You must follow the correct procedure if you intend to dissolve your Texas LLC for whatever reason. Terminating an LLC entails the cancellation of the entity’s legal existence, while dissolving an LLC entails officially closing your company and putting an end to its operations. Although these words are frequently used synonymously in Texas, the law gives them distinct meanings.
Step 1: Convene a meeting and cast a vote to dissolve
The members of the LLC must first convene and decide whether to dissolve the firm in the first phase. Typically, as stated in the operating agreement of the LLC, this calls for a majority vote of the members. Managers of the LLC may participate in the decision-making process if there are any.
Articles of Dissolution must be filed with the State in Step 2. Articles of Dissolution must be submitted to the Texas Secretary of State’s office following the vote. You can submit this via mail or online using the SOSDirect system. The name of the LLC, the date of dissolution, and a declaration that the members or managers approved the dissolution must all be included in the articles. Additionally, a $40 filing fee is required.
Step 3: Notify Debtors and Pay Off Debts You must notify your LLC’s creditors and settle any unpaid debts or obligations when the state accepts your Articles of Dissolution. Included in this are any debts, leases, or agreements that the LLC has signed.
Step 4: Resign from any licenses, permits, or registrations Finally, you must revoke any permissions, registrations, or licenses the LLC has obtained from federal, state, or municipal governments. Your Texas franchise tax account as well as any regional or local business licenses must be canceled in this process.
As was already mentioned, in Texas law, dissolution and termination have different meanings. Termination entails the end of the LLC’s operations and the winding up of its affairs, whereas dissolution refers to the process of doing so. After the LLC has been dissolved, a separate procedure must be followed to end the LLC’s existence. This step requires submitting a Certificate of Termination to the Secretary of State.
In Texas, ending a partnership is done in a manner akin to ending an LLC. Partners must hold a meeting and vote on dissolution before they can settle any outstanding obligations, file a Certificate of Termination with the Secretary of State, and revoke any licenses or permissions they may have obtained from federal, state, or municipal authorities.
A Certificate of Termination is a legal document that ends an LLC or partnership’s ability to transact business in Texas. It must be submitted to the Secretary of State’s office upon the dissolution of the LLC and payment of all debts and obligations.
If a Texas LLC fails to submit an annual franchise tax report or pay its franchise tax for two years in a row, it may have its existence forfeited. As a result, the LLC’s certificate of establishment is revoked, and it is no longer permitted to operate legally in Texas. The LLC must submit all unfiled reports and pay all unpaid taxes, fines, and interest in order to recover its existence.