Taxable entity converting to another taxable entity
You must complete the following steps.
Step 1. Have an account in good standing (not owe any franchise tax, penalty or interest payment).
Step 2. File a franchise tax report.
Step 3. File the appropriate, signed information report for the year in which the documents are filed with the SOS.
No final report is due, and a certificate of account status is not required, because the converted entity continues to file franchise tax reports.
When your business status is terminated, you lose limited liability protection, the primary benefit of creating an entity like an LLC.
There are significant implications for this so even though I said calm down, do not blow this off. Failure to become reinstated means that:
If someone sues you, your personal assets are on the line.
You will not be able to sue anyone in a business capacity.
You will not be able to open any business accounts
You may forfeit opportunities for certain contracts
A collection of articles for business owners and executives
FAQ
What does franchise tax involuntarily ended mean?
Franchise Tax Involuntarily Ended. The entity’s registration or certificate was ended as a result of a tax forfeiture or an administrative forfeiture by Texas Secretary of State. State of Formation.
What happens if you dont pay franchise tax in Texas?
In Texas, failure to file your franchise tax returns or pay your franchise tax liability will cause you to lose your limited liability protection. The Texas Tax Code provides for personal liability for the management of a company if there is a failure to file a report or pay a tax or penalty.
What does it mean when a company is forfeited in Texas?
Forfeiture of a corporation’s charter means that the corporation has lost some rights, but does not automatically result in dissolution of the corporation. A charter may be forfeited by action of the Secretary of State for: Failure to pay annual franchise tax after one year of nonpayment, or.
What does it mean to forfeit existence?
When a state government labels a corporation as “forfeited,” that’s bad news. A forfeited corporate entity loses its right to operate in that state. It still has to pay any taxes or fees it owes the state, though. Related.
