How To Close An LLC In Texas 2023? Detailed Guides

If you have a Texas LLC you want to shut down; then you have to go through the proper Texas LLC dissolution process as defined by the Texas Business Organizations Code and the Texas Secretary of State. Otherwise, fines could be in your future.

That’s why we’ve created this guide. It covers everything you need to know about Texas law as it relates to shutting down an LLC in Texas. Keep reading to learn more about LLC dissolution steps you should follow as a business owner of limited liability companies. 

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What Is The Process To Dissolve An LLC?

Let’s begin by taking a quick look at the steps you’ll need to follow in order to properly dissolve an LLC. Here’s what the process looks like:

• Obtain a certificate of account status for dissolution from the Texas Comptroller
• Determine whether your LLC in Texas is foreign or domestic
• Consult your LLC operating agreement for voluntary dissolution instructions
• Fill out and submit the required forms (and pay the filing fee)
• Begin winding down the business by closing accounts and distributing any remaining assets according to the operating agreement you have

Steps To Dissolve An LLC In Texas

Now that we’ve taken a high-level look at the steps to dissolve an LLC in Texas let’s review each of those steps in more detail. It’s important to make sure you get them all right to avoid having fines from the Texas Secretary of State or having to spend money on a Texas business law attorney.

Obtain A Certificate Of Account Status For Dissolution

According to the Texas Business Organizations Code, the first thing that you need before dissolving an LLC is a certificate of account status from the Texas Comptroller.

This account status certificate essentially is recognition from the official Texas Comptroller that you’ve paid all of your taxes and have no outstanding balances owed for franchise tax, employee taxes, or other requirements under the tax code.

To get your certificate of account status, your LLC in Texas must submit the comptroller form 05-359. Once this is reviewed, the comptroller will issue your certificate of account status, verifying that your limited liability company has its tax clearance letter and can move forward with the voluntary dissolution process.

Determine Whether Your LLC Is Foreign Or Domestic

The next thing you should do is determine whether your LLC in Texas is foreign or domestic, as this will impact the filing entity and forms you need to use.

An LLC is considered a domestic entity if it was formed in Texas. That means you would have paid a filing fee while forming your LLC in Texas. If you formed your LLC elsewhere and then registered it to operate in Texas through the Secretary of State, you likely have a foreign LLC.

The forms you need to submit to dissolve an LLC vary based on this classification, which is why it’s important to stop and figure this out before moving forward with the dissolution process for your LLC in Texas. 

We’ll cover the specific forms you need to submit in either scenario in a few steps.

Consult Your LLC Operating Agreement

The next thing you should do is look at the operating agreement for your LLC in Texas. This may tell you the specific steps that you need to follow before you can dissolve the limited liability company.

For example, your operating agreement may include specifications for:

• How LLC members decide to stop operating
• What type of written notice is required before a dissolution vote can take place amongst LLC members
• How to distribute any remaining assets
• And more

If your operating agreement has any specifications like these, it’s very important to follow them. Otherwise, one authorized member manager could sue another and potentially receive a court order blocking your certificate of termination and costing your business extra money that there’s no reason for it to have to pay.

Complete The Required Forms

After you’ve consulted your operating agreement, it will be time to fill out and submit the required forms.

If you have a domestic LLC, you will submit Form 651 to get your certificate of termination. This has a $40 filing fee.

If you have a foreign LLC, things get a little more complicated. If you are only ending your operations in Texas but plan on continuing to do business in other states, you have to submit Form 608 and pay a $15 filing fee.

Or, if you’ve already dissolved your LLC in the state where its public accounts were initially registered, then you can submit a Form 612 and pay a $15 filing fee.

Begin Winding Down The Business

Now all that’s left to do is finalize the wind-down of your company. This may involve submitting your last annual franchise tax report, letting your registered agent go, and informing the public of your voluntary decision of dissolution.

The Comptroller of public accounts could have additional steps for you to complete before termination can be processed as well. For example, you might have to settle claims with any known claimants and file two signed copies of any agreements you meet with creditors involving the prime rate, file number, or effective date of any potential settlements.

How Long Does It Take The State Of Texas To Process The Filing?

Once you’ve submitted your last annual franchise tax report and have a certificate of account status for tax clearance, it should take the state between three and four weeks to issue a certificate of termination.

The process typically moves faster when you’ve submitted online for your business instead of having to send a written notice to the Comptroller’s office or comptroller field office in Texas.

How Much Does It Cost to Close An LLC In Texas?

The cost of getting a certificate of termination to dissolve an LLC in Texas is typically $40 or less. You just have to pay fees when you file the form for termination with the Comptroller of Public Accounts or send written notice of your business dissolution to the Secretary of State.

You may have personalized expenses that go beyond this, however. For example, you might have to hire someone with business operations experience to come up with a company agreement for dissolution or compile your last franchise tax report.

But the bottom line is that once you get tax clearance and prove you’re in good standing, you just have to pay the filing fee to dissolve an LLC in Texas – unless you need to hire an attorney with legal experience to walk you through some tricky situations that are unique to how you transact business through your LLC or corporation.

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Conclusion

Dissolving an LLC in Texas is a fairly straightforward process. You just need to know the law and make sure that you’ve paid your taxes before asking for a form or certificate of termination.

In most cases, you won’t need to hire an attorney to represent your business entity. But there are situations in which that might be necessary – especially if you transact business in an unusual way through your LLC.

We hope that this guide has helped you get familiar with the law and prepared to file your articles of dissolution or determine whether you need to hire an attorney before proceeding. No matter what you decide, we wish you all the best with your business moving forward.