To dissolve a Texas limited liability company one has to take up a set of required steps. In Texas, if you and the members of the LLC want to discontinue business, then it is necessary to dissolve their business legally to avoid any administrative and legal consequences. To dissolve an LLC in Texas, you are required to submit a complete Article of Dissolution to the Secretary of State. Before submitting the Article of Dissolution, one must follow the operating agreement.
If you have an LLC in Texas (domestic or foreign) you must have an operating agreement. The first step towards the dissolution of Texas LLC is to follow the operating agreement. There are some points to be noted before proceeding with the official paperwork. At first, make sure all the members of the LLC are agreed to dissolve the business. Once all the members are ready, their consent should be recorded via voting. After casting their vote in favor of the dissolution, the legal process must be started. Here are the steps to address for dissolving Texas LLC.
On this page, you’ll learn about the following:
- How to Dissolve an LLC in Texas
- After Dissolving Your LLC
- Why Dissolve Texas LLC?
- Texas LLC Dissolution Review
How to Dissolve an LLC in Texas
Dissolution of Texas LLC requires three broad procedural steps. Having a Texas LLC Operating agreement, close all the tax accounts, and finally submit the Articles of Dissolution form to the Texas Secretary of State.
Step 1: Follow your Texas LLC Operating Agreement
When you have started an LLC as a business entity, then there is an operating agreement that is formed. There are complete details of how the company will function and grow in that operating agreement, which acts as a comprehensive guide. There is also a dissolution process, which is added to your agreement. The common dissolution steps that almost every LLC follows are:-
First of all, the dissolution vote will take place among the LLC members in the dissolution meeting. If the majority is with the YES, then the process goes into legal proceedings.
- All the dissolution votes will be noted down and recorded with the minutes of the meeting or a consent form.
- After that, a formal date for dissolving the LLC will be decided.
- The next step is counting the LLC assets and dividing them among the stakeholders and members accordingly.
- Finally, the creditors of the business are notified, and the debts of the business are settled.
This is a general process. However, it is strongly recommended to seek professional help to avoid any complications when it comes to terminating an LLC.
Get a Professional Agent Service
When it comes to a limited liability company dissolution, it is important to get professional help. The registered agent will guide you with everything you need to close your limited liability company. While choosing a registered agent make sure they have a physical street address in the state. A professional service provider helps you to file the Article of Dissolution and close your various tax accounts without any hassle. Below are the best LLC services we strongly recommend for you.
Step 2: Close All the Tax Accounts
Every action that an official business takes is legally bound to some minimum business taxes. For that, various accounts are maintained by the state government with the help of various departments. You should consider all the taxes that you have paid for your LLC’s duration and make a list of them.
Close Franchise Tax Account
To dissolve a Texas LLC, LLC owners have to close the Franchise Tax accounts. To close this account, you need to submit Franchise Tax Return Accounting Annual Reports. To close this Franchise Tax account, LLC owners have to pay the remaining tax liability, dues, fees, and other tax requirements.
After paying all the due Franchise tax balance the Texas Franchise Tax report should be filed. Within 60 days of clearing the balance, LLCs should file the report. The report can be filed online.
You can close your franchise tax account through Texas Comptroller.
Close Other Tax Accounts in Texas
You must contact all government entities and clear the amount of outstanding taxes due until the date you have decided for dissolution. All the taxes must be paid in advance so that you don’t face any issues in the further process of shutting down your LLC.
Some of the common taxes that limited liability companies have to pay are:
- Unemployment insurance tax
- Employee withholding tax if your LLC has employees.
- Other tax accounts such as industry-specific.
- If your LLC is engaged in selling taxable goods then they are liable to pay the sales and use tax.
Most of these taxes are normally filed, but some departments require official paperwork, without which it is impossible for the business to close accounts. Apart from business taxes, federal taxes, personal income taxes, and franchise taxes are to be considered. For the franchise taxes, a franchise tax form is required.
That is why the LLC owner should go through the sales tax guide and hire an accounting service. If you want to do the accounting yourself or make accounting easy, try FreshBooks.
Certificate of Account Status
After you close all your taxable accounts in Texas, you need to get the certificate of account status. You can apply for this certificate via mail or online. Once the application is sent and approved, you can get your Certificate of Account Status. The reason for getting this certificate is to show that all the accounts of a taxable entity are closed in Texas.
Online filing: Texas Comptroller Portal
Filing through Mail (PDF): Form 05-359
Comptroller of Public Accounts
P.O. Box 149348
Austin, TX 78714-9348
While dissolving the Texas LLC, the owner does not require to obtain a tax clearance certificate. However, if you have filed federal taxes, then you must go through the final return option on your IRS form.
The IRS form for the LLC that are classified as partnerships is form 1065, and those LLC’s who have registered themselves as corporate should check IRS form 1120.
Step 3: File Articles of Dissolution
There is a list of dissolution documents that you, as an LLC owner, have to file. Once these articles are filed, the legal existence of the LLC will be over. The dissolution procedure and filing the articles of dissolution form is very easy and is discussed below.
- First of all, the LLC owner(s) has to file the Certificate of Termination Form. There are different methods of filing available, i.e. file by mail, in-person, fax, or/and file online. To get the application form you need to visit the Secretary of State Website of Texas state.
- In that particular SOS website, the LLC owner has to look for the Domestic LLC Articles of Dissolution page.
- There is a form available on this page, which is the article of dissolution you are looking for. You have to download that pdf form and start filling it.
- You must fill in all the important and legal information in the form, so you should be extra careful.
- If you are filing online then along with the termination form, a Certificate of Account Status should be submitted.
- For the in-person filing, one may submit the paper form to the Texas Secretary of State.
- If you are filing by Fax, then some separate forms should be submitted i.e., a payment form should be sent along with other proper forms.
- After filling in all the important information, you must choose the mode of payment you want to use to pay the LLC dissolution filing fees.
- After filling in every detail, one should submit the form through an official mail address or in-person drop the forms and make a payment.
Secretary of State
P.O. Box 13697
Austin, TX 78711-3697
Fax: (512) 463-5709
James Earl Rudder Office Building
1019 Brazos St.
Austin, TX 78701
Filing Fee: $40
The LLC you owned is dissolved, and you are free from all the liabilities linked with the LLC and its taxes. A copy of both original articles and recorded articles should be submitted in front of the probate judge. Now it’s his call that he accepts your expedited dissolutions or not.
Points to Be Noted When Dissolving Texas LLC
Apart from these three steps, there are some other tasks one has to keep in mind while dissolving an LLC legally.
There are some purposes of LLC that require some attention even after dissolution, known as winding up. The task of winding up includes.
- For a certain period, the property of a business requires preservation.
- If there is any civil case against the LLC, then the owner needs to finish them.
- Settle all the existing disputes of LLC.
- Transfer all the property of LLC to the names of partners.
- Release all the liabilities that the LLC owes to others.
- Rightful distribution of all the assets among members, according to their percentage of partnerships.
Cost of Dissolving LLC
LLC cost in Texas includes the formation as well as dissolution fees. To dissolve an LLC in Texas, LLCs have to file an Article of Dissolution. The filing fee is $40. If the LLCs are filing online or by Fax then they have to submit Form 807 (Payment Form) along with the LLC dissolution form to specify credit card or bank details. Following are the ways to pay for the dissolution,
- You can select a payment pick-up option.
- There is an option of direct account transfer through your prepaid accounts.
- LLC owners can also use their Credit cards, providing their complete details and types. Along with that, an original signature is required to authorize the transaction state will make.
After Dissolving Your LLC
After you formally dissolve your LLC, your business name will not be reserved anymore. Any other business entity will be eligible to use your LLC name immediately after 120 days of dissolving your LLC. On the other hand, if you have a foreign LLC in other states, then you must comply with the SOS of the state after the dissolution of your LLC in Texas. A registered agent can help you do the needful.
Why Dissolve Texas LLC?
Everyone starts a business so that they will get profits and independence. So if the company cannot provide help with that, it is better to dissolve it. There can be many reasons that a company would let the shutter down. So here, let’s check why anyone would need to dissolve an LLC in Texas,
- The low economy of the sector can be a reason.
- If the company owners are always fighting over some decision, they will dissolve the company.
- The reason can be the clients and their increasing needs from the product and quality.
- The increasing costs of production and incapability of business for coping up with it.
- Suppose the time being of the company has come to the extent of being over. They will have to go for involuntary dissolution.
Top Businesses in Texas!
Texans are proud of themselves a lot as their economy is doing great. Due to this excellent economy, people love to start an LLC in Texas and have a good go at it. There are so many things that people can do because of the mixed type of sectors. Mainly people love to go in the finance sector too, but there are other profitable ones also. Want to check them out? Check here,
- Manufacturing: The Manufacturing industry provides the consumers with the products they need and provides $234.05 billion every year to the GDP growth. The main product of the state is computers and its other products. After that, the state is well known and stands at the second of the list for chemicals.
- Mining: The total value of mined products such as oil and natural gas leads in amount than the other states. ⅕th of the consumption of oil and ⅓rd of the consumption of natural gas is supplied from Texas of all states. It is also the reason it provides the amount of $233.08 billion annually to the GDP.
- Professional and business services: The biggest service industry in Texas contribute yearly $203.21 billion to the economy and produce better growth opportunities. As there are mining, manufacturing, and agriculture work, they are also connected with the professionaland business service sector and give their all.
Texas LLC Dissolution Review
Time needed: 5 minutes.
Here’s a recap of the steps you must follow when dissolving your Texas LLC. Click on the steps in this list if you want to read the full detail.
- Follow Your Texas LLC Operating Agreement
Remember that when you started, you created an operating agreement. Use this agreement as a guide in proceeding with the dissolution of your LLC.
- Close All Tax Accounts
Make sure you close all your tax accounts to avoid incurring further costs.
- File Articles of Dissolution
File the article of dissolution to make it known to the state where your LLC operates that you are indeed no longer in business.
What is the Cost to Dissolve an LLC in Texas
To dissolve an LLC in Texas you need to file the Certificate of Termination with the Texas Comptroller of Public Accounts through mail, in-person, fax or online by paying a filing fee of $40.
Dissolving a Limited Liability Company (LLC) in Texas involves many factors that can significantly impact your company’s finances. It is essential to understand the cost of dissolution and its various components before making any decisions.
Regardless of why the business is closing, the process of dissolving an LLC consists of several critical steps. As a business owner, you will need to file an application with the Texas Secretary Of State to formally terminate your business’s existence as an LLC.
In doing so, you will need to ensure all debts, taxes, and any other obligations of the business have been satisfied. Consulting with an attorney or a tax specialist is always recommended, as they can guide you through the process while providing support and advice to avoid potential financial risks.
The cost of dissolving an LLC in Texas varies depending on several factors. These can include the type of business and its structure, the number of members/partners, the nature of its debts, the size and scope of the enterprise, and other extenuating circumstances. Failing to plan for these expenses can result in significant financial consequences for both you and your partners owning the business.
Depending on the size of the venture, the costs may include compliance and legal fees, filing fees, and employee termination costs. The latter includes severance pay and compensation that needs to be factored into the overall cost of dissolution.
Furthermore, if there are outstanding business debts that have not been paid, then creditors are eligible to claim and attempt to satisfy these outstanding debts up to the remaining assets of the venture. Therefore, all creditors must be satisfied before proceeding with the dissolution process.
Other considerations include tax obligations and filings. For example, Texas may have an inheritance tax in addition to federal income taxes. The relevant state taxes will need to be paid by, and the respective tax clearances acquired, before winding up the following company formally. Companies needing to check the status of their taxes with relevant government bodies must enlist professional tax experts’ services for this purpose.
In summary, measuring the cost of dissolving an LLC in Texas can be a complex task, and it is crucial to consult professional legal, financial and tax advice from their respective experts affecting the businesses’ expenses. Tailored expenses will usually depend on the size and structure of the venture as well as tax and compliance regulations, so it is wise to have reliable advisors who understand these facets supporting you during the dissolution process. Ultimately this can save tremendous stress and expense by avoiding unpleasant outcomes and ensuring proper compliance with all rules and regulations related to your matter.
Yes, there is a minimal fee of $40, which Texas SOS charges to dissolve the legally registered LLC and proceed with removing their name from every tax list and benefits.
No, there is no requirement of revenue department clearance till the time the SOS of Texas accepts the dissolution form.
The name will also get deregistered with the dissolution of the LLC. But the name will not be allotted for the next 120 days. After that, if some business wants to name their LLC after the name chosen by you, then it is their choice.
If you have not dissolved your LLC, you are liable for business privilege tax, and if it is not paid on time, you are leveraged with 10% of the amount of tax or $50. After that, the additional penalties will increase by $1 per month. If it goes unpaid for a longer duration, then the chances of seizing your property can also recover the tax.
Yes, if you are dissolving your LLC, you have to pay some amount to the probate judge who was also present during your LLC formation in the probate office. The minimum fee of the judge is $50, which can vary.
Limited liability companies reduce owners’ personal liability. Having an LLC is quite cost-effective. However, if it is required to close down the business, then the dissolution process should be done legally. Get a professional service to get everything done. We hope this article helps you to close your LLC in Texas. If you have any query do let us know in the comment box.
2 thoughts on “How to Dissolve an LLC in Texas | LLC Closing Guide”
We are a Licensed Corporate Service Provider based in HK & China mainland.
In our day-to-day work, we often have clients who require the corporate services in US for their business, which is why we are contacting you.
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Presently，one of our clients are looking for Dissolving for their Foreign For-Profit Corporation in Texas.
Could you please advise us what other information is required before we can the detailed procedures & quotations?
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Hola! Este año abrí una Llc con una propiedad, peroahora estoy preocupada porque incluí a mis 2 hijos que viven con la novia. Como afecta el tenerlos a ellos en la Llc? Puede disolver la Llc?