The Dallas Business Return
Dallas has become one of the main places American companies move to. Firms relocate headquarters or large offices from California, New York and Illinois, investment managers and banks have built major campuses, and the city's private companies range from family real estate groups to professional partnerships with hundreds of partners. For all of them, the federal return carries most of the income tax, and the Texas franchise tax report measures the business by its margin rather than its profit. BOMCAS prepares both for Dallas companies, working remotely.
Margin methods and due dates for every Texas entity are set out on our Texas business tax page. Here we focus on Dallas headquarters, firms and developers.
Companies That Moved Here
A business that moves to Dallas does not stop filing in the state it left. The year of the move usually needs a final or part-year return in the old state, often with apportionment of income between the two, and the old state may keep taxing revenue from customers there for years. Texas apportions franchise tax by gross receipts, using where each sale is delivered or each service performed, so a newly arrived company should know which of its receipts are Texas receipts. We prepare the Texas report and coordinate with the other state's filings, so income is neither missed nor taxed twice.
Investment and Management Firms
Private equity, real estate and hedge fund managers based in Uptown and along the Dallas North Tollway typically run a management company, a general partner entity and the funds themselves. Management fees, carried interest and co-investments each have their own rules, and carried interest held for less than three years can be treated as short-term gain. The management company and the funds may each owe franchise tax reports, while some funds qualify as passive entities. We sort out which entity files what.
Professional Partnerships
Law, accounting, consulting and engineering firms often operate as limited liability partnerships or professional LLCs. Their federal partnership returns involve guaranteed payments, retirement plan contributions, partner capital accounts and K-1s for partners living in several states. For franchise tax, the compensation deduction is usually the best method, and the firm must collect the information needed to apply the per-person compensation cap correctly.
Real Estate Developers and Owners
Dallas developers build apartments, offices, industrial buildings and mixed-use projects across the city and its suburbs, each usually in its own entity. Cost segregation studies can speed up depreciation on new or acquired buildings, and like-kind exchanges can defer gain when properties are sold and replaced. Rental income is generally not passive for franchise tax purposes, so rental entities usually file full reports.
Wholesale and Showroom Businesses
The Dallas Market Center draws retail buyers from across the country to permanent showrooms and seasonal markets. Showroom tenants and sales agencies earn commissions or sell inventory, and both need their revenue and inventory recorded so the return and the franchise tax report agree. Commission-based agencies cannot use cost of goods sold, so the 70 percent of revenue method or compensation deduction applies.
What We Check
- Filing obligations in the state the company came from.
- Texas gross receipts and apportionment.
- Entity map for management companies, funds and property entities.
- Partner compensation and the franchise tax compensation cap.
- Depreciation, cost segregation and exchanges.
- Combined group membership.
Getting Started
Send the trial balance or accounting file, the entity chart, prior federal and state returns, any partnership agreements and fund documents, and fixed asset and property schedules. We review them, send one consolidated list of questions and walk through the returns before filing.
Dallas Business Tax Preparation Questions
Does my company still file in California after moving to Dallas?
Usually for the year of the move, and often later if it keeps customers or property there. We coordinate both filings.
How does Texas apportion franchise tax?
By gross receipts, based on where goods are delivered or services are performed.
Do investment funds owe Texas franchise tax?
Some do. Funds earning mainly interest, dividends and capital gains may qualify as passive entities; the management company usually files a regular report.
Which franchise tax method suits a law firm?
Usually the compensation deduction, because cost of goods sold does not apply to professional services.
Talk to BOMCAS About Business Tax Preparation in Dallas
Returns rely on multi-entity bookkeeping, payroll for distributed teams and correct sales and use tax. Partners report K-1s on personal returns, deals call for planning, missed reports after a move start with catch-up filing, and Canadian parents should read cross-border tax. Elsewhere in Texas, our statewide pages explain individual returns, sales and use tax, bookkeeping, payroll, tax planning, catching up on back taxes and Canada–U.S. tax, and the Texas page ties them together.
Write to BOMCAS about your Dallas company or household and we will answer with next steps and what we need to prepare a quote. Use the contact page or the form below, call 780-667-5250 or email info@bomcas.ca. You can find every Dallas service on the Dallas overview. This is general information, not advice for your own situation.