Looking for the numbers side of moving a company to Texas? Steven Palmieri, a Tax CFO, hears two sentences from relocating owners in the same breath. Texas has no state income tax, and Texas has a franchise tax. Both are true, and neither tells you what the first year of the move looks like. This page does.
An out-of-state entity that does business in Texas registers with the Secretary of State, or converts to a Texas entity. Which path fits is a legal choice, and an attorney should make it with you. We bring the numbers to that conversation, such as what each path does to the books, the tax filings and the cost of the first year.
The franchise tax begins when the company has a connection to Texas strong enough to count. From then on, a report is due each May 15. The first report has rules of its own. A company filing its first annual report cannot use the 100 percent prior-year payment to extend it, since there is no prior year. If you need an extension, the payment has to be sized from the current year instead. We map the first report's date and amount early, as part of the move plan, so the first May holds no surprise. The details are on the page about franchise tax as a planning number.
Each Texas place of business that sells taxable goods or services needs a sales tax permit. An employer registers with the Texas Workforce Commission within ten days of becoming liable for unemployment tax. A company moving people here also needs to report new hires in Texas. The page on hiring in Texas lists the first-hire steps in order.
The state you leave still has an interest. Final returns, payroll accounts and any local registrations may need closing out, each by its own rules. We keep the wording about the other state neutral, because the rules differ from one state to the next. What we do is list every account and filing in the old state and give each one a date, so none is left open by accident. Leaving something open can mean a notice arriving months later at an address you no longer use.
For part of a year, the company may sit under two sets of rules, and the plan needs to know which dates each set claims. The move date matters, and so does when employees' work shifts. Decide the order early. Registrations first, payroll second, the first sales tax return and the franchise date third. A calendar with both states' dates side by side makes the overlap visible.
Say a company with $1,800,000 of annual revenue moves its main office to Texas in July. These numbers are an illustration. With revenue under the franchise line of $2,650,000 for the 2026 and 2027 reports, it owes no franchise tax, and it still files the information report. It registers for sales tax at its new location in June and with the Workforce Commission within the first ten days of hiring locally. The old state's final payroll return follows in the next quarter. The plan has five dates on it, and the owner knows them in advance.
Entity documents, conversions and mergers are legal work, and we do not give legal advice. If you plan to convert, ask an attorney first, and tell us what the attorney says so the books follow. The page on work that needs a licensed firm draws the line more fully.
The date this page puts on your plan is the first May 15 after the move, because the first franchise report has the strictest extension rules. Work backward from it, and list the registrations that must be done sooner.
Plan the move year with us on a free Second Look call. No paperwork and no payment.
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