New Veteran-Owned Business Entities Get Texas Franchise Tax Abatement

There is great news for Texas veterans who want to form a business entity. In accordance with Senate Bill (SB) 1049, effective January 1, 2016, a new veteran-owned business entity that is formed in Texas between January 1, 2016 and January 1, 2020, may be eligible for an exemption from the Texas franchise tax for the first five years of operation. The Secretary of State also waives certain filing fees, and can even refund fees previously paid if the entity complies with the procedures.

To be considered a new veteran-owned business, an entity must:

• be formed or organized in Texas on or after Jan. 1, 2016, and before Jan. 1, 2020;

• be 100 percent owned by a natural person or persons with each owner being an honorably discharged veteran from a branch of the U. S. Armed Services; and

• All owners must complete the Comptroller Certification Form (PDF) certifying that 100% of the owners of the business are veterans (verification of status must be obtained from the Texas Veterans Commission (PDF)

The Comptroller’s office verifies this information. If during the initial five-year period, a new veteran-owned business no longer meets the above criteria, the business:

• must notify the Comptroller’s office; and

• becomes subject to franchise tax

The Underwood Law Firm is familiar with this veteran-specific process and knows how to get your business entity formed as quickly as possible. In addition, we can help you with important considerations such as choice of entity, name restrictions on veteran-owned entities, drafting your letter to the Texas Veterans Commission, and coordinating the entire process. To find out more about starting your own veteran-owned business in Texas, contact us today.

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