notice is mailed or sent (Texas Tax Code §§ 171.251, 171.2515). Collected sales tax is held in trust for the state, and an individual who controls its collection or payment and wilfully fails to pay it is liable as a responsible individual (§ 111.016). Records example: for each open period, a reconciled liability account per tax — Texas sales tax payable, federal payroll liabilities, TWC unemployment tax payable — tied to the General Ledger and the bank statements, so your CPA or EA can compare the books with what each agency has on file.
Around Texas.
Texas QuickBooks ProAdvisor & bookkeeping
The state page: services, industries, cities and the Texas tax terms in one place.Also in Texas
Texas cities
Not sure where your file stands? Start with the free QuickBooks file review · how Texas compares: state-by-state tax quirks.
Texas franchise (margin) tax questions.
What is the Texas franchise (margin) tax?
It’s a privilege tax on an entity’s “margin” — total revenue times 70%, or total revenue minus cost of goods sold, compensation, or $1 million — rather than on net income. It’s administered by the Texas Comptroller and imposed on each taxable entity formed or organized in Texas or doing business in Texas, including corporations, LLCs and partnerships. Rates, thresholds and deduction limits vary by report year, so confirm current figures with the Comptroller and your CPA.
Is the franchise tax the same as a state income tax?
No. The Texas Constitution bars a state tax on the net incomes of individuals (Article 8, Section 24-a). The franchise tax is a separate privilege tax on margin, filed with the Comptroller, not the IRS. That’s why “no income tax” doesn’t mean “no state tax obligation” for a Texas business.
Do I owe franchise tax if my revenue is low?
An entity whose annualized total revenue is at or below the no tax due threshold ($2,650,000 for reports due in 2026 and 2027) owes no franchise tax. Since the 2024 report year it files no No Tax Due Report, but it must still file a Public Information Report or Ownership Information Report. Whether you owe, and how much, is a determination for your CPA; we keep the revenue figure tracked so crossing the threshold is flagged early.
What does TechBrot do for the franchise tax?
We keep the figures the margin tax is computed from — revenue, cost of goods sold, and compensation — reconciled and distinct in your QuickBooks file, monitor revenue against the threshold, and close the books ahead of the deadline, so your CPA can compute the margin and file accurately. We do not compute the liability, choose the deduction method, or file the report.
When is the Texas franchise tax due?
The annual report is due May 15 (the next business day if May 15 falls on a weekend or holiday), filed with the Texas Comptroller. We reconcile and close the books ahead of that so your CPA isn’t reconstructing a year of records under deadline. Confirm the exact due date and any extension with the Comptroller and your CPA.
Do you compute or file my franchise tax?
No. TechBrot is a bookkeeping and advisory firm — we keep the books CPA-ready and coordinate with your CPA, who computes the margin, chooses the deduction method, and files with the Comptroller. We do not compute the liability, file the report, or represent clients, and we are not affiliated with Intuit Inc. or the Texas Comptroller.
My Texas entity is forfeited — can you help?
The Comptroller can forfeit an entity’s right to transact business in Texas when a required franchise tax report is not filed, or the tax or penalty not paid, within 45 days after the forfeiture notice is mailed or sent (Texas Tax Code Sections 171.251 and 171.2515). We get the books current so the financial picture is clear and CPA-ready; your CPA or EA files the outstanding reports, obtains the Comptroller’s tax clearance letter and completes reinstatement with the Secretary of State. We do the books; they handle the agency.
Collected sales tax or payroll withholding is involved — is that worse?
Treat it with urgency. Under Texas Tax Code Section 111.016, tax collected is held in trust for the state, and an individual who controls or supervises its collection or payment and wilfully fails to pay it is liable as a responsible individual; withheld federal payroll tax is a trust fund tax too, and the IRS can assess the Trust Fund Recovery Penalty against a responsible person who willfully fails to collect or pay it. Get your CPA, EA, or tax attorney involved immediately; we reconcile the underlying records quickly to support them.
Checked against the Texas Comptroller of Public Accounts.