How to Dissolve an LLC in Texas

To dissolve LLC Texas companies, owners have to follow specific steps. Dissolving an LLC in Texas may be done for one of several reasons. 

I can help you with winding up your limited liability company, or LLC in Texas. You can easily email me at sam@mollaeilaw.com for all the details and information.

While an LLC is usually established for an unlimited time, sometimes the business needs to be dissolved or formally terminated to avoid paying further taxes or filing annual reports. Otherwise, the LLC owner can be sued.

Why Dissolve LLC Texas Companies?

The decision to dissolve LLC Texas companies may be based on the following:

• A reduced cash flow
• Problems with managing the business
• Poor accounting practices
• A failure with respect to succession planning
• Disagreements between partners
• A defective product or products

Another reason for dissolution may involve creating a new entity. In some instances, the owners of the LLC may believe forming an entity, such as a corporation, maybe more viable in realizing a company’s goals.

In other cases, shareholders may wish to direct the business down another path or set up the business for a new reason. 

What are The Types of LLC Texas Dissolutions?

1. Judicial LLC Texas Dissolution

2. Administrative LLC Texas Dissolution

3. Voluntary LLC Texas Dissolution

An LLC Texas dissolution may be judicial, administrative, or voluntary. The listing below further explains each type of dissolution.

1. Judicial LLC Texas Dissolution

This type of dissolution happens when the court orders a dissolution after a company does not comply with Texas law or fails to pay its taxes. It can also occur, which happens more often when a lawsuit is submitted by unhappy LLC members who wish to break company ties.

2. Administrative LLC Texas Dissolution

This type of dissolution happens when the Secretary of State’s office imposes the activity. Again, a dissolution results when a company fails to comply with Texas law or does not file an annual report.

The Secretary of State (SOS) may also dissolve a business for other reasons too – all which usually have to do with an administrative infraction.

3. Voluntary LLC Texas Dissolution

This dissolution happens when members choose willingly to close their company. This may occur when one of the members dies, or company members vote to dissolve the business.

Any activities that lead to dissolution often are written in the operating agreement of the LLC. The reasons for dissolution may be agreed upon in the LLC’s articles of the organization when it is created as well.

If you want to dissolve your LLC to create a corporation, I will help you with the process for Texas. You can learn more about winding down LLC activities and forming a corporation when you contact me. Just shoot me an email at any time at sam@mollaeilaw.com.

How to Dissolve LLC Texas Companies

If you want to know exactly how to dissolve LLC Texas companies, you will definitely need my legal assistance. The process, in Texas, is quite involved, and you must be prepared to follow certain steps for winding up and terminating your company.

In fact, Texas law does not include a separate LLC Act, such as other states. As of January 1, 2010, limited liability companies (LLCs) in Texas are primarily overseen by the Texas Business Organization Code – the same legislation that oversees corporations, partnerships, and nonprofits in Texas.

Again, you will need a knowledgeable attorney like myself to help you through the dissolution. You can direct any inquiries to me at sam@mollaeilaw.com. 

Officially Closing a Texas LLC

To officially close your LLC in Texas, you will need to follow a series of tasks – all which are known, again, as winding-up a business. Before you voluntarily wind up your LLC, you need to review certain company documents, such as the operating agreement and certificate of formation. 

One of these two pieces of paperwork will feature a section that contains the rules for dissolving a company or what to do when winding up a business. One required action may be to obtain a vote of LLC members on beginning the winding-up process, including the percentage of members needed to vote favorably for dissolution. 

You need to follow the procedural tasks that are part of this process, such as establishing a certain time to meet and vote. Besides reviewing the dissolution mandates featured in the operating agreement or certificate of organization, the BOC in Texas allows for an alternative option that would trigger winding up – a majority vote by LLC members.

Regardless of how you begin the winding-up process, you should record the decision to dissolve in your company’s official minutes or via a consent form that has been drafted and written.

When You Dissolve LLC Texas Businesses, What are the Winding Up Activities?

When you dissolve LLC Texas businesses, you need to follow a specific format for winding up the business. You will not perform business activities, except those tasks that involve winding up. 

The Winding Up Procedure

Following is a listing of what you need to do. I can also help you get through the steps without too much difficulty. Address any inquiries to me at sam@mollaeilaw.com today.

What Tasks are Part of Winding Up

The BOC requires that businesses proceed as follows:

• Send a written notice of winding up to individual claimant against the LLC business.
• Collect and sell the LLC property so the property cannot be allocated to LLC members.
• Apply and distribute the LLC property for discharge, or make a sufficient provision along these lines. This includes obligations and liabilities owed to members of the LLC, besides distributions.
• After discharging or providing a discharge of LLC obligations and liabilities, allocating the remaining LLC property to LLC members in accordance with their interests and rights.
• Prosecuting or defending any related lawsuits.
• Performing any other task need to wind up the LLC and its operations.

Once more, winding up will require reviewing the operating agreement to further review each member’s respective rights and interests in the company. Always seek assistance from a qualified attorney, like me, to ensure LLC dissolution success. My email again is sam@mollaeilaw.com. 

After Winding Up – What Happens Next?

The following steps need to be taken after the winding-up tasks are complete.

Obtain a Certificate of Account Status

Obtain a Certificate of Account Status from the state’s Comptroller of Public Accounts (CPA) to show all the required taxes have been paid for your Texas LLC. This certificate also shows that you are in good standing so termination can commence.

You cannot terminate a Texas LLC unless you obtain this tax certificate.

To receive the tax certificate, you must file a Certificate of Account Status (Form 05-359) through the CPA. You can find this information on the Texas CPA website. 

It takes 4 to 6 weeks for the CPA to process a certificate of account status. Once you receive this certificate, you need to attach it to the certificate of termination. 

One note to remember – For federal tax purposes, you need to check the “final return” box on the IRS form 1065 if your LLC is listed as a partnership. This form should be checked on IRS form 1120 if the LLC was classified as a corporation.

Obtaining a Certificate of Termination

After receiving your certificate of account status form the CPA, you need to submit a certificate of termination with the SOS, or Secretary of State. This certificate must include, via the BOC, the following details:

• The LLC’s name
• The contact information and name of at least one of the LLC managers if the LLC was manager-managed, or the contact information and names of each of the managing members if the LLC was member-managed.
• The file number associated with winding up the LLC.
• A statement that shows you LLC complied with the BOC provisions established for the winding-up process.

Per the Texas SOS, your certificate of termination slip includes an official effective date for the certificate. This date should be no more than 90 days old from the date of signing.

It may also be the filing date or the date of the occurrence of a certain future event. 

SOS instructions indicate that the form should be signed by either an authorized managing member or authorized manager, depending on whether the LLC is member-managed or manager-managed. 

To file the certificate, you must pay a filing fee, which covers filing the document in three to five business days. Your business name will, again, become available for use by other companies once the certificate of termination if filed and processed.

What Do You Think?

So, what do you think about the steps required to dissolve LLC Texas companies? They are quite comprehensive. That is why you need my guidance.

I am always here to help with any type of business dissolution. Email me today at sam@mollaeilaw.com for all the details.