Texas LLC dissolution with the Texas Department of State
HOW TO DISSOLVE A TEXAS LIMITED LIABILITY COMPANY
How do you dissolve a Texas Limited Liability Company?
To dissolve your LLC in Texas, you submit the completed Certificate of Termination of a Domestic Entity (Form 651) in duplicate to the Secretary of State by mail, fax, in person or at SOSDirect Online.
The certificate of termination must be accompanied by a certificate of account status indicating that all taxes have been paid and the entity is in good standing for purposes of termination.
Is there a filing fee to dissolve or cancel a Texas LLC?
To dissolve your Texas Limited Liability Company, there is a $40 filing fee required.
Do you need a Department of Revenue Tax Clearance before the Texas Department of State will accept your dissolution?
Yes. Certificates of Termination must be accompanied by a tax clearance called a certificate of account status.
How do you get a tax clearance certificate in Texas?
You need to begin with Form 05-359, Request for Certificate of Account Status to Terminate a Taxable Entity’s Existence in Texas, which is obtained directly from the Comptroller’s office. Follow this link to find more instructions and download the form:
You can find more information about this process at http://www.franchisetax.tx.gov.
If you are not sure if your business is current with your tax requirements, call the Comptroller at (800) 252-1381 or (512) 463-4600.
Send your request to:
Texas Comptroller of Public Accounts
P.O. Box 149348
Austin, TX 78714-9348
How long does it take the State of Texas to process the filing?
Certificates of termination processing time could vary but in most cases it is 3-5 days. The hard work is done at the Texas Comptroller’s office. A form 05-359, Request for Certificate of Account Status, takes 4-6 weeks to process and receive your tax clearance.
How long before someone can take your business name?
Your business name can be taken by another entity immediately once your certificate of termination is processed or immediately upon administrative termination by the Secretary of State. You can be administratively terminated for tax violations or for failing to maintain a registered agent.
What is the penalty if you do not dissolve properly and just don’t file your annual reports?
Texas has an annual Texas Franchise Tax Report (Form 05-158-A) that entities must file instead of a corporate annual report. Once this annual franchise tax report is 45 days past due the entity losses its right to transact business in Texas, and after 120 days its registration is forfeited. A 5% penalty is imposed immediately once the franchise tax report is delinquent, and another 5% penalty is imposed after 30 days. If taxes and penalties and reports become 60 days delinquent, interest begins to accrue at 1% over the prime rate.
‘Upon the forfeiture of the right to transact business, the officers and directors of the entity become personally liable for each debt of the entity that is created or incurred in this state after the due date of the report and/or tax and before the privileges are restored. Texas Tax Code Section 171.255.’
(page 6, chapter FORFEITURE, 2011 Texas Franchise Tax Report Information and Instructions).
The following booklet is found at this link http://www.window.state.tx.us/taxinfo/franchise/index.html under Filing Resources, Form Instructions.
The Texas Secretary of State will forfeit your business registration if your franchise tax report is not submitted and taxes paid 120 days after the due date. The Comptroller’s Office has a detailed booklet available in pdf format at http://www.window.state.tx.us/taxinfo/taxforms/05-forms.html with information and instructions regarding the 2011 Texas Franchise Tax Report.
The Texas Comptroller can assist you with your franchise tax report by email at firstname.lastname@example.org or by calling (800) 252-1381.
What are the late fees and penalties to re-register if your registration is terminated?
Texas franchise tax is directly linked to your company’s right to transact business in Texas. Delinquent taxes accrue interest beginning 60 days after the date the report and tax payment is due. The interest rate to be charged is the prime rate plus 1%. There is a 5% penalty imposed the day after your due date and another 5% penalty 30 days later. To re-register after your business is terminated for tax reasons, you will have to pay all tax, penalties and interest that have continued to accrue and then get a tax clearance letter from the Texas Comptroller verifying that all tax liability is paid. Contact the Comptroller for help in complying with unpaid taxes, penalties and interest, and obtaining a tax clearance letter at (512) 463-4600 or by email at email@example.com. You will also have to file all delinquent franchise tax reports.
If your business registration is revoked by the state for not having a registered agent, there is no penalty for re-registering. You just have to retain a Texas registered agent and submit the proper forms and fees.