Title & Escrow Companies Bookkeeping in Texas

Escrow and trust account requirements in Texas are set by state law and by the underwriters you are appointed with, and they typically cover how funds are held, how frequently the account is reconciled, and what records must exist for each file. The reconciliation that satisfies all of them is the three-way: escrow bank balance, escrow book balance, and the sum of the individual file ledgers, agreeing at one point in time. Two of the three will frequently agree while the third does not, which is precisely why the third exists. The entity is registered with the Texas Secretary of State and, where the company sells anything taxable alongside closings, with the Texas Comptroller of Public Accounts as well — remote sellers may elect a single local use tax rate instead of tracking every jurisdiction. The franchise tax is a separate annual filing. We keep that reconciliation current and documented; whether it meets your specific Texas obligation is a determination for you, your counsel, and your underwriter.

Texas is one of thirteen states with no real estate transfer or deed tax, so a closing here moves fewer separate collections through escrow than in most states. Recording fees, underwriter premium splits, and payoffs still pass through and are still not income — the principle is unchanged, there are simply fewer lines to get wrong. The retained premium, after the underwriter's share, is where the actual revenue sits.

Registering to do business in Texas runs through the Texas Secretary of State, with tax accounts through the Texas Comptroller of Public Accounts and employer accounts through the Texas Workforce Commission. Texas treats these as wholly independent, so being in good standing with one says nothing about the others — and the sales tax account is the one that accrues a real balance while you are not looking.

Beyond sales tax, Texas imposes the Franchise Tax. Calculated on taxable margin rather than on profit, with a no-tax-due revenue threshold that is adjusted periodically. Even below the threshold there is generally an annual report to file, and missing it puts the entity out of good standing with the Secretary of State. That sits alongside registration with the Texas Secretary of State, and it is the obligation most often missed by businesses who concluded from the absence of a sales tax that Texas asks nothing of them. It is accrued as it builds rather than discovered at year end.