Texas State Law Changes for Small Business Reporting What Owners Need to Know

A small change in a filing rule can save hours, or create a missed deadline if no one catches it. Texas small business owners are seeing both sides right now.

Recent state-level changes have reduced some routine franchise tax reporting for smaller entities, while newer privacy rules and ongoing tax requirements still demand careful recordkeeping. The result is not a simple “less paperwork” story. It is a shift in which reports matter, when they apply, and what records a business should keep to prove compliance.

This guide is informational only and is not legal or tax advice. For decisions tied to your business structure, revenue, or industry, talk with a Texas CPA, tax professional, or attorney.

Small businesses may have fewer routine filings, but the right records still matter.

The biggest change is the Texas franchise tax filing threshold

For many small businesses, the most meaningful recent update is tied to the Texas franchise tax.

Texas increased the no-tax-due revenue threshold for franchise tax reports due on or after January 1, 2024. The threshold rose to $2.47 million in annualized total revenue. In plain terms, many taxable entities with annualized total revenue at or below that amount generally do not owe franchise tax.

The reporting change matters just as much as the tax change. For reports due on or after January 1, 2024, many entities that fall under the no-tax-due threshold are no longer required to file the separate No Tax Due Report. In many cases, they also do not need to file the related Public Information Report or Ownership Information Report for that report year.

That is a major shift for small LLCs, corporations, and other taxable entities that used to file a short annual franchise tax package even when they owed nothing.

What this means in practice

A Texas LLC with $950,000 in annualized total revenue may have filed a No Tax Due Report in prior years. Under the newer rule, if the entity is under the threshold and does not fall into another filing category, it may not need to file that annual no-tax-due paperwork.

A growing construction company with $2.8 million in annualized total revenue is in a different position. That business is above the threshold, so it should expect to file a franchise tax report and any required information report.

A consulting firm with uneven revenue should be careful. If revenue was $1.9 million one year and $2.6 million the next, the owner cannot assume the filing obligation stays the same. The threshold test needs to be reviewed each report year.

Lower filing burden does not mean no recordkeeping

The franchise tax update can reduce paperwork, but it does not remove the need to track revenue.

Texas uses specific franchise tax concepts, including annualized total revenue, and a business may need records to support why it did not file. If the Comptroller asks questions later, “we thought we were under the limit” is not as useful as clean sales reports, accounting records, and tax workpapers.

Keep records that show:

• Gross receipts and other revenue by year

• Returns, allowances, and other adjustments tracked by your accounting system

• Entity type and ownership details

• Prior franchise tax filings and confirmations

• Notes from your CPA or tax preparer about filing status

  
  

The main compliance habit is simple: decide each year, based on current numbers, whether a report is required. Do not rely on last year’s answer.

Situation	Likely reporting impact	Practical example
Revenue is at or below the no-tax-due threshold	The business may not need to file the annual No Tax Due Report for that year	A small retail LLC with $700,000 in annualized total revenue may no longer file the same no-tax-due package it filed in prior years
Revenue is above the threshold	Franchise tax reporting likely still applies	A services company with $3 million in annualized total revenue should prepare for a franchise tax report
Business is closing, merging, or changing structure	Special filings may still apply	An LLC that terminates its Texas registration may need final tax and Secretary of State steps
Revenue is close to the threshold	Documentation becomes more important	A seasonal business should keep clear monthly revenue records in case annualized calculations matter

Revenue tracking is still the foundation of good reporting.

Public information reporting may change for smaller entities

Before the recent franchise tax change, many taxable entities filed a Public Information Report or Ownership Information Report along with a no-tax-due filing. That made the annual franchise tax process a common way to update the state on officers, directors, members, managers, or ownership information.

Now, if a business is not required to file the no-tax-due report for a given year, the related information report may also not be required for that year.

That can feel like one less task, but owners should not ignore entity records. Businesses still need to keep their internal ownership and management information current. Banks, lenders, landlords, investors, and licensing agencies may ask for accurate records even when the state does not require an annual information report.

Example of how the change can affect an LLC

Say a two-member Texas LLC owns a small landscaping business.

In the past, it filed a No Tax Due Report and included ownership information with the annual filing. In 2024 and later years, if its revenue falls below the threshold and no other filing applies, it may skip that annual franchise tax filing package.

If one member sells their interest to the other, the state may not automatically receive that update through the old annual report process. The LLC should still update its company agreement, membership ledger, tax records, bank documents, and any licensing records.

The reporting burden may go down, but the need for accurate records remains.

Texas privacy rules can affect how customer data is disclosed

Another recent Texas change comes from the Texas Data Privacy and Security Act, which took effect in 2024. This law focuses on how certain businesses handle personal data of Texas residents.

Many small businesses are outside the main scope of the law if they qualify as small businesses under the federal Small Business Administration size standards. Even so, the law includes a rule that can still matter for small businesses: a small business may not sell sensitive personal data without getting prior consent.

Sensitive data can include categories such as precise location data, certain health-related data, biometric data, and other protected types of information.

For small businesses, this is less about filing a form with the state and more about what the business tells customers, what consent it collects, and what records it keeps.

Examples of privacy-related reporting changes

A local gym that uses a third-party app to track health metrics should review what data the app collects and whether any sensitive personal data is shared or sold. The gym may need clearer customer disclosures and consent records.

An online boutique that collects basic shipping details and email addresses may not have major new duties if it is a small business and does not sell sensitive data. Still, it should confirm what its payment processor, email provider, and website tools do with customer data.

A mobile service business that collects precise location data from customers should be more cautious. If that data is shared with another company for value, the owner should get legal guidance on consent and disclosure duties.

Sales tax reporting still changes when sales channels change

Texas sales tax rules are not new, but many small businesses run into reporting changes because their sales model changes.

A business that once sold only from a storefront may add online orders, farmers market booths, pop-up events, delivery services, or marketplace platforms. Each of those changes can affect how sales are tracked and reported.

Texas businesses should pay close attention to:

• Whether they have a valid Texas sales and use tax permit

• Which products or services are taxable

• Which local tax rates apply

• Whether marketplace facilitators collect tax on their behalf

• Whether direct website sales must be reported separately

• Filing frequency assigned by the Comptroller

  
  

Example of a marketplace reporting trap

A candle maker sells through a large online marketplace and also through their own website.

The marketplace may collect and remit Texas sales tax on marketplace sales. That does not mean the candle maker can ignore direct website sales. Sales made through the business’s own website may still need to be reported on the owner’s Texas sales tax return.

The practical fix is to separate revenue by channel:

• Marketplace sales

• Direct website sales

• In-person sales

• Wholesale or exempt sales

  
  

That makes sales tax returns easier and helps prevent double-reporting or underreporting.

Customer data rules can affect small businesses that collect sensitive information.

Business personal property renditions remain easy to overlook

Many Texas small businesses must report taxable business personal property to their county appraisal district. This is called a rendition.

A rendition usually covers property used to produce income, such as equipment, furniture, machinery, tools, computers, and inventory. It is separate from franchise tax and sales tax.

This requirement often surprises newer owners because it is handled locally, not through the same system as state franchise tax. Deadlines and procedures can vary by appraisal district, so businesses should check their county’s instructions every year.

Example of a rendition requirement

A small coffee shop owns espresso machines, grinders, refrigerators, tables, chairs, and point-of-sale equipment. Those items may need to be listed on a business personal property rendition.

A freelance designer working from home with only a laptop and small amount of equipment may still need to check local requirements. The answer can depend on the type and value of property and the appraisal district’s rules.

Even if the state franchise tax filing burden is lighter, local reporting can still apply.

Do not confuse Texas state changes with federal beneficial ownership reporting

Many small business owners have also heard about beneficial ownership information reports under the federal Corporate Transparency Act. That is a federal requirement, not a Texas state law requirement.

It can still affect Texas LLCs, corporations, and similar entities. Because federal beneficial ownership rules have been subject to legal challenges and changing guidance, business owners should check current FinCEN instructions or ask a qualified advisor before assuming they do or do not need to file.

The key point is this: Texas franchise tax changes do not cancel federal reporting duties.

A Texas LLC that no longer files a No Tax Due Report may still need to review federal beneficial ownership rules. These are separate systems with separate agencies and separate penalties.

Practical steps to stay compliant without overcomplicating it

The best response to new reporting rules is not panic. It is a better annual checklist.

Start with the reports most likely to apply to your business:

1. Review annualized total revenue before May 15

   
   

   Texas franchise tax reports are commonly tied to the May 15 deadline. Even if you believe you are under the threshold, check the current year’s numbers before deciding no report is needed.

   
   

2. Keep proof of why you did not file

   
   

   If your business is under the no-tax-due threshold, save the revenue report or accountant’s note that supports that conclusion.

   
   

1. Separate sales by channel

   
   

   Track marketplace, website, in-person, wholesale, and exempt sales in different categories. This makes Texas sales tax reporting much cleaner.

   
   

2. Check county appraisal district rules

   
   

   Business personal property renditions do not come from the same place as franchise tax notices. Add your county appraisal district to your annual compliance calendar.

   
   

1. Review data practices before sharing customer information

   
   

   If your business collects sensitive customer data, ask what is collected, who receives it, and whether consent is needed.

   
   

2. Update internal ownership records

   
   

   If Texas no longer receives an annual information report from your entity, your internal records become even more important.

   
   

1. Watch for notices from the Comptroller and Secretary of State

   
   

   Do not ignore mailed notices or Webfile messages. A filing requirement can still apply even when a similar business does not have one.

   
   

A simple annual reporting calendar can prevent missed deadlines

A small business does not need a complex compliance system. A shared calendar and a folder for confirmations can go a long way.

A practical Texas reporting calendar might include:

Time of year	What to review
January	Prior year revenue, entity changes, ownership updates, federal reporting questions
February to March	Sales tax records, resale certificates, marketplace reports, contractor records
April	Business personal property rendition requirements with the county appraisal district
May	Texas franchise tax threshold review and any required franchise tax filing
Quarterly or monthly	Sales tax filings, payroll and unemployment reports if applicable
Year-round	Privacy notices, customer consent records, permit renewals, address changes

This calendar should match the business. A restaurant, online seller, contractor, and professional services firm will not all have the same reporting duties.

A simple filing system helps owners adapt when reporting rules change.

The main takeaway for Texas small business owners

The recent Texas changes are helpful, especially for smaller entities that used to file no-tax-due franchise tax reports every year. Many businesses below the current revenue threshold may have fewer annual state filings than before.

That does not mean reporting has disappeared. Sales tax, local business personal property renditions, privacy disclosures, entity records, and federal requirements can still apply.

The best next step is to review your business in three parts: revenue, data, and property. Confirm whether your franchise tax filing duty changed, check how you collect and share customer information, and make sure local reporting is on your calendar. A little structure now can prevent expensive surprises later.