More often than not our business activities may fail to go as intended. If you find yourself in such a predicament and your existing business structure is a limited liability company (LLC), you might be wondering on the best way to dissolve your LLC in Texas.
Numerous enterprises in Texas are LLCs because it is one of the least sophisticated corporate entities to form. When you establish an LLC, you can have as many “members” or stockholders as you want, with no cap on the overall amount of shareholders in the company.
Numerous Texas entrepreneurs prefer LLCs since they combine the ease and versatility of a partnership with the liability protection affiliated with a corporation.
If you are considering closing your business, you may have several concerns regarding how to dismantle the LLC. Closing an LLC is an immensely complex procedure, therefore, it is very essential to work with a professional Texas business attorney. Failing to shut down an LLC properly can result in major liability problems.
In Texas, unlike most states, there is no precise LLC law that regulates the dissolution of an LLC. Texas business owners struggling to deal with LLC challenges should consult the Texas Business Organizations Code, which regulates all LLCs, as well as partnerships, corporate entities, nonprofit groups, etc.
Owing to the complexity of disbanding an LLC in Texas, it is critical to understand the actions that the LLC should implement in order to appropriately close.
Steps to Dissolve an LLC in Texas
If you choose to officially close your Texas-registered LLC or if the operating agreement gives room for automatic dissolution, you need to understand how and when to disband your LLC. Specific processes should be initiated, and they ought to be submitted to the Texas Secretary of State. Nonetheless, here are steps to take;
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1. The LLC Should Cease Operation
As per Texas law, when you start winding up activities, the LLC must cease operations (aside from any activities that are critical to the dissolution of the company). Instances of winding up activities under the Texas Business Organizations Code involve, but aren’t restricted to, the following:
- Notifying any claimants in writing of the liquidation process.
- The LLC’s property is sold.
- Sorting the surviving liabilities and responsibilities of the LLC, this may include the dispersion of LLC property.
- Allocating leftover LLC property to members in accordance with the regulating articles as well as the certificate of formation.
- Managing outstanding court cases, either filed against the LLC or as a plaintiff in the LLC.
- Any supplemental acts required to dissolve the LLC.
2. Procure a Certificate of Account Status
The Certificate of Account Status is essentially how the Texas Secretary of State’s office affirms an LLC has always been in compliance with all its taxes before it approves for disbandment. The Texas Comptroller is the one who issues the statement.
To obtain the Certificate, complete Form 05-359, which is accessible on the Comptroller’s website. Because the Secretary of State would not acknowledge a Certificate obtained from the Comptroller’s webpage, citizens have 2 alternatives for gaining the form: complete the form online or send the form straight to a Comptroller Field Office.
- If you submitted it online, you should anticipate receiving the Certificate within 4-6 weeks.
- If you submit it at the Field Office, you will be able to leave the building with the Certificate.
3. Apply for Termination Certificate
Following receipt of a Certificate of Account Status from the Comptroller, the next process is to submit a Certificate of Termination application via the Secretary of State’s webpage.
The document can be sent electronically (after creating an account), however, if you prefer to send it by email or fax, you must send two duplicates of the document. Append the Certificate of Account Status to the Certificate of Termination then move on to another phase.
4. Pay the Fees
The Secretary of State bills a processing fee of $40 to dissolve an LLC. When sending documents through the webpage, you will be allowed to pay online at the same time.
Checks will however be directed straight to the Secretary of State, and if payment is by credit card through fax, include Form 807. The following address detail is provided if you are mailing, faxing, or physically conveying the Termination request:
Mail to: P.O. Box 13697, Austin, Texas 78711-3697
Faxed to: (512) 463-5709
Delivered to: James Earl Rudder Office Building
1019 Brazos, Austin, Texas 78701
It normally takes a couple of days for the Secretary of State’s office to reply to your Certificate of Termination request (with the appended Certificate of Account Status As well as the service charge) (a little longer if submitted via mail or fax).
When things are in good enough condition, you will receive documentation affirming the LLC’s discontinuation. Maintain a duplicate of these papers in your archives.
To dissolve your LLC in Texas, forward the concluded Certificate of Termination to the Secretary of State via email, fax, in person, or digitally at SOSDirect Online.
The termination certificate will have to be followed by a certificate of account status showing that every due has been paid and the organization is in full compliance for closure. Your company name can now be picked by another organization when you disintegrate your LLC or corporation.