Taxes You Need To Pay in Texas LLC

Are you finding more detailed information about the LLC taxes in Texas? Then you are right here, a place where you can find complete information related to your Limited Liability Company taxes criteria. Likewise payroll, Texas sales tax, federal, & self-employment. The businesses are not taxed on the profits of a Texas LLC for the C Corporations. As you might know that every state has different rules and regulations, similarly the tax structure of each state also varies from one state to another. Here I have piled a piece of good information about the Texas state taxes. You can have a look so that you will have an idea about the taxes that you will have to pay if you have formed an LLC in Texas.

LLC Taxes in Texas

When I compare with other states Texas has extremely low business taxes, and even it does not include personal income tax. Not collecting the personal income tax has benefits like the business can keep more of the earned money with them. They can probably hire professional & talented employees or service providers. Referring that they do not have to pay the personal income tax. If the business is operating as a huge industry then they have to pay a big amount as a tax to the state and the federal government. If the business is small as their taxes are meager but if it becomes zero then if it is beneficial for all the business owners & members. If you want your LLC to run legally then you have to pay Texas LLC taxes.

  • Self-employment tax on their business profits is usually paid by owners of Texas LLC.
  • The Texas LLC owners pay their Federal income tax on profits and even, less federal allowances or deductions.
  • If the LLC sells the products physically to the customers they pay the sales tax on products.
  • Texas LLC owners have to pay the employer payroll tax on the salaries of the employees they pay.
  • Employees of Texas LLC pay the federal & payroll Taxes from their salary.

The Texas Comptroller has the authority to collect all the taxes. If you want to operate the LLC legally and pay all the taxes then you might need a Texas Tax ID. To make the transaction smooth, you can apply online by visiting the Texas Comptroller’s official website.

Texas LLC Sales Tax Rates 

As you might be familiar that every state has different tax rates, it may vary from state to state. So, here are some LLC Taxes in Texas that you have to pay as sales tax. Although, the state has a basic sales tax rate. The cities & counties may impose some extra tax amount, on the basic tax rate. Here I have provided a list in which I have mentioned a few major states’ tax rates.

For example, I have done a breakdown of some LLC taxes in Texas so that you can understand easily.

  • Texas State sales tax rate is 6.25%
  • Houston city imposes a sales tax of 1%
  • Houston MTA Transit imposes a sales tax of 1%
  • Total: It becomes an 8.25% sales tax rate

Note: You may get the accurate sales tax from when you will provide the exact location.

  • San Antonio, Texas sales tax is 8.25%
  • Dallas, Texas sales tax is 8.25%
  • Brownsville, Texas sales tax is 8.25%
  • El Paso, Texas sales tax is 7.25%
  • Midland, Texas sales tax is 6.75%

Federal Taxes for Texas LLCs

If you have formed an LLC then you will have to pay the federal taxes to operate the Limited liability company legally in Texas. There are different federal taxes that you might have to pay, these taxes pass through the tax return forms.

Texas LLC Taxes For Federal Self-Employment 

Once you have formed an LLC in Texas and you are running well and making huge profits. The members or managers taking profits from their LLCs will have to pay the self-employment tax. As that amount will be counted as your income so you have to pay the tax on that amount. The tax you pay to the state is basically known as (FICA) Federal Insurance Contributions Act or Social Security or Medicare tax. Basically, the FICA is tax rate is 7.65% if we combine the employer and employee tax then you will have to pay 15.3% as a self-employment tax.

It is necessary to pay all the LLC Taxes in Texas in order to be in good standing with the government. Here I have provided an example for your ease of understanding. You can have a look and understand that how much self-employment tax you may have to pay to the Texas State from your earnings.

  • If you have earned $25,000, then you will have to pay $3825 as a self-employment tax.
  • If you have earned $50,000, then you will have to pay $7650 as a self-employment tax.
  • If you have earned $1,00,000, then you will have to pay $15,300 as a self-employment tax.

C Corporation Taxes

There are many small businesses that tend to switch from the LLCs to the S-corporations to C-corporations if their growth is on the positive side. If taxes are very low on the S-corporations & C-corporations why will someone pay more right? Likewise, in every state, Texas also imposes levies the corporations as a business tax & franchise tax. In addition, Texas imposes a 1% tax rate on Texas corporations. This makes Texas stand on the high side when it comes to rank as a very low-taxed state. Moreover, the no-tax-due threshold & E-Z Computation rules are applied to the Texas corporations.

S Corporation Taxes

If you own a small business, then you will be familiar that the S corporation is trendy in small businesses. As the S-corporation has many benefits of incorporating, as C-corporation does not have the individual federal income tax. Or else in many other states, they have the additional state income tax. In the S-corporation, they must have to pay the LLC taxes in Texas on the equity of the shareholdings in the company. However, Texas has imposed the S-corporations on its franchise tax based on their business’s annual revenue. So, you have to file Texas LLC tax.

If you have formed an S-corporation then you don’t have to pay them more than 1%. The individual shareholders of the company are not required to pay the state tax from the income from your company. As I mentioned earlier that the S-corporation is very beneficial if their revenues do not exceed the minimum thresholds. The small business mostly operates as tax-free as the state does not impose any tax on the business.

Note: These are some of the LLC Taxes in Texas that should be paid on time in order to be in good standing with the secretary of the state. 

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