Texas Franchise Tax Final Report After You Sell

Which kind of sale you signed decides the work

The first question is not about tax at all. It is about what the buyer bought. Your answer changes who files the franchise tax from here on.

In a stock or membership sale, the buyer bought your shares or your interest in the LLC. The company keeps going under new owners, with the same Comptroller account. It keeps filing its yearly reports, and that is now the buyer's job.

In an asset sale, the buyer bought the equipment, customer list, name and goodwill. Your company sold those things, got paid, and still exists.

Most sales under about $2 million work this way. Your entity stays on the Comptroller's books until you end it.

So in an asset sale, the franchise tax stays with you. If you are not sure which kind of deal you signed, the purchase agreement says so on its first pages, and your attorney can confirm it in a minute.

Why the old company often stays open for a while

Sellers are often surprised by this. They expect to close the company the week after the sale. In practice, the entity usually stays alive for months, and for good reasons.

• The buyer may owe you payments under a seller note, and those go to your company.
• Part of the price may sit in a holdback until the buyer confirms your taxes and bills were paid.
• Late customer payments on old invoices still land in your company's bank account.
• Final bills from vendors, the landlord and the utilities keep arriving for a few weeks.
• Your CPA still has a final federal return to prepare for the company.

As long as the entity exists, it stays on the hook for its Texas reports. Plenty of sellers mentally close the books on sale day, then get a notice the next spring because nobody filed the yearly report. Put it on your calendar.

Who owes franchise tax in the first place

The Texas franchise tax applies to most entities that protect their owners from liability: corporations, LLCs, and partnerships with that kind of protection. A sole proprietor does not file it.

For the 2026 and 2027 reports, an entity with revenue at or under $2.65 million owes no franchise tax. The figure was $2.47 million for the 2024 and 2025 reports.

Above that, the rate is 0.75% for most businesses and 0.375% for retailers and wholesalers.

Owing nothing does not mean filing nothing. The old No Tax Due Report went away for reports due from 2024 on. An entity under the threshold still files its Public Information Report or Ownership Information Report. Yearly reports are due May 15.

A sale year can push revenue higher than usual, depending on how your CPA treats the proceeds. Do not assume last year's answer still holds. Ask your CPA to run the numbers for the year of the sale.

What ending the company actually takes

Once the payments are in and the bills are paid, you can end the entity. In Texas, that means filing a certificate of termination with the Secretary of State.

The Secretary of State will not accept it until the Comptroller says your account is in good standing.

Getting there has two parts. First, the company files a final franchise tax report and pays whatever it owes.

Second, you get a certificate of account status from the Comptroller showing the company is square. The Secretary of State wants that certificate itself, not a printout from the Comptroller's website.

We are not giving a due date for the final report here on purpose. The timing depends on when the entity ends and how your CPA sets up the final period. Get the date from your CPA or straight from the Comptroller.

The other accounts close on a different clock

The franchise tax is usually last, but it is not the only state account. Your sales tax permit closes right after the sale with a final return, and you tell the Comptroller who bought the business.

Our guide on sales tax on the equipment in a sale covers that piece.

If you used a trade name, that filing also needs to be cleaned up so the buyer can register it under its own name. See assumed name filings after a sale.

Buyers also tend to ask for proof that your sales taxes are paid, and some hold back money until it arrives.

Laid out on a calendar, the pattern is simple. Sales tax and payroll accounts close within weeks. The franchise tax and the entity itself close last. Our timeline page shows where these steps sit next to the rest of a sale.

A note for owners across the state line

Everything above is Texas. If your company is formed and based in New Mexico, say in Las Cruces or Santa Teresa, it follows New Mexico's rules instead, and your CPA and attorney there will handle the closing filings.

One more Texas point helps. Texas has no personal income tax, so an owner living in Texas pays no state income tax on the gain from the sale. Federal tax still applies.

Talk to your CPA about that well before closing, since tax usually costs a seller more than any fee.

Small habits that save a headache later

• Keep the company's mailing address current with the Comptroller until the very end. Notices go there.
• Keep one bank account open for the entity until the last payment clears.
• Save a copy of the final report, the certificate of account status and the filed termination together.
• Do not let the registered agent lapse while the entity still exists.

None of this changes what your business is worth. It does change how clean your exit feels. If you are still at the stage of asking what a buyer would pay, start with how buyers price a business.

Want a starting number before any of this matters? Use the free valuation form or call (915) 555-0193.