How to Actually Close an LLC in Texas – Don’t Make This Mistake + FAQs

Ready to close your Texas LLC but unsure how to navigate the legal maze? You’re not alone. Imagine pouring your heart into a business only to face the daunting task of shutting it down.

Texas boasts over 1.7 million active LLCs as of 2023, yet about 50% of small businesses fail within the first five years. Knowing how to properly dissolve your LLC can mean the difference between a clean break or costly headaches later.

How to Close a Texas LLC (Quick Answer)

Closing an LLC in Texas involves a series of legal and administrative steps to formally end the company’s existence. Here’s the process in a nutshell:

1. Vote to Dissolve the LLC: Follow your LLC’s operating agreement rules (or Texas default law) to get approval for dissolution. For a single-member LLC, this is a one-person decision; multi-member LLCs usually need a majority vote. Document this decision in writing (meeting minutes or a consent form).

2. Wind Up Business Affairs: Stop taking on new business and start winding up existing obligations. Notify creditors and claimants 📢, pay off all debts, and distribute any remaining assets to members (owners) according to their ownership shares. Also terminate or transfer licenses, permits, and registrations tied to the business.

3. Obtain Tax Clearance from the Texas Comptroller: Texas uniquely requires a Certificate of Account Status (tax clearance) from the Comptroller before you can dissolve. File all final Texas franchise tax reports and pay any due taxes. Then request this certificate (Form 05-359) from the Comptroller’s office, which confirms your LLC has paid all state taxes. Tip: This can take a few weeks to process, so plan accordingly.

4. File a Certificate of Termination with the Texas Secretary of State: Prepare Form 651 (Certificate of Termination) to officially terminate your LLC’s existence with the Texas Secretary of State (SOS). Attach the tax clearance certificate from the Comptroller to this filing – it’s mandatory. Submit the form through SOSDirect or by mail, and pay the required $40 filing fee. Once accepted, the state will formally dissolve your LLC’s charter.

5. Notify Federal Agencies & File Final IRS Returns: Dissolution doesn’t automatically notify the IRS. You’ll need to file a final federal tax return for your LLC (part of your personal return if sole proprietor, or final Form 1065/1120 if taxed as partnership/corp) and check the “final return” box. If you had employees, file final payroll tax forms (e.g. Form 941, 940) and issue any final W-2s. The IRS also suggests cancelling your EIN by sending a brief letter once all taxes are paid.

6. Close Out Other Accounts and Obligations: Wrap up any remaining loose ends. This includes canceling your Texas Workforce Commission account (if you had employees paying unemployment tax), closing your business bank accounts and credit lines, terminating leases or contracts, and informing your registered agent that the LLC has been dissolved (so you don’t incur further registered-agent fees). Also consider notifying any professional licensing boards (for PLLCs) or local authorities that the business has closed.

In summary: dissolving a Texas LLC requires both federal and state actions. First handle any federal tax duties, then fulfill Texas’s specific legal requirements like tax clearance and SOS filing. Below, we dive deeper into each step, explain key terms, and ensure you avoid common mistakes during the process.

Common Mistakes to Avoid When Dissolving a Texas LLC ⚠️

Even a simple oversight can lead to fines or legal trouble. Steer clear of these frequent mistakes when closing your Texas LLC:

• Ceasing Operations Without Formal Dissolution: Simply walking away from your business is not enough. Many entrepreneurs mistakenly just stop doing business without filing dissolution papers – a risky move. Until you officially dissolve, the state can still consider your LLC active (meaning you’re on the hook for franchise taxes, annual reports, and potential lawsuits).

• Not Obtaining Tax Clearance First: Texas law requires a Certificate of Account Status showing all state taxes are paid before the SOS will process your termination. Skipping this step (or attaching the wrong document) will get your termination filing rejected. Don’t attach a generic printout of your tax account; you need the official certificate with state seal.

• Ignoring Debts and Liabilities: Failing to notify creditors or settle all debts is a major no-no 🙅‍♂️. Texas requires LLCs to pay off or make arrangements for all liabilities before dissolving. This pecking order is important:

  1. Creditors – pay vendors, lenders, service providers, and any outstanding bills the LLC owes (this includes any unpaid salaries or reimbursements to members/employees).
  2. Members – after all creditors are paid (or money set aside for contested claims), any remaining assets are split among the owners according to their rights/interests (often proportional to ownership share, unless your operating agreement says otherwise).

  If the LLC doesn’t have enough assets to pay all debts, things get tricky: creditors might only get a partial payment, and members likely get nothing (and generally aren’t required to pay LLC debts out-of-pocket beyond any personal guarantees they made). But do not distribute money to members until debts are handled – doing so could make members liable to creditors later if it was done improperly.

• Forgetting Final Tax Filings: Owners sometimes dissolve the LLC with the state but forget to file final tax returns (state franchise or federal). This can lead to penalties or an administrative forfeiture of your LLC by the state for non-compliance. Always file a final Texas franchise tax report (even if “no tax due”) and mark your final IRS return appropriately.

• Overlooking Employee and Payroll Obligations: If you had employees, don’t forget to handle their final pay, last payroll tax filings, and to close your unemployment tax account with the Texas Workforce Commission. Neglecting this could result in continued tax billing or issues with former employees.

• Neglecting Permits, Licenses, and Accounts: Make sure to cancel any state or local permits (e.g. sales tax permit) once you’ve filed final returns. Similarly, close your business bank accounts and credit cards. Leaving bank accounts open after an LLC is dissolved can be problematic (and might violate bank terms). 📌 Pro tip: Also notify your registered agent of the dissolution so they know to close your file – you don’t want to keep paying for agent services for a non-existent company.

Key Terms and Entities Explained 🔍

Closing an LLC involves a lot of legal jargon and multiple government agencies. Let’s break down the key terms and players you’ll encounter:

Federal Laws and Requirements for Closing an LLC (IRS Obligations)

Before diving into Texas-specific steps, address the federal requirements. The U.S. Internal Revenue Service has its own checklist when you close a business. Key federal obligations include:

• Final Federal Tax Returns: You must file a final income tax return for your LLC for the year it ceases operations. How you do this depends on your LLC’s tax classification:

  • Single-member LLCs: If your LLC was disregarded (taxed as part of your personal income), just include the business income/expenses on your Schedule C (Form 1040) for the last year. Check the “final return” box on the schedule or appropriate form.
  • Multi-member LLCs: File a final Partnership Return (Form 1065), including K-1s for each member, or a final S-corp/C-corp return if your LLC elected those statuses. On these forms, there’s a checkbox or area to indicate it’s the final return for the entity.
  • Indicate that it’s your last return so the IRS knows the business is ending. Tip: The IRS expects you to mark the return as “Final” – otherwise, they assume the business is ongoing and might expect filings next year.

• Final Employment Tax and Contractor Forms: If your LLC had employees, file your final quarterly Form 941 (payroll tax) and final annual Form 940 (unemployment tax). Check the box that it’s a final return for those as well. Provide employees with their W-2 forms for wages, and submit W-3 to the Social Security Administration as usual. If you paid independent contractors, issue any required 1099-NEC forms for the final year. Essentially, wrap up all reporting obligations to avoid IRS penalties.

• Pay Any Federal Taxes Owed: Ensure you’ve paid all federal taxes up to the dissolution date. This includes income tax, payroll withholding, Social Security/Medicare, unemployment, etc., through the final date of business. If the LLC had installment agreements or other IRS plans, contact the IRS to inform them of the closure and settle up.

• Cancel Your EIN (Employer Identification Number): The EIN for your LLC is a tax ID that remains assigned to the business even after it closes, but you can close the IRS account tied to it. The IRS recommends sending a letter to officially close your business account and cancel the EIN so it’s noted as inactive. The letter should include your LLC’s legal name, EIN, business address, and the statement that you wish to close the account because the LLC is dissolved. Mail it to the IRS’s Cincinnati address (per IRS instructions). Note: The EIN stays on record (it won’t be reused), but this step ensures the IRS stops expecting filings from your LLC.

• Retain Business Records: The IRS advises keeping your business records for a period of time even after closing. For example, keep tax records for at least 7 years (to cover the statute of limitations in case of audits or if you need to amend returns), and payroll records for at least 4 years. This isn’t a filing step, but it’s a federal guideline to protect yourself after dissolution.

🚨 Important: Federal law does not have a procedure to “dissolve” an LLC (since LLCs are creatures of state law). From the IRS perspective, closing a business is about settling tax accounts. Make sure you also handle the state dissolution (next sections), because telling the IRS does not notify Texas or vice versa.

By taking care of these IRS requirements, you prevent unpleasant surprises like tax notices or fines long after your business has stopped operating. As the IRS itself notes, always “remember to check your state responsibilities when closing a business.” Now that we’ve covered the federal side, let’s move on to the Texas-specific laws and steps for dissolving your LLC.

Texas LLC Dissolution Steps and Legal Requirements (State Process)

Closing an LLC in Texas is governed by the Texas Business Organizations Code (BOC), which lays out the process of “winding up” and termination. Here we’ll cover each major step in detail, including special cases for different types of LLCs:

1. Internal Decision: Member Consent to Dissolve

The first step is deciding to dissolve and documenting that decision properly.

• Follow Your Operating Agreement: Check your LLC’s Articles of Organization and Operating Agreement for any provisions on dissolution. Many LLCs specify how members vote on major decisions like closing the company. For instance, your operating agreement might require a unanimous vote, or a super-majority (e.g. 2/3 of members) to approve dissolution.

• Texas Default Rule (Majority Vote): If your governing documents don’t specify how to approve dissolution, Texas law applies a default rule. Under Tex. Bus. Org. Code § 101.552, a majority of the LLC’s members can consent to dissolve the company. This is more lenient than some states that require unanimous consent. Example: If you have a Texas LLC with three members owning 60%, 20%, and 20%, the two smaller members (20% + 20% = 40%) cannot outvote the 60% owner on routine matters. But interestingly, for dissolution, Texas law says a simple majority in number of members can decide – so the two minority members (they are 2 of 3 members, i.e. a majority of the number of members) could dissolve the LLC even if the 60% owner votes no. Always double-check your own agreement, but this default can apply in absence of an agreed rule.

• Single-Member LLCs: If you’re the lone owner, this step is straightforward – you are the only vote. Document your decision to dissolve in writing (even a signed and dated statement or corporate minutes) for the record. It might feel silly to have a “meeting with yourself,” but keeping an official record is good practice, especially if you ever need to show when you decided to dissolve (e.g. for tax purposes or if facing any claim).

• Professional LLCs (PLLCs): In a PLLC, only licensed professionals can be members. The decision to dissolve in a PLLC follows the same voting rules – majority vote by members or as required by the PLLC’s operating agreement. Additionally, check if your professional licensing authority has any rules about closing a practice. For example, attorneys might need to arrange client file transfers or doctors might notify patients. These aren’t state dissolution laws per se, but ethical obligations tied to your profession.

• Document the Decision: However you arrive at the vote, make it official. Draft and sign a Resolution of Dissolution or meeting minutes that state the members agreed (and the date). This paper trail proves the dissolution was authorized. It can be as simple as: “On [Date], the members of [LLC Name] unanimously/majority agreed to dissolve the company.” All members (or just you, if single-member) should sign it. Keep this with your company records.

2. Winding Up: Settling Debts, Notices, and Asset Distribution

After the dissolution vote, your LLC doesn’t just vanish. It continues to exist for the purpose of winding up its affairs. Think of this as the “cleanup” phase where you tie up loose ends. Key winding-up tasks in Texas include:

• Notify Creditors and Claimants: It’s wise (and often legally required) to inform anyone who is owed money or who might have a claim against the LLC that you are closing. Texas law explicitly notes sending written notice to known claimants as part of winding up. This gives them a chance to come forward with any claims. In your notice, include a deadline by which claims should be submitted (and a mailing address). This helps cut off claims after a reasonable period.

• Stop New Business, Fulfill Existing Contracts: Cease taking new orders or clients. Complete any remaining jobs or terminate contracts where possible. Let customers know you’re closing and handle refunds or final deliveries as needed. Essentially, wrap up operations in an orderly way to avoid breach of contract issues.

• Liquidate Assets: Identify all assets of the LLC – cash, equipment, inventory, property, etc. You’ll convert these into cash if needed to pay debts. Sell off assets that won’t be distributed directly to members. For example, you might hold a going-out-of-business sale for inventory or sell business vehicles. Be sure to get fair market value, especially if a member wants to buy an asset – document the sale and use the proceeds for debts or distribution.

• Pay Off Debts and Liabilities: Use the LLC’s funds to settle all obligations. Texas law requires that creditors get paid first, before any money goes to members. This pecking order is important:

  1. Creditors – pay vendors, lenders, service providers, and any outstanding bills the LLC owes (this includes any unpaid salaries or reimbursements to members/employees).
  2. Members – after all creditors are paid (or money set aside for contested claims), any remaining assets are split among the owners according to their rights/interests (often proportional to ownership share, unless your operating agreement says otherwise).

  If the LLC doesn’t have enough assets to pay all debts, things get tricky: creditors might only get a partial payment, and members likely get nothing (and generally aren’t required to pay LLC debts out-of-pocket beyond any personal guarantees they made). But do not distribute money to members until debts are handled – doing so could make members liable to creditors later if it was done improperly.

• Handle Remaining Legal Matters: If the LLC is involved in any lawsuits (as plaintiff or defendant), dissolution doesn’t automatically end those. You may need to continue legal action to conclusion or settle them. Texas explicitly notes that during winding up, the LLC can still prosecute or defend lawsuits as needed. If you’re facing a lawsuit, consult an attorney before dissolving; you might delay dissolution until it’s resolved, or be prepared to handle it through the winding-up representatives of the LLC. Note: Dissolving also doesn’t protect you from lawsuits that arise after dissolution for things the LLC did while it was active. For example, if someone has a legal claim but files it after you dissolve, they may still sue the dissolved LLC’s remaining assets or insurance.

• Distribute Remaining Assets to Members: Once liabilities are satisfied, if there is leftover cash or assets, distribute to members per the ownership percentages or as agreed. It’s good to have each member sign a receipt of the final distribution. If assets (like a piece of equipment) are given to a member in kind, document its value as part of their share. Keep in mind any distributions at dissolution might have tax implications (e.g. a final K-1 to members reflecting that distribution of cash or property).

Texas’s winding-up provisions are found in the relevant Business Organizations Code, which underscore that skipping any of these tasks can leave you and your business open to financial or legal risk. Take the time to systematically wind up affairs. Once these are done, you’re ready for the final legal filings.

3. Obtaining Tax Clearance from the Texas Comptroller

Arguably the most Texas-specific step: securing a tax clearance certificate from the state Comptroller. Here’s what you need to know:

• Why It Matters: Texas requires a “Certificate of Account Status for Dissolution/Termination” to be attached to your termination filing. This document, issued by the Comptroller, certifies that your LLC has paid all its state taxes (mainly franchise tax) and is in good standing tax-wise up to its final day. Without it, the Secretary of State will not dissolve your company. This ensures the state collects any due taxes before the business disappears.

• Filing Final Franchise Tax Reports: Before requesting the certificate, you must file any pending Franchise Tax reports. If your LLC is closing mid-year, you’ll file a final “Final Franchise Tax Report” covering from the end of your last report period up to your business’s termination date. In practice, many LLCs choose to officially terminate at the end of a tax year to simplify this, but if not, the final report will be a partial-year filing. Include payment for any franchise tax due (if your annualized revenue is below the no-tax-due threshold, you’ll file a No Tax Due Report, but still need the certificate).

• Requesting the Certificate: You can request the Certificate of Account Status online via the Comptroller’s eSystems (if you have an online franchise tax account) or by mailing Form 05-359. There is no fee for the certificate itself. Online is faster, but either way the Comptroller will review your account. They’ll check that:

  • All required franchise tax returns are filed (annual reports, final report).
  • Any taxes, penalties, or interest owed are fully paid.
  • The LLC is in good standing with respect to Title 2, Tax Code obligations (which include franchise tax).

• Waiting Time: Plan ahead, as it can take several weeks (often 4-6 weeks) to receive the certificate from the Comptroller. Your LLC must remain active during this time (you can be winding up in the meantime). Only once you have the certificate in hand can you proceed to file termination with the state. Tip: If you need to close faster (e.g., by a certain date), consider contacting the Comptroller’s office; sometimes they can expedite in special cases, but there’s no guarantee.

• Ensure It’s the Correct Certificate: The Comptroller issues different types of status certificates. Make sure you specifically obtain the “Certificate of Account Status for Dissolution/Termination”. If you accidentally print a normal account status or get the wrong type (e.g., a certificate showing good standing but not for dissolution), the SOS will reject your filing. The correct certificate will explicitly state it’s for the purpose of termination and that all taxes are paid and report filings are current.

By fulfilling the tax clearance step, you protect yourself from personal liability for unpaid taxes and pave the way for the state to approve your LLC’s termination. Think of it as Texas giving you a final bill of health – you can’t graduate (dissolve) until you’ve paid your dues.

4. Filing the Certificate of Termination with the Texas Secretary of State

Now for the final legal act: filing paperwork with the Texas Secretary of State to officially terminate your LLC’s existence. Here’s how to get it right:

• Prepare Form 651 (Certificate of Termination): Texas provides a form for LLC termination (Form 651) which you can download from the SOS website. You can also draft your own termination document, but using the form ensures you meet the minimum statutory requirements. The form will ask for:

  • LLC Name and Texas file number (the number given when you registered the LLC).
  • Governing Authority Statement: You’ll indicate the reason for termination. For voluntary dissolutions, it’s typically “Voluntary decision to wind up and terminate, approved by the members as required by law and the governing documents.” This fulfills the requirement to state the event prompting winding up (which in our case is the members’ decision).
  • Winding Up Compliance Statement: A line to affirm that all debts, liabilities have been paid or provided for, and that any remaining assets have been distributed to the members. Essentially, you certify that the winding up is complete in accordance with Texas law.
  • Effective Date (optional): If you want the termination to be effective on a future date (maybe you got your certificate early but want to officially end on Dec 31 for simplicity), Texas allows you to list an effective date. If left blank, it terminates upon filing by default.
  • Additional Info: Possibly the names and addresses of governing persons or a contact. Check the instructions – Texas doesn’t require a lot of extra info, but ensure every required field is filled.

• Signatures: The form must be signed by an authorized person. That could be a manager or member of the LLC. Typically, the person winding up (which might have been designated in your dissolution resolution) will sign. In a single-member LLC, that’s you. In a multi-member, usually a managing member or an officer signs on behalf of the company. Note: If a lawyer or authorized agent is filing for you, they could sign as well – but generally an owner’s signature is provided.

• Attach the Tax Clearance Certificate: This is crucial – include the Comptroller’s Certificate of Account Status with your termination filing. If filing by mail, attach the original certificate. If filing online via SOSDirect, you may need to upload a PDF of the certificate. Double-check that it’s the correct one for termination (as discussed earlier). Without this attachment (for non-exempt entities), your filing will be rejected.

• Submit and Pay the Fee: As of the latest update, the Texas SOS charges $40 to file a Certificate of Termination for LLCs. If you use SOSDirect (the online portal), you can pay by credit card; if by mail, include a check or money order payable to the Secretary of State. Texas usually requires two signed copies if mailed, so they can return one to you stamped. Online filing will provide an electronic confirmation instead.

• Confirmation of Dissolution: Once processed, the Secretary of State will officially terminate your LLC’s existence in the state records. At that point, the LLC is considered dissolved/terminated and ceases to exist as a legal entity. Its name becomes available for others to use, and any new business you do under that name would not be under the old LLC’s protection. You should receive a file-stamped copy of the Certificate of Termination for your records.

Texas does not issue a fancy “dissolution certificate” document beyond the filed termination itself. Keep the confirmation from the SOS together with your other important business papers. This is your proof that the company was properly dissolved as of a certain date.

5. Aftermath: Post-Dissolution Notifications and Tasks

With the legal formalities done, you have a few final wrap-up tasks to ensure nothing comes back to bite you:

• Cancel Remaining State Accounts: If not already addressed during winding up, formally close your accounts with state agencies:

  • Texas Workforce Commission: If you had an unemployment tax account (because you had employees), log in to the TWC employer portal and close your account or contact TWC to inform them the business has dissolved. This prevents the state from expecting quarterly wage reports or charging minimum taxes in the future.
  • Sales Tax Permit: If your LLC held a Texas sales and use tax permit (for selling goods), file your final sales tax return (covering up to the last day of business) and mark it final. Then request cancellation of your sales tax permit with the Texas Comptroller’s office so they know you won’t be collecting sales tax anymore.
  • Other Licenses/Permits: Think of any industry-specific licenses (e.g. a food service license, professional licenses for a PLLC, local city business license). Notify the issuing authority that the business is closed. Some permits require a notice or have a cancellation process.

• Notify Banks and Close Financial Accounts: 🏦 Inform your business bank that the LLC is dissolved and close all bank accounts under the LLC’s name. This helps protect against any fraud or misuse and stops bank fees. If you have a business credit card, pay it off and close that account too (or convert it to a personal account if the bank allows and you intend to keep using it, though often it’s best to close it to avoid any confusion). Remember: After dissolution, the LLC as an entity no longer exists — keeping bank accounts open in the LLC’s name could violate bank terms since there’s no legal entity to own the account.

• End Contracts and Lease Agreements: Ensure any property leases, equipment rentals, or service contracts are properly terminated. Many contracts have a termination clause upon dissolution – provide notice to the other party, and keep documentation that you did so. If your office lease runs beyond your closing date, negotiate with the landlord on an early termination or sublease if possible.

• Communicate to Stakeholders: It’s good practice to let customers, clients, and suppliers know that the business has closed (if you haven’t already). This can be done through an email, a notice on your website, or even a published notice in a local newspaper (some states require publication of dissolution notice – Texas doesn’t, but it’s optional for liability cutoff). This communication helps everyone adjust and sends a clear signal that the LLC no longer exists.

• Maintain Records and Contact Info: Keep all the final paperwork – dissolution resolution, Certificate of Termination, final tax filings, etc. – in a safe place. Also, if your contact information will change after the business closes, consider providing a forwarding address or email in case any loose ends surface (for example, a refund or an unexpected invoice arrives). You might continue to get mail addressed to the LLC for a while; having a way to receive it ensures you don’t miss anything important.

By completing these post-dissolution tasks, you essentially tie a bow on the entire process. Your Texas LLC is closed, and you’ve notified all relevant parties, so you can move on without lingering obligations.

How Closing a Texas LLC Compares to Other States 🗺️

Each state has its own spin on LLC dissolutions. Here’s how Texas’s process stacks up against other states, highlighting a few key differences:

• Tax Clearance Requirement: Texas is unusual in mandating a tax clearance certificate before dissolution. Most states do not require a separate tax sign-off prior to filing dissolution. For instance, Delaware and California don’t force you to obtain a formal tax clearance document; you simply file dissolution papers (though you’re still expected to pay any taxes owed). Texas’ approach is more like states such as Arizona or Alabama, which also require verifying taxes paid before dissolution. This adds an extra step (and wait time) in Texas that folks from other states might not expect.

• Name of Dissolution Document: In Texas, the final filing is called a Certificate of Termination. Many other states refer to it as “Articles of Dissolution” or a “Certificate of Dissolution.” Functionally, they do the same thing – terminate the entity – but if you’re researching online, note the terminology difference. Also, Texas charges a modest fee ($40) for this filing, whereas some states have different fees: e.g., California currently charges no fee to file Articles of Dissolution for LLCs (to encourage business closures to be formalized), while Delaware charges a higher fee (around $200) to file a Certificate of Cancellation for an LLC. Always check your state’s fee schedule; Texas is relatively cheap in this regard.

• Member Approval Rules: Texas’s default rule allowing dissolution with a majority of members (by number) can be more flexible than some states. For example, New York’s LLC law generally requires unanimous consent of members to dissolve unless your operating agreement says otherwise. Delaware also defaults to the LLC agreement’s terms, and if the agreement is silent, you might need all members to agree (Delaware LLC Act doesn’t explicitly provide a default percentage for voluntary dissolution, so typically unanimous). This means in some states a disgruntled minority member could block a dissolution, whereas in Texas, a simple majority (if no other agreement) can proceed. It’s an interesting quirk that makes dissolving potentially easier in Texas when members disagree.

• Franchise Tax vs. State Income Tax: Texas has no personal income tax, but it has the franchise tax which complicates dissolution if not handled. In contrast, a state like Florida has no state income tax and no franchise tax, making dissolutions a bit simpler (just file the articles of dissolution and you’re done, generally). States with annual report requirements or annual minimum taxes (e.g. California’s $800 franchise tax) require those to be paid up through the final year but often don’t block dissolution if you don’t (they’ll just come after you for the money later). Texas’ approach is stricter: you must clear the tax first or the state won’t let you dissolve.

• Publication Requirements: A few states (like New York for LLC formation, and Arizona for some dissolutions) have newspaper publication requirements as part of dissolution. Texas does not require any publication to dissolve an LLC. Your dissolution is effective upon state filing. This keeps the process more private and straightforward.

• Involuntary Dissolution for Taxes: In Texas, if you forget to file franchise tax reports, your LLC can be forfeited by the state (an involuntary termination). Reinstating requires clearing those taxes. Other states have similar penalties (e.g., Administrative dissolution in states for not filing annual reports). The key difference is what it takes to reinstate: Texas has no time limit for reinstating a forfeited LLC for tax reasons – you can revive it years later by paying dues – whereas some states like Arizona limit how long you can revive an administratively dissolved LLC.

In short, Texas’s dissolution process is thorough and tax-focused. If you’re familiar with closing an LLC in another state, don’t assume the same rules apply in Texas. Always check the specific requirements (like the Comptroller certificate). Conversely, if you learned to dissolve in Texas first, you might be pleasantly surprised that some other states have fewer hoops (but still follow through on taxes and formal filings elsewhere)!

FAQs on Closing an LLC in Texas 🔖

Q: Do I need a tax clearance from the Texas Comptroller to dissolve an LLC?
A: Yes. Texas requires a Comptroller’s Certificate of Account Status showing all franchise taxes are paid before the Secretary of State will dissolve your LLC.

Q: Can I just stop doing business without formally dissolving my Texas LLC?
A: No. Ceasing operations alone does not end your LLC. You must file a termination with the state, or you’ll remain subject to taxes, filings, and potential liabilities.

Q: Does it cost money to dissolve an LLC in Texas?
A: Yes. The state filing fee for a Certificate of Termination is $40. You may also incur minor costs for notarization or postage, but the SOS filing fee is $40.

Q: Do all members have to agree to dissolve an LLC in Texas?
A: No. By default, Texas allows dissolution with approval from a majority of the LLC’s members (unless your operating agreement requires a higher threshold).

Q: Should I cancel my EIN after closing my Texas LLC?
A: Yes. It’s advisable to send the IRS a brief letter to close your business’s EIN account. While the EIN stays assigned to the LLC, this notifies the IRS that the LLC won’t be filing future taxes.

Q: Will dissolving my LLC protect me from ongoing or future lawsuits?
A: No. Existing lawsuits involving the LLC can continue despite dissolution. Also, claims that arise from prior business actions can be brought against the dissolved LLC’s assets (or against you, if personally liable) even after it’s closed.

Q: Can a dissolved or forfeited Texas LLC be reinstated later?
A: Yes. If your LLC was forfeited for tax or report issues, you can reinstate it by clearing the franchise tax filings and paying penalties. However, a voluntarily terminated LLC generally cannot be reinstated – you’d have to form a new entity.

Q: Can I dissolve my Texas LLC online?
A: Yes. Texas allows online dissolution filings via the SOSDirect portal. You still need to upload the Comptroller’s tax clearance certificate and pay the $40 fee, but the process can be completed electronically.