How to Dissolve (Close) an LLC in Texas

If you have a limited liability company (LLC) in Texas, you may need to shut down the business at some point. Maybe you’ve started another company or decided to relocate to another state — whatever the reason, you’ll need to follow the somewhat complicated LLC dissolution process. 

If done incorrectly, you’ll still be responsible for annual reports and fees and could face additional penalties. Lucky for you, this handy guide explains how to dissolve an LLC in Texas. 

Properly shutting down an LLC involves several crucial steps, as detailed below.  

1. Vote for Dissolution

LLC owners, known as members, must vote to dissolve the LLC. Hopefully, you have an operating agreement that details the process to do so. If not, Texas law does not have default rules for dissolution. Instead, it relies on the Texas Business Organization Code, which says that a majority vote of members is required for dissolution. Because the laws are vague, it’s recommended that you have an attorney’s assistance during the dissolution process. 

Once you’ve followed the procedure, draft a resolution to dissolve the LLC, which you’ll keep in your records. 

2. Cancel Business Licenses and Permits

If you were required to get licenses and permits for your business, you’d need to contact the issuing agencies to cancel them so that you’re not charged renewal fees. If you have any outstanding fees, you’ll likely need to pay them before you are allowed to cancel.

3. Notify Creditors

If you owe money to any creditors, you’ll need to notify them in writing of the dissolution and give them detailed instructions on how to file any claims for the outstanding debt. Texas law on handling claims is vague, so it’s wise to have an attorney’s assistance.

In Texas, claims must be settled before you formally dissolve your LLC with the state.

4. Notify Tax Departments

Notify relevant tax authorities of the dissolution and pay any outstanding taxes due.

5. Cancel Contracts and Settle Financial Obligations

If you have contracts with vendors, lessors, or any other outstanding financial obligations, you’ll need to ensure all your obligations are fulfilled, and all contracts are canceled. 

6. Distribute Assets to Members

If the LLC has any assets remaining in any form after all financial obligations have been settled, they must be distributed to members based on LLC ownership percentages. If the assets are equipment, property, or other non-cash assets, they’ll need to be sold first so distributions can be made in cash. 

7. File the Dissolution Papers with Texas

In Texas; the process to officially dissolve your LLC is to file a certificate of termination. First, download the form and fill it out.

Next, mail two copies of the completed form, along with the filing fee and certificate of account status, to:

P.O. Box 13697 
Austin, Texas 78711-3697

The certificate of account status, which states that all taxes have been paid, must accompany the certificate of termination.

The fee for filing dissolution papers in Texas is $40.

In Closing

Regardless of the reason, LLC dissolution must be done right to avoid legal issues and financial penalties. It’s highly recommended that you employ the services of an attorney to ensure everything is done correctly and all bases are covered.