Veteran owned LLCs in Texas

When forming a Texas LLC or using a Texas LLC to operate a business, veterans are entitled to a couple of benefits: (1) no filing fee (or refund of filing fee) and (2) exempt from paying franchise taxes for up to 5 years.

A new veteran-owned business (formed on or after January 1, 2022) is exempt from (or entitled to a refund of) the $300 filing fee associated with starting an LLC.

Franchise taxes are only applicable to business that exceed the $1.23MM annual revenue threshold, but if your LLC is qualified as a veteran-owned business, you are exempt from paying franchise taxes until either the fifth anniversary of the LLC's existence or the day it fails to qualify as a veteran-owned business - whichever comes first.

An important point to remember is that even if your new veteran-owned business is not subject to state franchise tax for its initial five-year period, you must still file specific reports (including franchise reports) with the Comptroller of Public Accounts.

To be deemed a "new veteran-owned business," your LLC must:

• Be formed in Texas on or after January 1, 2022, and before January 1, 2026, AND
• Be 100% owned by an honorably discharged veteran from a branch of the U.S. Armed Services.

To qualify as a veteran-owned business, you must complete the following:

1. Request and receive a Letter of Verification of Veteran’s Honorable Discharge from the Texas Veterans Commission for EACH owner.
2. Once all owners have received their Letter of Verification of Veteran’s Honorable Discharge from the TVC, complete Comptroller Form 05-904, Certification of New Veteran-Owned Business.
3. Submit the Letter of Verification and Form 05-904 with the LLC's Certificate of Formation for a waiver of the filing fee (or mail these two documents after formation with a refund request to the Secretary of State).