What Is Texas Dissolution?
A business entity that has decided to end all activities undergoes the process of dissolution. It means that the company will deal with all its obligations and that it will close its operations for good.
Why Does A Company Dissolve?
Why do companies need to dissolve? – A business owner creates a company in Texas with the approval of the state. To do this, the company has to file paperwork and go through the process the state requires. Likewise, a company has to inform the state that it will no longer conduct business and will not be liable for filings and fees through the submission of formal paperwork.
Who makes the decision to dissolve? – The formation documents of your company may have a provision that will guide you on what to do to dissolve the business. Generally, LLCs require the vote of members. Corporations need the approval of the board of directors and shareholders.
How long does it take to dissolve a business? – The whole process includes a variety of tasks. Thus, it may take some time for a company to finish everything. A business entity may have to spend weeks taking care of all the steps. As for the state, it may take 3-5 days to process necessary documents. The Comptroller’s Office can take up to 4-6 weeks.
What Happens If Your Company Does Not Formally Dissolve?
Your Texas business entity continues to exist until it dissolves formally. Thus, it will still have to file annual franchise tax reports. Additionally, your Texas company will also remain vulnerable to claims and penalties.
Steps To Dissolve Your Business
1. File Articles of Dissolution with the state – The state uses only one form for all dissolution filings. A Texas company has to submit a completed Form 651 Certificate of Termination of a Domestic Entity in duplicate. You have to file it with the Secretary of State by mail, fax, in person, or online. Submit it along with the company’s tax clearance certificate.
2. Remove all liabilities and obligations – Under Texas law, a company that is applying for dissolution will have to stop carrying on the business. It will continue to exist only to wind up. Your company may appoint one or more members or officers to handle the task. During this step, you have to liquidate all the company’s assets and settle all its obligations. If your company has remaining assets after dealing with its liabilities, you may distribute them to members and shareholders according to rights and interests.
3. Give notice to any claimants – Send a written notice to the people who have claims against the company. Notify them about the dissolution and provide information on how they can submit their claims, such as information on where they can send the claims and the deadline for submission.
4. Tax clearance – Texas requires business entities to submit a tax clearance certificate, which is also known as the Certificate of Account Status, when they file for dissolution. You can get one using Form 05-359 Request for Certificate of Account Status to Terminate a Taxable Entity’s Existence in Texas. You can get the form from the Comptroller’s office.
5. Close all bank accounts, credit lines, permits, and licenses – If there are bank accounts and credit lines under the name of the company, close them. Leaving these open may also leave you vulnerable to company liabilities and obligations that could lead to legal issues. Your company may have also obtained business licenses and permits. Cancel all of them to protect yourself from possible fiscal obligations.
How DoMyLLC can assist with streamlining the process
After deciding to close the business, an owner may want to leave that chapter behind and move on. However, the state requires business entities to go through the Texas dissolution process. If you need guidance in handling the tasks, you can rely on our team of experts. You may also opt to leave the filing to us. We offer personalized solutions. This way, you can be sure that the service you are getting fits the needs of your Texas company. Contact us now and find out how we can simplify the process for you.
Texas Dissolution FAQs
The filing fee to dissolve a company in Texas is $40.
Yes, tax clearance is among the requirements in Texas. Your company will have to submit it along the completed Certificate of Termination form. It is known as the Certificate of Account Status.
The processing time of the Certificate of Termination may vary, depending on the workload of the staff. Normally, it takes the Secretary of State 3-5 days to finish processing the documents. However, it may take 4-6 weeks before the Comptroller’s Office finishes processing your Certificate of Account Status and for you to receive it.
The names of business entities in Texas are immediately available for use of another entity as soon as the state finishes processing the Certificate of Termination.
Texas Business Resources:
Texas Office of Secretary of State
Phone Number:
(512) 463-5555
Address:
Texas Secretary of State
PO Box 13697
Austin, TX 78711