How to Dissolve an LLC in Texas

What Dissolving a Texas LLC Means

Texas law generally describes the process as winding up and termination. A decision or event requiring winding up starts the closeout process. The LLC does not simply disappear when members decide to close it; the company must complete the winding-up work required by Chapter 11 of the Texas Business Organizations Code before filing its Certificate of Termination.

After winding up is completed, a domestic filing entity files a Certificate of Termination under BOC § 11.101. For a Texas LLC, the Secretary of State provides Form 651.

Before You File: Approve the Voluntary Winding Up

Review the LLC’s company agreement / operating agreement and certificate of formation first. Under Texas BOC § 101.552, the statutory default for a voluntary winding up is a majority vote of all members. If the LLC has no members, the statute uses a majority vote of all managers.

Keep a written resolution, consent, meeting record, or other company record showing the approval and the event requiring winding up. Form 651 requires the filing to identify the nature of the event that required winding up.

Wind Up the Texas LLC Before Filing Form 651

During winding up, the LLC should stop ordinary ongoing business except as reasonably necessary to close its affairs. Chapter 11 allows the company to collect and dispose of property, prosecute or defend proceedings, settle matters, and perform other acts appropriate to winding up.

Pay Creditors and Handle Liabilities Before Owner Distributions

Texas BOC § 11.053 requires an entity winding up to use its property to discharge, or make adequate provision for the discharge of, its liabilities and obligations. Only after liabilities and obligations have been discharged or adequately provided for should the remaining property be distributed to owners according to their rights and interests.

Get the Texas Comptroller Termination Certificate

This is the most important Texas-specific prerequisite. Under BOC § 11.101 and the Form 651 instructions, a taxable entity must submit a Comptroller certificate showing that taxes administered under Title 2 of the Texas Tax Code have been satisfied.

The Comptroller calls this the Certificate of Account Status to Terminate Existence or Registration. Before it can be issued, the entity must file outstanding annual franchise tax and Public/Ownership Information Reports, file any required final franchise tax report, pay tax, penalty and interest due, and close other Comptroller tax accounts.

File Form 651 — Certificate of Termination

After winding up is complete and the required Comptroller certificate is ready, file Form 651 — Certificate of Termination of a Domestic Entity with the Texas Secretary of State. The current filing fee is $40.

The filing identifies the entity, governing persons, the event requiring winding up, and confirms completion of the winding-up process. For an LLC, the form is signed by an authorized manager if manager-managed or an authorized managing member if member-managed.

Texas permits termination filings through Secretary of State web submission systems such as SOSDirect/SOSUpload where available. Paper Form 651 instructions also allow submission by mail or delivery and instruct paper filers to submit the completed form in duplicate with the fee.

Effective date: Form 651 is normally effective when accepted and filed, but it may provide a specified delayed date or date/time no more than 90 days after the instrument is signed. Texas law also permits a properly described future event or fact subject to the statutory 90-day process.

Complete Texas Tax and Employer Closeout

The Comptroller termination process requires more than the franchise tax account alone. The state instructs terminating entities to file, pay and close all other tax accounts administered by the Comptroller before requesting the termination certificate. Use Webfile or the appropriate Comptroller account process for the taxes the LLC actually had.

If the LLC had Texas employees, complete final payroll and unemployment-tax reporting and update or close the employer account through the Texas Workforce Commission’s Unemployment Tax Services. Close state and local licenses, permits and regulated-profession registrations separately.

What Happens After Texas Files the Certificate of Termination

When the Certificate of Termination becomes effective, the LLC’s legal existence is terminated, subject to Texas statutory provisions that preserve certain post-termination claims, liabilities and proceedings. Keep the filed Form 651, Comptroller certificate, member approval, final tax reports, creditor records and closing accounting with the company’s permanent records.

Close the Remaining Business Accounts

• Texas Comptroller: confirm all relevant tax accounts and final reports are closed or completed.
• TWC employer account: finish unemployment-tax and wage reporting if the LLC had employees.
• Licenses and permits: cancel state, county, city and professional registrations separately.
• Federal EIN use: follow the IRS business-account closeout process where appropriate.
• Banking and contracts: close accounts only after outstanding checks, refunds and liabilities are resolved.

Common Texas LLC Termination Mistakes

• Filing Form 651 before winding up is complete.
• Using the ordinary franchise-tax account-status printout instead of the specific termination certificate.
• Forgetting outstanding Public Information or Ownership Information reports and any required final franchise tax report.
• Distributing assets before debts and liabilities are discharged or adequately provided for.
• Assuming the SOS termination automatically closes all Comptroller, TWC, license, EIN or banking accounts.
• Using a member-vote threshold that conflicts with the company agreement or the applicable Texas statutory rule.

About the Author

Ahmad Adil

Ahmad Adil is the founder and CEO of LLC School. Use the official filing and tax-account sources linked in this guide for your LLC’s closeout. Requirements depend on the entity’s status and circumstances.

About Ahmad Adil →