The yearly upkeep that keeps a Texas company in good standing and its owners protected

The short list: state reports, a current agent and honest records

To keep a Texas LLC or corporation in good standing, file the annual franchise tax report and the Public Information Report or Ownership Information Report with the Texas Comptroller by the due date, keep your registered agent and registered office current with the Secretary of State, and keep the company's internal records up to date: consents or minutes for major decisions, an accurate ownership record, and a company agreement or bylaws that still match how the business runs.

The state filings protect the company's legal status. The internal records protect the owners, both from each other and from outsiders who test the company's liability shield. I help owners set up both, and I handle the disputes that arise when neither was done, so I have seen what a few skipped hours a year can cost. This guide is general information, not legal or tax advice; talk to a licensed Texas attorney and your CPA about your company.

The annual franchise tax report

Texas imposes a franchise tax, which the Comptroller describes as a privilege tax on each taxable entity formed or organized in Texas or doing business in Texas. According to the Comptroller, the annual report is due May 15, moving to the next business day when that date falls on a weekend or holiday.

Many small companies owe no franchise tax because their revenue is below the no-tax-due threshold, which the Comptroller lists as $2,650,000 for reports due in 2026 and 2027. Owing nothing is not the same as filing nothing. Your CPA should confirm which report your company files and whether any tax is due, but the reporting obligation itself is the owner's responsibility to track.

Notices from the Comptroller deserve prompt attention. Owners sometimes set them aside because they assume nothing is owed, only to discover months later that a missing report has put the company's standing at risk. Forward every state notice to your CPA the day it arrives, and keep copies of what was filed and when.

The Public Information Report most owners forget

Alongside the franchise tax report, the Comptroller requires an information report. According to the Comptroller, corporations, LLCs, limited partnerships, professional associations and financial institutions file a Public Information Report, and other taxable entities file an Ownership Information Report. Both are due on the annual franchise tax due date, and a report is due even when the entity owes no franchise tax.

This is the report that causes the most trouble, because owners who owe nothing assume there is nothing to file. The report lists the company's officers, directors, managers or members, which also makes it a good annual prompt to check that the people listed are the people actually running the company.

What forfeiture means for the owners personally

The consequence of missing these reports is serious and easy to underestimate. The Comptroller explains that an entity that fails to file may forfeit its right to transact business in Texas, even if it owes no franchise tax or has paid all taxes due. Forfeiture denies the entity the right to sue or defend in Texas courts, and each officer, director, partner, member or owner becomes personally liable for certain debts of the entity.

In other words, a missed form can undo part of the liability protection the company was formed to provide, and can leave the company unable to enforce its own contracts in court until it is brought current. My guide on whether an LLC really protects your personal assets explains how this fits with the other ways owners lose protection.

Keep the registered agent and office current

Every Texas LLC and corporation must maintain a registered agent and registered office, the place where lawsuits and official notices are delivered. According to the Secretary of State's instructions, the agent must be a Texas resident individual or an entity registered to do business in Texas, must consent to serve, and cannot be the company itself.

Agents move, resign, change jobs or forget. An owner who listed a home address and later moved, or a former partner who served as agent and then left the company, can mean that a lawsuit is delivered to the wrong place. A default judgment because nobody received the papers is one of the most avoidable disasters in business law. Check the agent and office every year, and update the state's records when anything changes.

Internal records the state never asks for

The state does not collect your company agreement, bylaws, minutes or consents. That makes them easy to neglect and essential when something goes wrong. In my experience, litigation years later can turn on what was or was not done and documented, and the owners who kept simple records are in a far stronger position.

You do not need elaborate corporate ceremony. A short written consent signed by the owners or managers for each major decision, and an annual note confirming who owns what, covers most small companies. Corporations should follow their bylaws on meetings and elections of directors and officers.

Store these records where more than one person can find them. If the only copy of the company agreement lives in one owner's email, the company is one departure or one lost laptop away from not knowing its own rules.

• Written consents or minutes for borrowing, major contracts, leases and large purchases
• Approval of distributions and owner compensation
• An up-to-date record of each owner's percentage and contributions
• Records of admission or departure of any owner
• Officer and director appointments, removals and resignations
• Any amendments to the certificate of formation, company agreement or bylaws

Keep the money separate all year

Good standing is not only about filings. The company should have its own bank accounts, pay its own bills and receive its own income. Owners should be paid through documented distributions or compensation, not by pulling cash whenever they need it. Personal expenses should never run through the company account.

This problem is most common in owner-operated businesses that grew out of a sole proprietorship, where the habits of the early days never changed. The fix is simple but requires discipline: one company account for company money, a clear method for paying the owners, and receipts for anything the company reimburses.

Clean books also make every other obligation easier: your CPA can file accurate reports, owners can see what distributions are justified, and a lender or buyer can trust what you show them. If the books have fallen behind, the guide on catching up on books before tax season is a practical starting point.

An annual review of the agreement itself

Businesses change faster than their documents. A company agreement written when two founders started out may not fit a company with employees, a third owner, outside debt or a new line of business. Once a year, read the agreement against reality. Does it describe how decisions are actually made? Do the buyout terms still produce a fair and payable price? Are the people named in it still involved?

This is also the time to look at the hard events. If an owner's family situation, health or plans have changed, the buy-sell terms may need attention. My guide on partners who never wrote down a buyout explains why those terms matter so much and why they are easiest to fix while everyone still agrees.

A short annual review with your attorney is usually inexpensive compared with repairing documents after a dispute has started.

A simple calendar that works for most small companies

Owners who stay in good standing usually do it with a calendar, not with memory. Pick one person, an owner or a trusted office manager, to own the calendar, and share it with your CPA. The list below is a starting point that most small Texas companies can adapt.

For a Dallas company with several owners, it helps to send everyone a one-page summary after each item is done, so no owner is surprised later and everyone can see the company is being run by its own rules.

• Early in the year: gather financial records for the CPA and confirm the franchise tax filing plan
• By the May due date: franchise tax report and Public Information or Ownership Information Report filed
• Each spring: confirm the registered agent and office, and update the state if anything changed
• Midyear: review owner compensation and distributions against the company agreement
• Each fall: read the company agreement or bylaws against how the business actually runs
• Whenever it happens: document major decisions and any change in owners, officers or managers

Bringing a neglected company back into shape

If you are reading this and realize your company has missed reports or never kept records, you are not alone, and it is usually fixable. The first step is to check the company's status with the Comptroller and the Secretary of State, then file what is missing with your CPA's help. Internal records can be rebuilt with written consents that ratify past decisions, an updated ownership record and, where needed, a new or amended company agreement.

I help owners in Dallas and across the region with this kind of cleanup from my office at One Campbell Centre. I have been licensed in Texas since 1998, and my approach is straight talk counsel: you should understand your own documents and obligations well enough to govern your company without creating personal liability. Send me what you have, and I will tell you what is missing, what matters most and what it will take to put it right.

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