Texas Franchise Tax Account Status: How to Check & Fix

Most Texas business owners don’t think about their franchise tax account status until something goes wrong.

A bank asks for a certificate of good standing.

A lender pauses a loan.

A franchisor flags a compliance issue.

Then suddenly you’re staring at the Texas Comptroller website trying to figure out why your entity isn’t “active” anymore.

If you operate a franchise in Texas, your Texas franchise tax account status is one of those quiet details that can create significant problems if ignored. Let’s break down what it actually means, how to check it, and why it matters more than most owners realize.

What is Texas franchise tax account status?

Your Texas franchise tax account status tells you whether the Texas Comptroller considers your business compliant with state franchise tax requirements.

It has nothing to do with:

• Your IRS account
• Federal income taxes
• Texas sales tax permits

But it does affect your legal standing with the Texas Secretary of State—and that’s what banks, landlords, franchisors, and investors care about.

In simple terms:

If your franchise tax status isn’t clean, Texas may not recognize your business as fully compliant, even if you’re operating day-to-day.

Why this matters (even if your business seems “fine”)

Texas doesn’t shut businesses down overnight. That’s why many owners assume everything is okay—until it isn’t.

When a franchise tax account falls out of good standing, Texas can:

• Remove your right to transact business.
• Flag your entity as not in good standing.
• Complicated financing or refinancing.
• Create exposure for owners or managers in certain situations.
• Delay expansion, transfers, or unit sales.

For franchise owners running multiple entities, one missed filing can quietly affect the entire structure.

How to find out your Texas franchise tax account status

This is where many owners get confused. Texas uses two systems, and both matter.

1. Texas Comptroller (CPA)

This is the tax side.

Here you can see:

• Whether franchise tax reports were filed
• If payments are missing
• Whether the account is marked active, delinquent, or forfeited

This is where most problems actually start.

2. Texas Secretary of State (SOS)

This reflects legal standing.

If the Comptroller reports a problem, the SOS often follows by marking the entity as:

• Not in good standing.
• Forfeited.
• Involuntarily terminated.

If you only check one system, you may miss the real issue.

Common Texas franchise tax statuses

Active / In Good Standing

This is where you want to be.

• Required reports are filed.
• No outstanding balances.
• You can legally operate, bank, and contract.

No Tax Due / Not Established

Common for newer entities or low-revenue businesses.

• Still requires filing
• Often misunderstood as “nothing to do” (which causes problems later)

Delinquent

• One or more filings or payments are late.
• Penalties and interest may be building.
• Forfeiture becomes likely if ignored.

Forfeited

This is serious.

• Texas has removed your right to transact business.
• Liability protection can be affected.
• Banking, leasing, and franchising issues often follow.

Involuntarily Terminated

• Usually, the result of prolonged forfeiture
• The entity is no longer identified as active.
• Reinstatement is possible but more complex.

What makes businesses in Texas forfeitable?

In our experience, forfeiture usually isn’t intentional. It happens because:

• Owners assume no revenue means no filing.
• A No Tax Due report was missed or filed incorrectly.
• An old entity was forgotten after restructuring.
• Notices went to an outdated address.
• One LLC in a multi-entity group slipped through the cracks.

Texas is very procedural. Missing paperwork—even with zero tax due—still counts.

How to fix a Texas franchise tax account issue

There is a clear way, but no shortcut.

First, identify exactly what Texas says is missing—specific years, reports, or payments.

Second, file the required franchise tax reports and information reports, even if the numbers are zero.

Third, resolve balances or correct errors. Sometimes penalties can be reduced; sometimes they can’t. The key is addressing it before the situation escalates further.

Finally, confirm reinstatement. Don’t assume that filing automatically restores your status. Always verify updates in both the Comptroller and Secretary of State systems.

Why does this impact franchise owners harder?

Franchise owners often:

• Run multiple LLCs.
• Expand into new locations quickly.
• Work with lenders, franchisors, and landlords regularly.

That means status issues surface faster—usually at the worst possible time.

This is why Texas franchise tax compliance works best when it’s tied into ongoing accounting, not handled once a year in isolation.

FAQs

What does “forfeited” mean?

Texas has removed your right to do business due to missing franchise tax filings or unpaid balances.

Can I operate while forfeited?

Legally, no. Doing so can create liability and operational risks.

Do I need to file if my business had no income?

Yes. Texas still expects franchise tax and information reports, even with zero revenue.

How long does reinstatement take?

Anywhere from a few days to a few weeks, depending on what’s missing.

Get help before this becomes a bigger problem

If you’re unsure about your Texas franchise tax account status, or you manage multiple entities and want peace of mind, this is worth addressing sooner rather than later.

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