Have you decided to stop transacting business with your Texas limited liability company? The state of Texas legally requires all business entities to go through a formal dissolution process.
What does this process entail, and how does it differ for domestic and foreign entities? In this guide, we’ll answer all the tough questions about dissolving an LLC in the state of Texas.
Guru Tip: If you'd like help dissolving an LLC, the same services that form an LLC can also take care of the dissolution logistics and paperwork with the state.
What Does It Mean to Dissolve an LLC?
Dissolving a company is an official means of permanently closing your business. While filing the dissolution documentation with the state of Texas is certainly an important part of the process, it’s not the only step. You should also liquidate your business assets, settle any liabilities, and send legal notifications to anyone that had an interest in your company.
Keep in mind that if you fail to complete these steps, you as a business owner could be held personally liable for any outstanding debts or liabilities of your limited liability company. Now that we’ve discussed what exactly dissolving an LLC is, let’s dive into the details of how this process is carried out in the state of Texas.
How to Dissolve a Domestic Texas LLC
If your limited liability company is domestic to the state of Texas, the dissolution process involves the filing of a document called the Certificate of Termination of a Domestic Entity. The information required to fill out this document includes:
- Name of your LLC
- Your entity type
- Date your entity was formed
- The file number issued to your business
- Names and addresses of your governing persons
- Nature of the event causing your business to dissolve
- Date when your dissolution will be effective
- A certificate of tax clearance from the Texas Comptroller (should be attached; request one here)
- Signature of authorized representative of the company
Once you’ve finished filling out this form, you’ll need to pay the $40 filing fee. You can make your check payable to the “Texas Secretary of State.” Then, you can mail your check along with two signed copies of the form to the following address:
Secretary of State
P.O. Box 13697
Austin, Texas 78711-3697
Typically, the Texas Secretary of State’s office takes three to five business days to process your dissolution documents. However, the Texas Comptroller can take 4 to 6 weeks to provide you with a certificate of tax clearance. As a result, you can expect the whole dissolution process to take approximately six to seven weeks.
How to Dissolve a Foreign LLC in Texas
Do you need to dissolve a limited liability company based outside of Texas, but qualified to transact business within this state?
The dissolution process for foreign LLCs in Texas starts with the filing of a Certificate of Withdrawal of Registration. Like the Certificate of Termination used for domestic LLCs, the Certificate of Withdrawal is a two-page document, and it includes the following pieces of information:
- Name of your LLC
- Your entity type
- Date your entity was registered with the Secretary of State
- File number issued to your entity
- Address of your principal office
- Additional address where future process can be served on your business if necessary
- When your filing becomes effective
- Certification that you have attached a tax clearance certificate (which you can acquire here)
- Name and signature of an individual authorized to complete the filing
Similar to the Certificate of Termination, the Certificate of Withdrawal requires a fee. However, for foreign entities, this fee is just $15. You can make your check out to “Tennessee Secretary of State.” This filing also gets sent to the same address:
Secretary of State
P.O. Box 13697
Austin, Texas 78711-3697
You should also expect this filing to take anywhere from 3-5 business days to be processed, plus any time necessary to acquire your certificate of tax clearance.
What Else Do I Need to Know About LLC Dissolutions in Texas?
First off, it’s important to note that once your dissolution is complete, any business entity in Texas can claim your business name if they would like to use it. This is just one of many reasons that you should only dissolve your Texas limited liability company if you’re entirely certain that you’re done conducting business in this state.
You should also keep in mind that there are several scenarios that can lead to the state of Texas administratively dissolving your LLC. If you fail to file your annual franchise tax report within 45 days after its due date, you will lose your right to do business in Texas. Let it go uncorrected for another 120 days and the Secretary of State will perform an administrative dissolution of your business. The same applies if you fail to maintain a registered agent.
If your LLC is administratively dissolved, you can reinstate, but it is a hassle. For one thing, you’ll need to pay the fees you incurred while you failed to file your reports. Texas imposes these fees using a pretty substantial interest rate for each report that goes unpaid. You’ll need to pays these fees and file an Application for Reinstatement. Depending on the nature of your business, these steps could be just the tip of the iceberg for reinstatement, so it’s strongly advised to not dissolve your business unless you have no plans to transact business in Texas again.
Conclusion
Whether you’re dissolving a domestic or foreign limited liability company, the process isn’t complicated.
The filing of either the Certificate of Withdrawal or a Certificate of Termination is essentially the same process.
Our final note in this guide is that you should make certain each step of the process outlined in this guide is followed closely, to avoid any unforeseen snags with your dissolution. We hope this article helped you to better understand the dissolution process for a Texas LLC!