Learn how to legally structure and operate a wholesale business in Texas, including LLC formation, sales tax permits, and compliance.
Posted by ConradTXLaw · 48 replies
Texas does not require a real estate license to assign contracts on properties you have under contract. However, you must genuinely have an equitable interest in the property through a signed purchase agreement—you cannot simply market someone else's property for a fee without a license. In 2017, Texas passed SB 2212, which clarified that wholesalers must use only one property address in their marketing and must disclose their role as a principal, not an agent. Always consult a Texas real estate attorney before launching to ensure your marketing materials comply.
Posted by MiriamLLC · 35 replies
Forming a Texas LLC requires filing a Certificate of Formation with the Texas Secretary of State online (SOSDirect portal) for a $300 fee. You'll need to choose a registered agent (a person or service with a Texas physical address), create an operating agreement (not required but strongly recommended), and obtain a Federal Employer Identification Number (EIN) from the IRS for free at irs.gov. The entire process takes about 1–3 weeks. Many wholesalers form their LLC before closing their first deal to protect personal assets from business liability.
Posted by SandraTexasTax · 41 replies
A Texas Sales and Use Tax Permit (often called a resale certificate) is required if you sell taxable goods or services in Texas. For real estate wholesalers, assignment fees on contracts are generally not subject to sales tax—real estate transactions are exempt. However, if you expand into selling tangible wholesale goods (products, merchandise), you'll need a permit from the Texas Comptroller's office, available free online. Resale certificates allow you to purchase inventory tax-free from suppliers when buying for resale. Always verify with a CPA before making tax decisions.
Posted by HectorTaxCPA · 29 replies
In Texas, assignment fees from real estate wholesale deals are typically treated as ordinary income for federal tax purposes—reported on Schedule C for sole proprietors or as pass-through income from an LLC. Texas has no state income tax, which is a significant advantage for Texas-based wholesalers. The assignment fee is not subject to sales tax in Texas. Keep records of all deals, expenses (marketing, skip tracing, travel, office), and fees. A real estate-focused CPA can help you maximize deductions including home office, vehicle mileage, and software subscriptions.
Posted by FelipeStructure · 33 replies
For most wholesalers doing fewer than 20 deals per year, an LLC taxed as a disregarded entity is sufficient and simplest. As volume grows, many wholesalers elect S-Corp taxation to reduce self-employment tax—if your business earns $100,000+ in net profit, an S-Corp election can save $5,000–$10,000 annually by splitting income between salary and distributions. The S-Corp election is made via IRS Form 2553 and must be filed by March 15 for the current tax year. Consult a CPA before making this election—it adds payroll complexity.
Posted by AndreaContracts · 37 replies
The essential documents for a Texas wholesale deal are: a Purchase and Sale Agreement (your contract with the seller), an Assignment of Contract Agreement (your agreement with your end buyer), and an earnest money receipt from the title company. Texas wholesalers typically use either a TREC (Texas Real Estate Commission) promulgated contract or a customized investor purchase agreement—both are legally valid. Your assignment agreement should specify the assignment fee, property address, and terms. Have a Texas real estate attorney review your documents before use.
Posted by DesireeBusinessBank · 22 replies
Once your LLC is formed and you have an EIN, you can open a business checking account at any major Texas bank or credit union. Required documents typically include your Certificate of Formation, EIN confirmation letter, operating agreement, and a government-issued ID. Many wholesalers use Chase, Bank of America, or Texas-based institutions like Frost Bank for their business accounts. Keeping business and personal finances separate is legally important for maintaining your LLC's liability protection and simplifies accounting at tax time.
Posted by OctaviaCompliance · 28 replies
Texas LLCs are required to file an annual Public Information Report (PIR) with the Texas Secretary of State by May 15 each year—there is no fee for this filing. If your LLC has gross revenues exceeding $1.23 million (2026 threshold), you must also file a Texas Franchise Tax Report. Most small wholesaling LLCs fall below this threshold and owe no franchise tax, but still must file a 'no tax due' report. Failing to file can result in forfeiture of your LLC's right to do business in Texas. Use the Texas Comptroller's WebFile system for electronic filing.
Posted by MarilynBookkeeping · 19 replies
QuickBooks Self-Employed or QuickBooks Online Simple Start work well for most beginning wholesalers. Create income categories for assignment fees and expense categories for marketing (direct mail, online ads), skip tracing, software, travel, and professional services. Keep all receipts digitally using apps like Expensify or simply photograph them with your phone. At year end, provide your CPA with a profit and loss statement. Deductible business expenses for wholesalers typically include your LLC costs, phone, home office (if you work from home), and mileage driving to properties.
Posted by IgnacioInsurance · 31 replies
Most Texas wholesalers operating exclusively through contract assignments do not own properties long enough to need property insurance. However, general liability insurance ($500–$1,500/year) is advisable if you ever host buyers at properties or conduct inspections. Errors and omissions (E&O) insurance protects against claims that your professional advice caused financial harm—relevant if you provide deal analysis to buyers. An umbrella liability policy adds $1–2 million in additional coverage at low cost. As your business grows, consult a commercial insurance broker about a business owner's policy (BOP).
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