Books That Feed Texas Filings
In Texas the books do more than produce a profit figure. Total revenue drives the franchise tax, cost of goods sold and compensation decide which margin method is cheapest, sales by location determine local sales tax, and the fixed asset register supports the business personal property rendition sent to the appraisal district. When the ledger is set up with those filings in mind, each one becomes a report rather than a project. BOMCAS keeps monthly books for Texas businesses remotely, in QuickBooks Online or the software you already use.
A Chart of Accounts Built for Margin
The Texas definitions of cost of goods sold and compensation do not match the federal ones exactly. Labor and materials used to produce goods, certain warehousing costs and some overhead can be included in Texas cost of goods sold, while selling and administrative costs generally cannot. Compensation includes wages, benefits and owner distributive income, but not 1099 contractors. We set up accounts so those groups can be pulled from the ledger directly, which makes the annual comparison of margin methods quick and supportable.
Sales Tax by Location
For a business with more than one store, warehouse or service base, sales should be recorded by location so the return reports local tax to the right city, county, transit authority and special district. Sales tax collected is posted to a liability account, not to revenue, and the account should clear to zero each period after the return is paid. Timely filing discounts and any prepayment discount are booked as other income.
Fixed Assets and Renditions
Businesses render their business personal property to the county appraisal district by April 15 each year. From the 2026 tax year, the first $125,000 of income-producing personal property at a location is exempt, and a business whose property at a location is worth $125,000 or less can certify that once and stop rendering until its value grows or ownership changes. A fixed asset register that records each asset's location, cost and in-service date supports both the federal depreciation schedule and the rendition, and shows when a location crosses the threshold.
Total Revenue and the Federal Return
Texas total revenue starts from the revenue lines on the federal return, then removes specific exclusions such as flow-through funds paid to others in certain industries. A staffing company passing wages through to clients, a real estate brokerage paying agents, or a construction company paying subcontractors on a public project may qualify for exclusions that reduce revenue, but only if the books show those payments clearly. We set up accounts to capture them as they happen rather than reconstructing them in May.
Property Tax Accruals
Texas property tax bills arrive in the fall and are due by January 31. For businesses with significant real estate or equipment, we accrue the expected tax monthly so profit is not overstated for most of the year and then hit with one large expense.
The Monthly Close
- Bank, credit card and loan reconciliations.
- Sales, sales tax and use tax accounts reconciled to the returns.
- Payroll liabilities matched to deposits and Texas Workforce Commission payments.
- Inventory and cost of goods sold adjustments where they apply.
- A profit and loss, balance sheet and cash summary sent to the owner.
Industries With Special Needs
Construction
Contractors need job costing that separates residential and nonresidential work, because sales tax treatment differs, and that tracks retainage, change orders and work in progress for the federal return.
Oil and gas
Operators and working interest owners need joint interest billing, revenue by well or lease, and separate records of severance tax withheld by purchasers.
Restaurants and retail
Point-of-sale summaries should be posted daily or weekly, with tips, card fees, gift cards and mixed beverage taxes kept apart from revenue.
Real estate
Rental owners and developers need income and costs by property, records of property tax protests and capital improvements, and clear separation of personal and business spending.
Records and How Long to Keep Them
The Comptroller can generally assess sales and franchise tax for four years from the date the tax was due, so records supporting those returns should be kept at least that long, and longer for assets still being depreciated. We keep receipts and source documents attached to each transaction so they can be produced quickly in an audit.
Catch-Up and Clean-Up
When books are months or years behind, we rebuild them from bank and card statements, sales reports and vendor records, correct the sales tax liability account and identify any returns that need to be amended or filed. Owners who have mixed business and personal spending get a clean opening balance to start from.
Texas Bookkeeping Questions
Do I need separate accounts for Texas franchise tax?
Not separate books, but your chart of accounts should let us pull revenue, cost of goods sold and compensation as Texas defines them, so each margin method can be calculated.
Is sales tax I collect part of my revenue?
No. It is held for the state and recorded as a liability until the return is paid.
What does the $125,000 business personal property exemption mean for my books?
From 2026, the first $125,000 of income-producing personal property at a location is exempt. Your asset register should show what is at each location so you know whether you still need to render.
How long should Texas businesses keep records?
At least four years for sales and franchise tax, and longer for assets still being depreciated.
Talk to BOMCAS About Bookkeeping in Texas
Monthly books support the sales and use tax returns each period, the payroll reconciliations each quarter and the year-end franchise tax report and business return. They also give owners the figures for their personal returns and make tax planning reliable. Records that are years behind start with catch-up filing, and Canadian-owned companies should also see cross-border tax. For a summary of how Texas taxes businesses and residents, see the Texas accounting and tax overview or our United States services.
Tell us what you need help with and we will reply with next steps. Contact BOMCAS, use the contact form below, call 780-667-5250 or email info@bomcas.ca. You can also go back to the Texas overview. This page is general information, not advice for a particular situation.