Texas Franchise Tax Forfeiture: Complete Guide to Reinstating Your Business

Received a Texas Notice of Forfeiture of Right to Transact Business? Your LLC or corporation has lost its legal right to operate in Texas. Here is exactly what that means and how to fix it fast.

If your Texas business has been forfeited for franchise tax, you are not alone. Thousands of Texas LLCs and corporations lose their right to transact business each year due to missing franchise tax filings.

Many business owners do not realize this has happened until they try to sign a contract, apply for financing, or check their business status.

The good news is that most forfeited Texas businesses can be reinstated quickly.

This complete guide explains: 

• What Texas franchise tax forfeiture means 

• Why your business was forfeited 

• Risks of remaining forfeited 

• Personal liability concerns 

• How to reinstate your Texas business 

• How long reinstatement takes 

• What it costs to fix 

  
  

If your Texas business is forfeited, start your Texas business reinstatement with Aureus Advisory Partners.

1. What Is Texas Franchise Tax Forfeiture

Texas franchise tax forfeiture occurs when a business fails to file required franchise tax reports or Public Information Reports. When this happens, the Texas Comptroller forfeits your right to transact business in Texas. 

Your business may show: 

• Franchise tax forfeited 

• Right to transact business forfeited 

• Not in good standing 

• Involuntarily terminated 

• SOS forfeited 

These all indicate your business is no longer compliant.

2. Why Texas Businesses Become Forfeited

The most common reason for forfeiture is missing franchise tax filings. 

This includes: 

• Franchise tax report not filed 

• No Tax Due Report not filed 

• EZ Computation Report not filed 

• Public Information Report not filed 

• Penalties not paid 

• Multiple years missing 

Even if your business owed no tax, filings are still required. 

This is one of the most common compliance issues for Texas businesses.

3. What Happens When Your Texas Business Is Forfeited

When your Texas business is forfeited, several risks may arise.

Your business may: 

• Lose right to transact business 

• Lose good standing 

• Be unable to sign contracts 

• Be unable to sue in Texas 

• Experience banking issues 

• Have vendor compliance problems 

• Be terminated by the state 

These risks increase the longer your business remains forfeited. 

4. Personal Liability After Texas Franchise Tax Forfeiture

One of the most serious risks is personal liability. When your Texas business is forfeited, owners, officers, and directors may become personally liable for debts incurred after forfeiture. 

This may include: 

• Vendor agreements 

• Business loans 

• Leases 

• Contracts 

• Credit accounts 

• Business purchases 

This is why reinstating quickly is important.  Learn more about personal liability here.

5. Can You Still Operate a Forfeited Texas Business

Many businesses continue operating while forfeited without realizing it. While this is common, it may create risk. 

Operating while forfeited may: 

• Create personal liability exposure 

• Cause contract issues 

• Delay financing 

• Affect licensing 

• Create compliance problems 

The safest approach is restoring good standing as soon as possible.  Learn more about operating while forfeited here.

6. How to Reinstate a Forfeited Texas Business

To reinstate your Texas business, missing filings must be completed. 

This usually includes: 

• Filing missing franchise tax reports 

• Filing Public Information Reports 

• Paying penalties if applicable 

• Requesting reinstatement 

• Restoring good standing 

Once processed, your business returns to active status.

7. How Much Does It Cost to Reinstate a Texas Business

Businesses that only missed filing requirements with no taxes owed often pay nothing beyond the filing fee to restore good standing.

The cost depends on: 

• Number of missing years 

• Whether taxes are owed 

• Penalties and interest 

• Secretary of State forfeiture 

• Entity type 

Many businesses owe nothing beyond filing requirements.  Learn more about reinstatement cost here.

8. How Long Does Texas Reinstatement Take

Timing depends on: 

• Missing filings 

• Whether taxes are owed 

• Secretary of State forfeiture 

• Comptroller processing time 

Some businesses can be reinstated quickly once filings are submitted. 

9. How to Check If Your Texas Business Is Forfeited

You can check your Texas business status using: 

Texas Comptroller Taxable Entity Search Texas entity search 

If your status shows forfeited, action should be taken immediately. 

10. We Can Reinstate Your Texas Business

If your Texas business is forfeited, we can handle the entire reinstatement process. 

We will: 

• Review your Texas entity 

• Identify missing filings 

• Prepare franchise tax reports 

• File Public Information Reports 

• Request reinstatement 

• Restore good standing 

Start your Texas reinstatement process today.

We will review your entity and tell you exactly what needs to be done. 

Final Thoughts

Texas franchise tax forfeiture is common, but it is usually fixable. The most important step is identifying missing filings and restoring good standing as soon as possible.

If your Texas business is forfeited, click here and we will help you reinstate your company today.