Are you considering dissolving your LLC? It’s important you follow the process correctly whether you’re closing down or opting to sell your LLC. Just as there’s a procedure for establishing your LLC, a similar method exists for dissolving it. You should ask the right questions and to the right people. If you speak to a Texas Registered Agent, you’ll get all the answers you need. You can get professional advice on how to shut down your business completely or to sell it. In this article, we will simplify the process so you have an idea where to get started.
When Do You Decide It’s Time To Close or Sell?
You might decide to close or sell your business for various reasons. It could be because the business is not making enough money, or that your personal circumstances have changed. Also, it’s possible you’ve seen a better opportunity elsewhere.
It’s about assessing how well your business is doing, and what the future looks like. So, these could be possible reasons why you’ve taken this decision. The decision to close or sell is usually a combination of financial, personal, and strategic factors.
You may be reluctant especially after you’ve invested a lot into the business. However, it would be unwise to continue in the business if you’re constantly running at a loss. You’ll end up incurring exorbitant expenses despite the decline in productivity and little profit.
How to Permanently Dissolve Your LLC
If you want to go ahead to dissolve or sell your LLC, there are some things you should know. The process is quite straightforward and here’s what you need to do:
Take a Vote
You can’t simply pack up and shut down since it’s not a one-man business. You’ll need to consider other stakeholders’ opinions on the matter. Set up a meeting to cast a vote on the dissolution of the LLC. You’ll need a well documented process which will show the decision reached.
Provide an Exit Strategy
The next step is to have an exit strategy that will protect you. Choose a method that guarantees you receive a fair share of your business’s funds. Clear any remaining debts during this phase, and the remaining funds will be divided among shareholders.
In an instance where you’re filing for bankruptcy, you can have the court sell your assets. It will enable you to settle all your creditors before you eventually dissolve the company. Also, if you want to sell off your assets, make sure you assess them. You should include both tangible and intangible assets like your licences, parents, and permits.
Inform Your Employees
Let your employees be aware of your decision to shut down. You’ll need to give them at least 60 days notice before the dissolution date. In addition, you’ll also have to prepare their last paycheck prior to termination. Apart from your employees, it’s also important to notify customers and creditors of the situation.
Resolve Financial Liabilities
You’ll also need to file your last tax return and employee payroll tax before the dissolution. Ensure that no creditors are still owed and that there are no unsettled financial obligations. If you are selling the business with debt, make sure the buyer is aware of the debt and willing to clear it on your behalf.
Close Down Your Business
In Texas, you can file a dissolution, and it will be processed within three to five days. You’ll need to submit a completed Certificate of Termination of a Domestic Entity (Form 651). The duplicate copy can be sent by mail, fax, in person to the Secretary of State. You can opt to send it via SOSDirect Online.
Alongside the termination certificate, you must submit form 05-359, a Request for Certificate of Account Status, to the Texas Comptroller’s office. It typically takes 4-6 weeks to obtain your tax clearance certificate through this process.
For your LLC termination to be valid, you must have both Certificate of Termination, and tax clearance certificate (or a certificate of account status) that indicates you have paid all taxes.
You can employ a professional to help you dissolve your LLC with ease. If you use a Texas Registered Agent, they can help you dissolve or sell your LLC. Also, they’ll ensure you are compliant with the law. You’ll enjoy a smooth dissolution process with the help of our professionals.