Returns Built Around Houston's Economy
Houston businesses file in a city where oil and gas, refining and chemicals, shipping and medicine all run on different calendars and different cost structures. A drilling services company may swing from loss to profit in two years, a turnaround contractor may book most of its revenue in the spring and fall maintenance seasons, and a physician group in the Texas Medical Center has steady income but heavy payroll and equipment. Texas has no corporate income tax, so the federal return and the Texas franchise tax report are the two filings every Houston entity has to get right. BOMCAS prepares both remotely for Houston companies.
Franchise tax methods and deadlines statewide are on our Texas business tax page; here we apply them to energy, plant, port and medical businesses in Houston.
Energy Service and Supply Companies
Oilfield service firms, equipment rental yards, valve and pipe distributors and engineering consultancies make up a large share of Houston's private companies. Their returns usually turn on three things: how heavy equipment is depreciated, how inventory held in yards and warehouses is valued, and how revenue earned on long jobs is recognised. Federal law again allows full bonus depreciation for qualifying property acquired after January 19, 2025, and Section 179 expensing is available within its limits, but taking every deduction in a strong year can leave nothing for the down years that follow. We model both choices before filing.
Working Interests and Royalty Companies
Many Houston entities own pieces of wells rather than service them. A working interest owner can usually deduct intangible drilling costs in the year they are paid, and independent producers and royalty owners may use percentage depletion within federal limits. Joint interest billings, revenue statements and the operator's year-end summary have to agree with the books, and severance taxes withheld by the operator belong on the return as an expense, not as income lost. We reconcile these statements well by well where needed.
Plant, Turnaround and Industrial Contractors
The refineries and chemical plants along the Houston Ship Channel and in Pasadena, Deer Park and Baytown rely on a large network of mechanical, electrical, scaffolding, insulation and inspection contractors. These businesses deal with retainage, change orders, per diem for travelling crews and equipment moved between sites. Contractors under the federal small contractor threshold may use the completed-contract method on short jobs; larger firms generally use percentage of completion. The choice changes when profit is taxed, and it must match how the franchise tax report treats the same revenue.
Port, Trucking and Logistics
Port Houston handles more foreign waterborne tonnage than any other U.S. port, and the warehouses, freight forwarders, customs brokers and drayage carriers around Barbours Cut and Bayport serve that traffic. Their returns involve fuel, truck and trailer depreciation, leased yard space and, for importers, duties and landed cost in inventory. Carriers working outside Texas may also owe returns in the states where they operate.
Medical and Professional Practices
Physician groups, dental and therapy practices, imaging centres and research consultancies around the Medical Center often operate as professional associations or LLCs. The franchise tax applies to them, and the cost of goods sold deduction usually does not, so the compensation deduction or the 70 percent of revenue method is the normal choice. We also handle the federal qualified business income deduction, which is limited for specified service businesses at higher incomes.
The Franchise Tax Report for Houston Entities
Most Houston companies file the same franchise tax report and Public Information Report each May 15, whether or not tax is due. The method chosen for margin, the revenue that can be excluded, and whether the entity belongs in a combined group are decisions we make with the federal figures in front of us. Energy companies often have flow-through payments to royalty owners or other working interest owners that can be excluded from total revenue when the rules are met.
What We Review Before Filing
- Fixed asset additions, disposals and the depreciation election for the year.
- Revenue statements, joint interest billings and depletion schedules for oil and gas interests.
- Contract schedules, retainage and work in progress.
- Inventory counts at yards, warehouses and job sites.
- Owner compensation, distributions and loans.
- Activity in Louisiana, Oklahoma and other states.
Getting Started
Send your accounting file or trial balance, fixed asset list, contract and job schedules, oil and gas statements if you own interests, payroll summaries and the last two years of returns. We review everything, send one list of questions and walk through the federal return and franchise tax report with you before anything is filed.
Houston Business Tax Preparation Questions
Do Houston businesses pay a state income tax?
No. Texas has no corporate income tax, but most entities owe or file the franchise tax report, and the federal return is still required.
Can an oil and gas working interest owner deduct drilling costs right away?
Intangible drilling costs are generally deductible in the year paid, though some owners choose to capitalise them. Percentage depletion may also apply within federal limits.
Which franchise tax method suits a Houston medical practice?
Usually the compensation deduction or 70 percent of revenue, because cost of goods sold rarely applies to professional services. We compare them each year.
Do turnaround contractors working outside Texas file elsewhere?
Often yes. Crews and equipment in Louisiana or other states can create returns there, so we review where the work was done.
Talk to BOMCAS About Business Tax Preparation in Houston
Accurate returns rest on job and well-level bookkeeping, payroll for crews and shifts and current sales and use tax filings. Owners carry K-1s to their personal returns, the numbers feed planning for the next cycle, forfeited companies start with catch-up filing, and Canadian parents raise cross-border questions. Statewide, we also cover personal tax preparation, sales and use tax, bookkeeping, payroll, tax planning, back taxes and late filing and cross-border tax, all reachable from the Texas overview.
Tell BOMCAS about your Houston business or household and we will reply with next steps and what we need for a quote. Use the contact page or the form below, call 780-667-5250 or email info@bomcas.ca. Every Houston service is on the Houston overview. This page is general information, not advice for your situation.