Business formation paperwork on a desk, how to Dissolve an LLC in Texas

How to Dissolve an LLC in Texas: Certificate of Termination and Tax Clearance

How to Dissolve an LLC in Texas: Certificate of Termination and Tax Clearance

Dissolving a Texas LLC has three parts. Inside the company, the members or managers must approve winding up and the company must settle its debts and distribute what remains. On the government side, the Texas Comptroller of Public Accounts must confirm that the company's taxes are paid, and the Texas Secretary of State must accept a Certificate of Termination. Miss one piece and the filing can be rejected, or the LLC can stay on record with taxes and reports still owed. This guide follows the order that works in practice, with the forms, fees, and agencies for each step.

Texas does not issue or require a general state business license, so there is no state license to surrender. What you do need to close out is the entity itself, its tax accounts with the Comptroller, and any assumed name filing the LLC made.

Informational only. This article is general information, not legal or tax advice. Dissolution touches your company agreement, creditor obligations, and tax filings, and the right steps depend on your facts. Talk with a Texas business attorney and a CPA before you vote to dissolve, especially if the LLC has debt, employees, more than one owner, or an open tax audit.

What You Need Before You Start

Gather these items before you file anything. Missing one usually means a second trip to the Comptroller or the Secretary of State.

  • Your company agreement (operating agreement) and every amendment
  • The LLC's exact legal name and Texas file number, as shown in Secretary of State records
  • A written record of the members' or managers' approval to wind up
  • A list of creditors, open contracts, leases, and unpaid invoices
  • Franchise tax and Public Information Report records for every year the LLC existed
  • Your sales and use tax records and permit number, if the LLC held a permit
  • A Webfile login with the Comptroller, or Form 05-359 for requesting the account status certificate
  • A SOSDirect account if you file online, or a payment method for the $40 filing fee

Make sure you use Form 651 for an LLC. Form 652 is the Certificate of Termination for nonprofits and carries a $5 fee. Filing the wrong form wastes a filing cycle.

Step 1: Approve the Winding Up

Start with the decision, because every later step depends on it. Members or managers must approve winding up the way your company agreement requires. Where the agreement is silent, the Texas Business Organizations Code supplies the default rules, so confirm the approach with an attorney before relying on a default.

Record the approval in writing. A signed written consent or meeting minutes should state the date, who approved, the vote count, and the reason for dissolving. This record matters later if a member disputes the decision, a creditor asks how the company was closed, or your CPA needs it for the final tax year.

Read the agreement for three things: the vote threshold, any notice period owners must receive, and the order of distributions. Some agreements require a supermajority or a specific sequence for paying creditors and then members. Do not assume one manager can approve dissolution alone unless the agreement says so.

Step 2: Wind Up Affairs and Pay Debts

Winding up means closing the business in an orderly way, not just stopping operations. Typical work includes:

  • Collecting receivables and selling or transferring company assets
  • Notifying customers, vendors, landlords, and lenders that the company is closing
  • Paying known debts and obligations, including taxes, or setting aside funds for them
  • Terminating or assigning contracts, leases, and vendor accounts
  • Distributing any remaining property to members as the agreement and law require

Keep a closing file with a dated entry for every payment, notice, and distribution. Texas does not require a newspaper publication as part of this process. That does not end creditor exposure, though. A creditor you never notified may still have claims against the company or the people who received distributions, so review every debt and contract before you distribute anything.

Step 3: File the Final Franchise Tax Report and Pay Any Tax

The Texas franchise tax is a privilege tax administered by the Comptroller. Texas has no state personal income tax and levies no corporate income tax, so for an LLC the franchise tax report is the filing that matters most at closing. You must file the final franchise tax report in the year of termination and pay any tax due.

Whether you owe tax depends on total revenue. For the 2026 and 2027 report years, the no tax due threshold is $2,650,000. Entities at or below that total revenue owe no tax, but they must still file a Public Information Report. Above the threshold, the rates are:

Entity type or revenue levelRate
Retail and wholesale0.375 percent
All other entities0.75 percent
EZ Computation rate, entities under $20 million in total revenue0.331 percent

Check the report year, your total revenue, and which rate applies with the Comptroller at comptroller.texas.gov/taxes before you estimate anything. If your final period falls near a report year boundary, ask the Comptroller which threshold and rate apply. Pay any amount due when you file, and keep the confirmation.

Step 4: Close the Sales Tax Permit

If the LLC held a Texas sales and use tax permit, close it with the Comptroller. Most businesses selling taxable goods or services need that permit, and the Comptroller issues it at no charge. Closing it stops the state from expecting returns after the business is gone. File any final sales tax returns for sales made before closing, and confirm the current closure method on the permit page at comptroller.texas.gov/taxes/permit.

Do not skip this step because the business has stopped selling. An open permit can keep generating filing obligations, and the Comptroller will not issue a clean account status while taxes are still owed.

Step 5: File the Final Public Information Report

The Public Information Report (PIR) is filed with the Comptroller, not the Secretary of State. It is due May 15 each year alongside the franchise tax report, and the final PIR goes in with the final franchise tax report. An entity under the no tax due threshold still files the PIR, so a zero-tax LLC does not skip it. Confirm the final filing requirements with the Comptroller before you submit.

Step 6: Request a Comptroller Certificate of Account Status

This is the document that makes the Secretary of State filing possible. Form 651 must attach a Comptroller Certificate of Account Status (Form 05-305). The certificate shows that all Title 2 Tax Code taxes have been paid and must be valid through the effective date of the termination.

Request it through Webfile or on Form 05-359. Time the request after the franchise report and sales tax account are settled, and make sure it will still be valid on the date you plan to file. A certificate requested too early can lapse before you file, which forces a second request.

Important: Do not attach a printout of the Franchise Tax Account Status page. The Secretary of State rejects it. Only the Certificate of Account Status (Form 05-305) meets this requirement.

Step 7: File the Certificate of Termination (Form 651)

Form 651 is the Certificate of Termination for an LLC. It is filed with the Texas Secretary of State with a $40 filing fee. The form lists the governing persons of the LLC and the event that required winding up, such as a vote of the members. Attach the Form 05-305 certificate, valid through the effective date.

You can file online through SOSDirect at direct.sos.state.tx.us, or by mail or hand delivery. The Secretary of State does not publish a guaranteed standard turnaround. Electronic filing is the fastest route. Mailed or hand-delivered documents typically take at least one business day just to be entered and show as Received.

If you need a guaranteed date, Texas Express expedite is the only paid option that provides one. Standard Expedite costs $50 per document and is typically processed in two to three business days. Next Day Expedite costs $500 per document and is processed by close of business the next business day for filings received by 12:00 p.m. Same Day Expedite costs $750 per document and is processed by close of business the same day for filings received by 12:00 p.m. Expedite fees come on top of the $40 filing fee. Confirm current options with the Secretary of State before you pay.

Expected Results

Once the Secretary of State accepts Form 651, the LLC's record should reflect the termination. You can confirm this in the business search at sos.state.tx.us/corp/searches. Treat that record as the formal end of the entity, not the end of every obligation.

Some matters may continue after termination. Creditor claims may still arrive, a late tax question may still come up from the Comptroller, and a bank or landlord may still need documents. Keep your closing file, tax confirmations, and the accepted Form 651 for as long as your attorney or CPA recommends.

Common Mistakes to Avoid

  • Filing Form 651 before the taxes are cleared. The account status certificate depends on every tax being paid, so the filing stalls or fails if you go out of order.
  • Attaching a printout of the Franchise Tax Account Status page. The Secretary of State rejects it. You need Form 05-305.
  • Requesting the account status too early. If the certificate expires before the effective date, you have to request it again.
  • Using the nonprofit form. Form 652 is for nonprofits at $5. An LLC files Form 651 at $40.
  • Leaving the sales tax permit open. Returns can keep coming due, and the account will not clear.
  • Assuming a zero-tax LLC has no filings. Entities under the $2,650,000 threshold still file the Public Information Report.
  • Dropping the registered agent too early. A domestic LLC must continuously maintain a registered agent and registered office in Texas, so keep that service active until the termination is accepted.
  • Skipping the vote or using the wrong threshold. A dissolution approved under the wrong rule can be challenged by a member or creditor.
  • Forgetting the assumed name. If the LLC filed an assumed name certificate (Form 503, $25), confirm with the Secretary of State what happens to it after termination.

Tips That Save Time

  • Start the tax steps first. Most delays come from the Comptroller accounts, not the Secretary of State filing.
  • Request the account status certificate in the same week you plan to file Form 651, so it stays valid through the effective date.
  • Keep a single closing folder with every notice, payment, and confirmation number.
  • Use SOSDirect for the filing if you want the fastest processing. Use expedite only if a bank, buyer, or deadline needs a guaranteed date.
  • Check the Secretary of State business search after filing to confirm the record shows the termination.

When to Get Professional Help

Handle a simple, debt-free LLC with one owner and a clean tax history on your own if you are comfortable with the steps above. Bring in professionals when the company has more than one owner who disagrees, unpaid debt, employees and payroll tax history, real estate, pending litigation, or an open audit. A Texas business attorney can review the company agreement and creditor exposure, and a CPA can confirm the final franchise tax position. If you need free guidance on the business side, the Texas Small Business Development Center Network at sbdctexas.org offers advising.

Official Texas Resources

This article is informational, not legal or tax advice. Fees, thresholds, and processing times can change, so confirm each figure on the agency page before you file.

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