Texas Splits the Job Between Two Agencies
Closing a Texas entity is a two-agency exercise, and the order is fixed. The Texas Comptroller controls the tax side and issues the Certificate of Account Status that says the entity is square with the franchise tax. The Texas Secretary of State controls the corporate register and accepts the Certificate of Termination that actually ends the entity, for a $40 fee. The Secretary of State will not complete the termination without the Comptroller's certificate attached, so the practical starting point is comptroller.texas.gov, not the filing form.
What the Comptroller is checking
Every taxable Texas entity files a Franchise Tax Report with a Public Information Report each year, due 15 May. The Comptroller issues the Certificate of Account Status once those filings are current and any tax due is paid. There is no separate annual report fee in Texas, which is why owners assume there is nothing running when they stop trading. What is running is the reporting obligation, and the penalty attaches to the missed report rather than to a renewal invoice.
A related document with a similar name
Texas also issues a Certificate of Fact - Status, its version of a good standing certificate, at $15 standard or $40 with the $25 expedite for 1 to 2 business day turnaround. Banks and buyers often ask for it during a wind-down. It is issued only while the entity is current on the Franchise Tax Report, so if a closing bank or counterparty is going to want one, order the status certificate before the termination goes in.
The Texas Termination Sequence
| Item | Value |
|---|---|
| Form name | Certificate of Termination |
| Filing fee | $40 |
| Tax clearance | Yes, required first |
| Processing time | 5-10 business days |
| Filing agency | Texas Secretary of State |
Four steps, and the middle one sets the timetable.
Document the owner decision
Member or shareholder approval is required. A Texas LLC operating without a written agreement falls to the default rules in the Business Organizations Code: member-managed, per-capita voting, distributions weighted by capital contribution. Corporations need a board resolution recommending termination and a shareholder vote approving it. Sign and date the consent before anything is submitted.
Request the Certificate of Account Status
File the final Franchise Tax Report and Public Information Report, pay anything outstanding, and request the certificate. This leg typically runs two to six weeks and is the reason Texas terminations take longer than the $40 fee suggests. Start it on the day the owners approve.
File the Certificate of Termination
Submit the Certificate of Termination with the Comptroller's certificate and the $40 fee. Standard processing runs 5 to 10 business days. Once accepted, the entity's legal existence in Texas ends.
Then clear the tail
Cancel the assumed name certificates, close local permits and licences, file the final federal return marked final, close the EIN account if it will not be reused, update the record, end the registered agent engagement in writing, and document the final distribution to owners.
Forfeiture Risk: What Texas Does to an Abandoned Entity
Because Texas charges no annual report fee, an abandoned entity produces no renewal invoice, and owners read that silence as closure. The Comptroller reads it as a missed Franchise Tax Report. Each missed report carries a $50 penalty, and unpaid tax accrues at 5% per month, so the cost curve is driven by whatever tax was actually due rather than by a flat fee. Three missed cycles is $150 in penalties before interest, with the reporting gap itself sitting on the account.
Sustained non-compliance leads to forfeiture of the entity's right to transact business in Texas, and the state can move to administrative dissolution after roughly 24 months. Neither outcome is a substitute for terminating. A forfeited entity cannot obtain the Certificate of Account Status, which means it cannot terminate, cannot get a Certificate of Fact - Status for a bank, and cannot cleanly complete an asset sale. Personal guarantees behind leases, equipment finance and credit lines are unaffected by the entity's status. So is the exposure created by distributing remaining cash to owners without settling known creditors first.
Texas sets no statutory deadline on the Application for Reinstatement, which sounds generous until you price it. Reinstating means filing every missed Franchise Tax Report and Public Information Report, paying the $50 per report and the 5% per month that accrued, and only then paying the $40 to terminate. Against a $300 formation fee for a new Texas LLC, an entity that has been dormant for several years is often not worth reviving except when the name, contracts or licences are tied to it. Our Texas reinstatement service quotes the back-filing position before you commit either way.
Dissolve your entity
If you would rather not do this yourself, we handle the tax clearance, the articles of dissolution, and the final filings in the right order. Or keep reading and file it on your own. This guide covers everything you need either way.
Five Mistakes That Derail Texas Terminations
Mistake 1: treating the Secretary of State as the only agency
What it is: going straight to the corporate filing and never touching the Comptroller. Why it happens: the Secretary of State is where the entity was formed, so it feels like where it should be closed. Consequence: the Certificate of Termination is rejected for want of the Certificate of Account Status, the $40 is spent, and the process restarts behind a two to six week tax queue. Prevention: open the Comptroller file first and treat the Secretary of State filing as the last step.
Mistake 2: assuming no tax is due means no report is due
What it is: skipping the final Franchise Tax Report because the entity owed nothing. Why it happens: with no annual report fee in Texas, a zero-tax entity looks like it has no filing obligation. Consequence: the Comptroller will not issue the Certificate of Account Status, and each missed report carries its own $50 penalty regardless of whether tax was owed. Prevention: file the final report and Public Information Report even at zero, then request the certificate.
Mistake 3: leaving assumed name certificates on file
What it is: terminating the entity and forgetting the DBA. Texas registers assumed names at both state and county level, at $25 with the state and typically $15 to $25 per county. Why it happens: the county filing was made years earlier by someone else. Consequence: a trading name still publicly tied to a terminated entity, which complicates a later sale of the name and leaves a live public record pointing at former owners. Prevention: list every state and county assumed name certificate and withdraw each one alongside the termination.
Mistake 4: distributing before notifying creditors
What it is: paying remaining cash out to members or shareholders before giving known creditors written notice. Why it happens: once operations stop, the bank balance looks like a final profit. Consequence: creditors who were never notified can pursue the recipients personally for what they received. Prevention: dated written notice with a claims deadline, proof of delivery, and no distribution until the deadline has run.
Mistake 5: leaving the agent and other-state registrations live
What it is: terminating in Texas while the registered agent renews and foreign registrations elsewhere stay open. Why it happens: those are separate contracts with separate renewal dates. Consequence: an agent invoice each year for a terminated entity, plus live annual report obligations in every state where the entity is still qualified. Prevention: cancel the agent in writing and file a withdrawal in every state on the qualification list in the same cycle.
Three Texas Terminations, Step by Step
Example A: a single-member software LLC in Austin
A solo developer stopped contracting in January. The entity owed no franchise tax but still had to report. The sequence was: signed single-member consent, final Franchise Tax Report and Public Information Report filed at zero, Certificate of Account Status requested and received in about four weeks, then the $40 Certificate of Termination filed with the Secretary of State and accepted in eight business days. Total state cost $40, total elapsed time about seven weeks, and the 15 May report date passed with the entity already closed.
Example B: a Houston corporation with four shareholders
An equipment services corporation with four shareholders and two officers wound down after selling its service contracts. The board adopted a resolution recommending termination and the shareholders voted to approve it, documented in the minute book because two shareholders were passive investors. One Franchise Tax Report had been missed, which added the $50 penalty plus 5% per month on the tax that was ultimately assessed. The bank required a Certificate of Fact - Status to close the operating account, ordered at $15 while the entity was still current. With the $40 termination fee the direct state cost came to $105 plus the assessed tax, over about nine weeks.
Example C: a Dallas LLC also registered in Wisconsin and Utah
A five-member consulting LLC had foreign registered in Wisconsin and Utah during an expansion. Terminating in Texas alone would have left both live, and each has its own meter: Wisconsin bills LLCs a $25 annual report with a $5 per month late penalty, and Utah bills a $20 annual renewal with a $10 late penalty. The members approved, cleared the Comptroller, filed the $40 Certificate of Termination, withdrew the state and county assumed name certificates, and filed withdrawals in Wisconsin and Utah in the same month. Running the out-of-state registrations alongside the Texas filing is what made the closure complete rather than partial.
How File.Business Handles Texas Termination
We draft the member or shareholder consent, prepare and file the final Franchise Tax Report and Public Information Report, request the Certificate of Account Status from the Comptroller, file the Certificate of Termination with the Secretary of State and the $40 fee, order any Certificate of Fact - Status the bank needs while the entity is still current, withdraw state and county assumed name certificates, and file withdrawals wherever the entity is foreign registered. See the Texas dissolution service, the general dissolution page, or the compliance service if other entities in the group keep trading.
Texas dissolution FAQ
How do I dissolve an LLC in Texas?
File the final Franchise Tax Report, obtain a Certificate of Account Status from the Texas Comptroller, then file the Certificate of Termination with the Texas Secretary of State and the $40 fee. File.Business handles both agencies as a single dissolution project.
How much does it cost to dissolve a business in Texas?
The Secretary of State fee is $40. Anything owed on the franchise tax side is added, including a $50 penalty for each missed Franchise Tax Report and 5% per month on unpaid tax.
What is the Certificate of Account Status and why do I need it?
It is the Texas Comptroller document confirming the entity is current on its franchise tax obligations. The Secretary of State will not complete a termination without it, and obtaining it typically takes two to six weeks.
How long does a Texas termination take?
The Secretary of State filing runs 5 to 10 business days once the Comptroller certificate is in hand. Because the tax leg adds two to six weeks, plan on six to nine weeks end to end.
What happens if I just stop filing in Texas?
Each missed Franchise Tax Report carries a $50 penalty and unpaid tax accrues at 5% per month. Continued non-compliance leads to forfeiture of the right to transact business and, after roughly 24 months, administrative dissolution, which blocks the termination path until the account is brought current.
Do I need to cancel my Texas DBA separately?
Yes. Texas records assumed names at both state and county level, at $25 with the state and typically $15 to $25 per county, and terminating the entity does not withdraw them. Each certificate has to be withdrawn where it was filed.
File.Business handles your Texas dissolution end-to-end.
We draft the authorization documents, coordinate tax clearance (required in Texas), file the Certificate of Termination with the Texas Secretary of State, and confirm acceptance. Total Texas filing time 5-10 business days.
Filing in Texas specifically: Texas dissolution filing covers the current fee, the Comptroller step, and the exact document the Secretary of State expects.
This guide is written from the official sources below. Fees, forms, and deadlines change; confirm the current requirement with the agency before you file.
Disclosure. File.Business is a private filing service, not a government agency and not a law firm. We prepare and submit filings at your direction, and nothing on this page is legal or tax advice. Filing fees, deadlines, and statutory references are current as of the last-updated date shown above and can change. Confirm current requirements with the relevant state agency before you file.
