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Dissolve an LLC in Texas

How to Dissolve an LLC in Texas (5 Easy Steps)

Are you considering dissolving your LLC in Texas? It’s a big decision that can have legal, financial, and tax implications. Don’t worry, we’ve got you covered! In this article, we’ll provide you with all the information you need to make an informed decision about dissolving your LLC in Texas.

From the steps involved in the process, to the documents you’ll need, the cost, and the time it takes, we’ve got all the answers. Plus, we’ll give you some things to consider before making your final decision, and weigh up the pros and cons of dissolving your LLC in Texas. So sit back, relax, and let us guide you through the process of how to dissolve an LLC in Texas.

5 Steps to Dissolve an LLC in Texas

Dissolving an LLC in Texas can occur voluntarily or involuntarily. Voluntary dissolution occurs when the LLC’s members decide to dissolve the LLC, whereas involuntary dissolution occurs when the state dissolves the LLC for failure to comply with statutory requirements.

  1. Review the LLC’s operating agreement: It’s essential to review the LLC’s operating agreement to determine the process for dissolution, the required vote, and the steps for winding up the LLC’s affairs.
  2. Conduct a vote: If the operating agreement doesn’t specify the vote required for dissolution, a vote of two-thirds or more of the members is typically necessary.
  3. File Certificate of Termination with the Secretary of State: Once the vote passes, you need to file a Certificate of Termination with the Texas Secretary of State to dissolve the LLC formally.
  4. Settle any outstanding obligations: The LLC needs to settle any outstanding obligations, such as taxes, debts, or contracts, before dissolving.
  5. Notify relevant parties: The LLC needs to provide notice of its dissolution to creditors, customers, and other relevant parties.

Dissolving an LLC in Texas requires following a specific set of steps, including conducting a vote, filing a Certificate of Termination, settling any outstanding obligations, and notifying relevant parties. If you’re unsure about any of these steps, it’s always a good idea to consult with an experienced attorney to ensure the process goes smoothly.

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Files Needed to Dissolve an LLC in Texas

To dissolve an LLC in Texas, you need to file specific documents with the Texas Secretary of State. The exact paperwork you need to file can vary depending on your LLC’s specific circumstances.

  1. Certificate of Termination: The Certificate of Termination is the primary document you need to file with the Texas Secretary of State to dissolve your LLC. This form includes information such as the LLC’s name, the reason for dissolution, and the effective date of dissolution.
  2. Tax Clearance: If your LLC owes any taxes to the state, you need to obtain tax clearance from the Texas Comptroller of Public Accounts. You need to file a Form 05-359, Request for Certificate of Account Status, to obtain this clearance.
  3. Franchise Tax Forms: If your LLC has a franchise tax account with the Texas Comptroller of Public Accounts, you need to file any necessary franchise tax forms to close the account.
  4. Other Forms: Depending on your LLC’s specific circumstances, you may need to file other forms with the Texas Secretary of State, such as a Certificate of Account Status or a Certificate of Conversion.

To dissolve an LLC in Texas, you typically need to file a Certificate of Termination with the Texas Secretary of State. Depending on your LLC’s specific circumstances, you may also need to obtain tax clearance, file franchise tax forms, or file other documents with the state.

Costs to Dissolve an LLC in Texas

To dissolve an LLC in Texas, you need to file specific paperwork with the Texas Secretary of State. The fees you need to pay to file these documents can vary depending on your LLC’s specific circumstances.

  • Filing Fee: The primary fee you need to pay to dissolve your LLC is the filing fee for the Certificate of Termination. As of April 2023, the fee is $40.
  • Expedited Service Fee: If you need your Certificate of Termination processed quickly, you can pay an expedited service fee. The fee varies depending on how quickly you need the document processed, ranging from $25 for 24-hour service to $100 for 2-hour service.
  • Other Fees: Depending on your LLC’s specific circumstances, you may need to pay other fees to dissolve your LLC. For example, if your LLC owes any taxes to the state, you may need to pay those taxes before filing your Certificate of Termination.

Depending on your LLC’s specific circumstances, you may also need to pay other fees, such as taxes owed to the state.

Bizee (formerly Incfile) is our preferred choice for LLC dissolution because they provide all of the services you need while being transparent with pricing.

How Long Does an LLC Dissolution Take in Texas?

To dissolve an LLC in Texas, you need to file specific paperwork with the Texas Secretary of State. The timeline for dissolving your LLC can vary depending on your LLC’s specific circumstances.

  • Filing Time: After you file your Certificate of Termination with the Texas Secretary of State, it typically takes about 2-3 business days for the document to be processed.
  • Tax Clearance: If your LLC owes any taxes to the state, you need to obtain tax clearance from the Texas Comptroller of Public Accounts. It typically takes about 5-10 business days to obtain tax clearance.
  • Franchise Tax Clearance: If your LLC has a franchise tax account with the Texas Comptroller of Public Accounts, you need to obtain franchise tax clearance before you can dissolve your LLC. It typically takes about 5-10 business days to obtain franchise tax clearance.
  • Final Notice: After the Texas Secretary of State processes your Certificate of Termination, they will send a final notice to your LLC’s registered agent. Your LLC will be officially dissolved 120 days after this final notice is sent.

Dissolving an LLC in Texas typically involves a filing time of about 2-3 business days for the Certificate of Termination to be processed. Depending on your LLC’s specific circumstances, it can take an additional 5-10 business days to obtain tax clearance and/or franchise tax clearance.

Your LLC will be officially dissolved 120 days after the final notice is sent to your LLC’s registered agent. If you’re unsure about the timeline for dissolving your LLC, it’s a good idea to consult with an experienced attorney to ensure a smooth dissolution process.

Things To Consider When Dissolving an LLC in Texas

Before you dissolve your LLC in Texas, there are several important factors to consider. These factors can affect the ease and timeline of the dissolution process, as well as your legal and financial obligations.

  1. Outstanding Obligations: Before you dissolve your LLC, you need to ensure that all outstanding obligations have been satisfied. This includes paying any outstanding debts, taxes, or legal judgments against your LLC.
  2. Contracts and Leases: If your LLC has any outstanding contracts or leases, you need to carefully review these agreements to determine your obligations and potential liability upon dissolution.
  3. Employee and Vendor Obligations: If your LLC has employees or vendors, you need to ensure that all outstanding obligations have been satisfied. This includes paying any outstanding wages, benefits, or vendor bills.
  4. Intellectual Property: If your LLC owns any intellectual property, you need to determine what will happen to these assets upon dissolution. This can include trademarks, patents, or copyrights.
  5. Member Agreements: If your LLC has multiple members, you need to review your member agreements to determine your obligations and potential liability upon dissolution. This can include buyout provisions, distribution of assets, and voting requirements.
  6. Compliance with State Laws: Before you dissolve your LLC, you need to ensure that you comply with all relevant state laws and regulations. This includes filing the necessary paperwork with the Texas Secretary of State and obtaining tax clearance from the Texas Comptroller of Public Accounts.

You should review all outstanding obligations, contracts, and leases, as well as employee and vendor obligations and intellectual property assets. Additionally, you need to review your member agreements and comply with all relevant state laws and regulations.

Pros and Cons of Dissolving an LLC in Texas

Dissolving an LLC in Texas can have both positive and negative consequences, depending on your specific circumstances. It’s important to weigh the pros and cons before making any decisions.

PROSCONS
Avoiding ongoing costs: Dissolving an LLC can help you avoid ongoing costs associated with maintaining your business, such as annual franchise taxes, registered agent fees, and other administrative costs.Legal consequences: Dissolving an LLC can have legal consequences, such as termination of contracts and leases, potential litigation from creditors, and possible personal liability for members if all outstanding obligations are not satisfied.
Liability protection: Once an LLC is dissolved, its members are no longer personally liable for any debts or legal obligations of the LLC.Tax implications: Dissolving an LLC can have tax implications, such as the potential for additional taxes or penalties if all tax obligations are not satisfied.
Simplified decision-making: Dissolving an LLC can simplify decision-making by eliminating the need for member meetings and votes.Loss of assets: Dissolving an LLC can result in the loss of valuable assets, such as intellectual property or real estate, if proper planning is not in place.
Clean break: Dissolving an LLC can provide a clean break for members who want to move on to new ventures or opportunities.Employee and vendor impact: Dissolving an LLC can have a negative impact on employees and vendors, such as potential job loss or loss of business relationships.

Dissolving an LLC in Texas can have both positive and negative consequences, depending on your specific circumstances. It’s important to weigh the pros and cons before making any decisions.

While dissolving an LLC can help you avoid ongoing costs and simplify decision-making, it can also have legal and tax implications, result in loss of assets, and impact employees and vendors. If you’re unsure about whether dissolving your LLC is the right decision, it’s a good idea to consult with an experienced attorney or financial advisor.

Conclusion

In conclusion, dissolving an LLC in Texas is a big decision that requires careful consideration. From the steps involved in the process, to the documents you’ll need, and the cost and time it takes, we’ve provided you with all the information you need to make an informed decision.

Remember to take into account the things to consider before dissolving your LLC, and weigh up the pros and cons we’ve discussed. And if you’re feeling unsure or overwhelmed, don’t hesitate to seek the advice of an experienced attorney or financial advisor. At the end of the day, dissolving an LLC can be a smart move if it’s the right decision for you and your business. So go ahead and take that next step in your entrepreneurial journey, and dissolve your LLC in Texas with confidence!

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Additionally, our guides on registering for taxes, obtaining an EIN, and creating an operating agreement can help you navigate the legal requirements to dissolve an LLC in Texas. For more information and support as you begin this process, be sure to visit our website and take advantage of our comprehensive resources.

Legal Disclaimer: This article contains general legal information, does not constitute professional legal advice for your situation, and should not be interpreted as creating an attorney-client relationship. If you have legal questions, you should seek the advice of an attorney licensed in your jurisdiction.

Recommendations for Dissolving an LLC in Texas

Plan ahead: Before you decide to dissolve your LLC, make sure you have a plan in place for winding down the business, settling any outstanding obligations, and distributing assets. This can help minimize the potential legal and financial consequences of dissolution.
 
Consult with professionals: Consult with an experienced attorney and/or financial advisor who can guide you through the process of dissolving your LLC in Texas. They can help you understand the legal and tax implications, as well as advise you on how to properly notify creditors, shareholders, and other relevant parties.
 
Follow the proper procedure: Make sure to follow the proper procedure for dissolving your LLC in Texas, which includes filing the necessary paperwork with the Texas Secretary of State and meeting any other state requirements. This can help ensure a smooth dissolution process and avoid potential legal issues down the line.
 
Settle all obligations: Before dissolving your LLC, make sure to settle all outstanding obligations, such as taxes, debts, and contracts. This can help protect you and other members from potential liability down the line.
 
Notify relevant parties: Make sure to notify all relevant parties, such as creditors, vendors, employees, and shareholders, of your LLC’s dissolution. This can help ensure a smooth transition and minimize any negative impact on these parties.

Can an LLC be dissolved voluntarily?

Yes, an LLC can be dissolved voluntarily by its members or managers.

What happens to an LLC’s debts when it is dissolved?

Any remaining debts or liabilities of the LLC are typically paid off using the LLC’s remaining assets, and if there are not enough assets to cover the debts, the LLC’s members may be held personally liable.

Can an LLC be dissolved involuntarily?

Yes, an LLC can be dissolved involuntarily by court order if it fails to fulfill certain legal requirements, such as filing annual reports or paying taxes.

What happens to an LLC’s employees when it is dissolved?

Depending on the circumstances, an LLC’s employees may be laid off or transferred to another company if the LLC is sold or merged with another business.

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Hi, I’m Eric Worral, and I Want to help you start a business.

You should know I’m one of those people that sees an obscure stat or quote and I won’t be able to shake it… it just follows me around like a shadow.

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