How to dissolve a corporation in Texas

What does it cost to dissolve a corporation in Texas?

The Texas Secretary of State charges $40 to file Form 651, the Certificate of Termination, for a corporation. That is the visible cost. Before you can file it, though, you need a Certificate of Account Status for dissolution from the Texas Comptroller, which has no fee of its own but requires the corporation's franchise tax to be current. So the real cost depends on any back franchise tax the corporation has accumulated while it sat unused.

Corporation fees can differ from LLC fees, and figures change; we confirm the current numbers with the Secretary of State and Comptroller before we file. See the wider picture on the main corporation guide.

What is the Certificate of Account Status?

Texas is a genuine tax-clearance stateand this is the defining feature of the process. Before the Secretary of State will terminate a corporation, the Comptroller must issue a Certificate of Account Status for dissolution or terminationhistorically called tax clearance. It confirms the corporation's franchise tax reports are filed and its balance is paid. The request is associated with Form 05-359and the resulting certificate is attached to Form 651.

How do the board and shareholders approve dissolution?

A Texas corporation winds up and terminates through its governance structure in two moves under the Business Organizations Code. First, the board of directors adopts a resolution recommending winding up and termination. Second, the shareholders approve it, generally a majority of the outstanding shares entitled to vote.

Record both the board resolution and the shareholder approval in writing. Even a single-shareholder corporation completes both, both in writing. That record supports the Certificate of Termination and confirms the dissolution was authorized.

How do you dissolve a Texas corporation, step by step?

1. Board resolution to wind up and terminate. The directors recommend it, recorded in the minutes.
2. Shareholder approval. Shareholders vote to approve, generally by a majority of shares, recorded in writing.
3. Get the franchise tax current and request the certificate. File any outstanding Texas franchise tax reports, pay the balance, and request the Comptroller's Certificate of Account Status for dissolution.
4. File Form 651. Submit the Certificate of Termination to the Texas Secretary of State with the Comptroller certificate attached, and pay the $40 fee.
5. File IRS Form 966 within 30 days. The Corporate Dissolution or Liquidation form, filed within 30 days of adopting the resolution or plan.
6. Wind up and file final returns. Notify creditors, settle or provide for debts, distribute any remainder to shareholders, file the final federal return marked final, and close the IRS business account.

What is Form 651, the Certificate of Termination?

A Texas corporation files Form 651, Certificate of Termination of a Domestic Entitywith the Texas Secretary of State. It names the corporation, states the basis for termination, and is submitted together with the Comptroller's Certificate of Account Status. The filing fee is $40. Form 651 is used by both corporations and LLCs, but a corporation must complete the board and shareholder approval and the franchise tax clearance before it can be filed. If you are closing a Texas LLC rather than a corporation, see how to dissolve an LLC in Texas.

IRS Form 966 and final returns

Form 966, “Corporate Dissolution or Liquidation,” is the federal filing unique to corporations closing down. A dissolving Texas corporation files it with the IRS within 30 days after the board and shareholders adopt the resolution or plan to dissolve. Because that clock runs from the approval, not from your state filing, it is easy to complete the Texas side and forget the federal one.

A dissolving corporation also files a final federal income tax return with the “final return” box checked, Form 1120 for a C-corp, Form 1120-S for an S-corp, plus its final Texas franchise tax report. Texas has no state income tax, so the state tax side is franchise tax and any sales-tax permits to close. We cover the federal sequence on the final tax return page.

Your EIN and the IRS account

Here is the step almost everyone misses: the EIN. The IRS does not cancel an EIN. The number is permanent and never reassigned. What you do instead is ask the IRS to close the business account behind it, and the IRS will not close it while final returns are outstanding. The Comptroller's certificate covers Texas franchise tax; it gives the IRS no signal at all.

How long does it take in Texas?

The Certificate of Account Status usually drives the timeline. Getting franchise tax reports current and receiving the certificate can take a couple of weeks or more, longer if there are back reports. Once it is in hand, filing Form 651 is quick, though Secretary of State processing times vary and Texas offers paid expedite. Form 966 and the IRS account closure run on the federal clock, generally several weeks each.

Confirm current Comptroller and Secretary of State times before relying on a date.

Rather have your Texas corporation closed properly?

We get the franchise tax current, obtain the Comptroller's Certificate of Account Status, file Form 651 with the Secretary of State, make sure Form 966 lands inside its 30-day window, and, if your corporation ever had an EIN, close the IRS business account too. If you're not sure which package is yours, a specialist is on WhatsApp 24/7 and will tell you straight.

This page is general information about dissolving a Texas corporation, not legal or tax advice. Final-year corporate tax, insolvency, and contested claims can have significant consequences, confirm your specific situation with a qualified attorney or tax professional before you act.