Have you opted to close down your Texas LLC (limited liability company)? It’s important to note that the process involves various tasks; with the most important ones involving winding up and termination. The winding-up tasks include sending a written notice of the dissolution to shareholders, selling your LLC property, and defending any lawsuits.
Texas state laws require all business entities to follow a formal dissolution process, which mainly involves getting a tax clearance and the certification of termination. But what does the process involve? Is it different for domestic and local businesses? This guide will answer all your troubling questions about dissolving a Texas LLC.
How Long Does It Take to Close a Texas LLC?
The whole process generally takes around 2-3 months, but it can be longer depending on the complexity of the case.
The length of time it takes to close an LLC in Texas can vary, but typically the process of dissolving an LLC in Texas involves filing articles of dissolution with the Texas Secretary of State
Are There Any Specific Requirements for Dissolving an LLC in Texas Regarding Taxes?
Yes, according to the Texas Business Organizations Code, before dissolving an LLC in Texas, you will be required to present evidence that all state taxes have been paid. The Texas Comptroller of Public Accounts office issues a certificate of account status, which confirms that the LLC has paid all state taxes and has no outstanding tax liabilities. This certificate is mandatory to be presented before the Secretary of State before the LLC can end its existence. The form to be used for this purpose is the Comptroller’s Form 05-359, Certificate of Account Status.
What Does Dissolving an LLC Mean?
Dissolution refers to the official process of permanently terminating your business. It’s an essential process that requires you to file critical Texas LLC dissolution documentation, for instance, a Certificate of Termination. After that, you need to submit it to the Secretary of State.
You are then required to settle any liabilities, liquidate your assets, and send legal notices to individuals who contributed to your company. Failure to complete these steps makes you responsible for your Texas LLC’s unsettled liabilities or debts. Let’s now discuss the steps involved in carrying out this process in Texas.
How To Dissolve a Domestic LLC in Texas
Dissolving a domestic Texas LLC is simple as the process involves filing a domestic business’ Certificate of Termination. The information you need to provide in this form includes:
- Name of LLC
- Entity type
- Date of entity formation
- Business file number
- Names and addresses of governing persons
- Nature of the cause for dissolution
- Effective dissolution date
- Signature of the company’s authorized representative
Most importantly, you must attach a tax clearance certificate provided by the Texas Comptroller. After filling out this form, you need to settle a filing fee of $40 payable to the Texas Secretary of State. Finally, mail your check together with two signed copies of the Certificate of Termination to:
Secretary of State
P.O. Box 13697
Austin, Texas 78711-3697
The Secretary of State’s office will take 3-5 working days to process your Texas LLC dissolution documents. However, the overall dissolution process for a domestic LLC in Texas will take about 6-7 weeks.
How To Dissolve a Foreign Limited Liability Company in Texas
Do you want to dissolve a foreign limited liability company qualified to operate within Texas? You will need to file a Certificate of Withdrawal of Registration (Form 608) in duplicate. It’s a two-page document that requires you to provide the following information:
- Name of LLC
- Entity type
- Date of registration by the Secretary of State
- Business file number
- Principal office’s address
- Additional addresses for possible future processes
- Effective filing/dissolution date
- Attached tax clearance certificate
- Name and signature of the authorized person to finalize the filing
Like the Certificate of Termination, you’ll need to pay a Certificate of Withdrawal filing fee of $15 for your foreign entity. Besides, send two copies of the signed certificate of withdrawal of registration forms to this address:
Secretary of State
P.O. Box 13697
Austin, Texas 78711-3697
Your filing will take about 3-5 working days to get processed. If you’ve just applied for the tax clearance certificate, you may have to wait for 4-6 weeks to get one.
What Else Should You Know About Texas LLC Dissolution?
It’s important to understand that once the dissolution process ends, any Texas entity can legally claim your business name. Therefore, ensure you terminate your limited liability company only if you’re sure of never conducting business under that company.
Besides, Texas may administratively dissolve your LLC because of different scenarios, for instance, failing to submit your yearly franchise tax report for over 45 days past the due date. Failing to file your tax reports results in the secretary of State initiating an administrative dissolution of your entity. The same consequences apply if you don’t operate as a registered agent.
In case of an administrative LLC dissolution, you can apply for reinstatement. The state imposes fines at interest rates ranging from 0.331% to 0.75% for every unpaid tax report. That means you need to settle these fees before filling out an Application for Reinstatement. Regardless of your business type, completing these steps is pretty difficult. It is advisable not to dissolve your Texas LLC unless you don’t plan on transacting with the company in the state ever again.
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