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Texas Certificate of Termination After You Sell Your Business

In most asset sales the buyer takes the business and your company is left as an empty shell. Shutting it down in Texas takes a tax clearance first, then a filing with the state.

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  • Owners doing $1M+ a year

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Why the Old Company Is Still There

Most sales of owner-run companies are asset sales. The buyer forms its own entity and buys the equipment, customers and goodwill. Your LLC or corporation still exists, holding the sale money and any loose ends.

That's normal, and often useful. Your company may need to stay alive for a while to collect a seller note, receive an earnout, wait on escrow or pay final bills.

At Fort Worth Business Brokers HQ, we connect owners with an experienced broker who helps plan the sale with what happens after closing in mind.

Don't Shut It Down Too Soon

Ending the entity is the last step, not the first. Before you do, make sure the company has collected everything it is owed and paid everything it owes.

Ask your attorney about indemnity and escrow periods in the purchase agreement. If the buyer can still bring claims against the company, you may want it to exist until that window closes.

Once those are settled, an open entity just keeps generating filings. That's when it makes sense to end it formally instead of letting it drift.

Step One: The Final Franchise Tax Report

Texas LLCs and corporations file franchise tax reports with the Comptroller. The Comptroller's guidance says an entity ending its existence files a final report, unless it is part of a combined group, which has its own rules.

The report covers the period up to the end of the business. Your CPA prepares it, and the sale income usually flows into it, since the gain from selling assets is part of the company's last year of business.

Many small companies owe no franchise tax because their revenue falls under the threshold. Ask your CPA which reports the Comptroller still needs from your company before it will clear it.

Step Two: The Certificate of Account Status

The Secretary of State won't accept a Certificate of Termination without proof from the Comptroller that the entity's franchise tax is settled. That proof is a certificate of account status.

You request it from the Comptroller, either on Form 05-359 or through Webfile. The Comptroller doesn't charge for the request.

The Comptroller issues it only after all franchise tax reports, including the final one, are filed and any tax is paid. Third party guides report waits of several weeks, so start early.

Step Three: The Certificate of Termination

With the tax certificate in hand, the company files a Certificate of Termination with the Texas Secretary of State. For a domestic LLC or corporation, that's Form 651.

The tax certificate goes with it. Once the Secretary of State accepts the filing, the entity's existence ends.

Check the current filing fee and processing times on the Secretary of State's site before you send it. Your attorney or CPA often handles the filing as part of wrapping up.

The Other Accounts to Close

Terminating the entity doesn't automatically close every account it held. Sellers usually also need to deal with these:

  • The sales and use tax permit, with a final return covering sales up to closing
  • The Texas Workforce Commission unemployment tax account, with a final wage report
  • Any assumed name certificates filed for the business
  • Local permits and the county rendition for business personal property

For the property tax piece, see our guide to the Tarrant County personal property rendition.

If You Sold Stock Instead

In a stock or membership interest sale, the buyer buys your company itself. The entity keeps operating under its new owners, so there's nothing for you to terminate.

In that case the buyer's concern shifts to the company's past taxes, which is where the Certificate of No Tax Due and the purchase agreement come in.

Confirm With Your CPA or Attorney

This page is a general overview, not tax or legal advice. Comptroller and Secretary of State forms, fees and procedures change, and the right timing depends on your deal.

Talk with a Texas CPA and business attorney before you end the entity, especially if any payments from the sale are still coming.

Getting Started

A clean exit starts long before closing. If you're thinking about selling, begin with a free, confidential valuation, or read about exit planning.

You can also call (817) 555-0142 to talk through your timeline.

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