Houston, TX Bookkeeping Services — No Income Tax, One Margin Tax

Texas has no personal income tax, and Houston businesses still file a state return. The franchise tax — the “margin tax” — is computed from total revenue with a choice of deductions, not from profit, and even businesses below the no-tax-due threshold generally have an annual filing obligation with the Comptroller. Sales tax is 6.25% state with local add-ons capped so the combined rate tops out at 8.25%, which is predictable but still varies by address. And there is no city income tax in Houston at all. The result is a state that is genuinely low-tax and still unforgiving about revenue records, because revenue is the base.

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On This Page

• Running the numbers in Houston
• Houston tax cheat sheet
• The margin tax starts from revenue, not profit
• Job costing for energy, engineering and construction
• The rendition nobody plans for
• What we handle for Houston businesses
• Houston FAQs

Running the Numbers in Houston

Houston is the largest city in Texas and its economy runs on energy, petrochemicals, the ship channel and its logistics chain, one of the largest medical complexes in the world, and a deep base of engineering, construction and industrial services firms around all of it.

Two bookkeeping situations dominate. Project and job-costed work — engineering, fabrication, construction and oilfield services where costs have to attach to jobs or margin is unknowable, and where retainage and progress billing complicate both sides of the ledger. And revenue measured gross, because the margin tax computes from total revenue, which makes pass-through costs, reimbursable expenses and subcontractor billings worth recording deliberately rather than casually.

Houston Tax Cheat Sheet

Texas Comptroller of Public Accounts, checked 3 October 2026. The no-tax-due threshold, deduction options and local sales-tax rates change — confirm your position with the Comptroller or your CPA.

The Margin Tax Starts From Revenue, Not Profit

Texas replaced a conventional income tax with a franchise tax computed from total revenue, reduced by one of several permitted deductions. The choice of deduction belongs to your CPA. The total revenue figure belongs to your books.

That makes a few ordinary bookkeeping decisions unusually consequential. Whether reimbursable client costs run through revenue. Whether subcontractor billings are recorded gross or net. Whether a joint-venture share is recorded as revenue or as equity income. Each of those changes the starting number, and therefore the tax.

None of it is exotic — it is simply revenue recognition done consistently and documented. But it has to be decided when transactions are recorded, not argued about in May.

Job Costing for Energy, Engineering and Construction

Houston’s project businesses share a failure pattern. Materials, subcontractors and equipment hire go to general expense accounts rather than to jobs. Retainage held by customers is treated as a vague receivable and retainage held from subcontractors as a vague payable. Progress billing bears no fixed relationship to work performed. The result is a business that knows its bank balance and not its margin.

Doing it properly means costs coded to jobs as incurred, labour and equipment allocated, retainage tracked separately on both sides, and progress billing matched to completion so that over- and under-billing are visible rather than hidden.

Job costing and class tracking sit on our Enterprise plan at $300/month for 20 hours, in whatever accounting system you already run — including industry-specific and ERP systems.

The Rendition Nobody Plans For

Texas counties tax business personal property — equipment, furniture, fixtures, inventory in some cases — assessed from an annual rendition filed with the county appraisal district. For a Houston business with real plant and equipment, that is a recurring cost of consequence.

It also runs directly off the fixed-asset register, which means the same issue we see everywhere it applies: assets that were scrapped, sold or written off years ago still sitting on the register, generating tax on equipment the business no longer owns.

Maintaining the register — additions with dates and costs, disposals removed when they happen, consistent depreciation — is ordinary bookkeeping that in Texas has a direct cash consequence every year.

What We Handle for Houston Businesses

• Total revenue recorded consistently and documented, since it is the starting point for the margin tax
• Job costing with retainage tracked on both sides and over- and under-billing visible
• Fixed-asset register maintained with disposals actually removed, for the county rendition
• Sales tax reconciled monthly against what was remitted, with the local component preserved
• Monthly reconciliation of every bank, card and merchant account, with processor fees separated from gross
• Catch-up bookkeeping at $75 per month behind, no limit on how far back

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Houston Bookkeeping FAQs

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