When you are ready to stop doing business, you cannot simply stop operations of your limited liability company (LLC) and walk away. Instead, there are many requirements for dissolution of an LLC under the law. Many states have a specific LLC Act, however, Texas does not. Instead, you must comply with laws in the Texas Business Organization Code (BOC). These laws can be complex and it is always advisable to speak with an attorney who is thoroughly familiar with dissolution requirements under the BOC.
If you plan to shut down your LLC, you must start a process commonly called “winding up.” The BOC sets out certain events that trigger a mandatory winding up process, though you can also engage in winding up voluntarily. For guidance on the specific steps of winding up your LLC, you should first look to the organizational documents of your company, including a certificate of formation and operating agreement. If these documents were properly drafted, they should address how the LLC should be dissolved. Often, this requires a majority vote of the LLC members.
Winding up involves many tasks, including:
- Notifying any claimants against the business of the winding up
- Defending or prosecuting any LLC legal claims
- Taking inventory of all LLC property
- Applying LLC property to satisfy any liabilities
- Distributing LLC property among members or selling the property
You must also ensure that all final LLC taxes have been paid and ensure that your LLC is in good standing with the IRS and the Texas Comptroller. You must file a Request for Certificate of Account Status from the Comptroller and wait for it to be processed. You will then need to file a Certificate of Termination with the Texas Secretary of State with your Certificate of Account Status attached. These forms must state that you complied with all BOC requirements for winding up your LLC. Once your Certificate of Termination is processed, your business name will again be available for others to use as their own.
Officially dissolving your LLC is only one small part of shutting down a business. You also need to terminate any leases, settle debts, liquidate assets, pay your employees, sell off inventory, and much more. Some businesses end by filing for Chapter 7 bankruptcy if the LLC cannot afford to pay off its debts. In any event, deciding to close an LLC is a critical decision that will require significant work on the part of the members in order to comply with the law and avoid any legal issues.
Find Out How a Houston Business Law Firm Can Help You
Dissolving your LLC in the right way is critical for your finances and your future. This is far from a simple process, however, and it is always best to have the guidance and assistance of an experienced business attorney throughout the whole process. Attorney Andrew Weisblatt has helped clients during every stage of business – from formation to dissolution. Please call The Weisblatt Law Firm at 713-352-0847 or contact our office online to discuss how we can assist your company.