How to Close a Business in Texas: 5 Steps With the Secretary of State and the Comptroller

Texas will not let a company end while it owes the Comptroller a single report, and it enforces that rule with a document rather than a lecture. The Secretary of State's termination form costs $40. It is also rejected without a certificate that only the Comptroller can issue, and the Comptroller issues it only after four earlier steps are complete.

That chain decides the order of everything that follows. The five steps below run through the Comptroller first and the Secretary of State last, which is the reverse of how most owners picture it.

1. Every Missing Franchise Tax Report Comes Before the Final One

The Comptroller's page on terminating, withdrawing or reinstating an entity opens its list with the backlog: "File all outstanding annual Franchise Tax and Public/Ownership Information Reports." The information report is the one owners forget, because it carries no payment and feels optional. It is not optional for this purpose.

A company that stopped filing when business slowed has to produce those reports now, for each year it skipped, before the state will treat any later filing as final.

2. The Final Report Covers a Period That Ends Near the Termination Date

The second step is the one that requires arithmetic. The Comptroller asks the entity to "File any required Final Franchise Tax Report to report your entity's accounting data starting the day after its last annual report accounting period end date through a date that is within 60 days of the entity's termination date."

Read slowly, the sentence fixes both ends of a period. It begins where the last annual report left off, and it ends on a date close to the day the company will cease to exist, which the owner has not yet reached. The final report is therefore written a little in advance of the event it describes, and the termination has to land within 60 days of the date the report runs through.

Consider a hypothetical Houston contractor whose last annual report covered a period ending December 31 of the prior year. If the owners plan to file the termination in the middle of September, the final report would cover January 1 through a date within 60 days of that September filing. If the Secretary of State's filing slips to late December because the certificate in step 4 arrived later than expected, the date the report ran through may no longer sit inside the window, and the owners may find themselves correcting a report they believed was their last.

The final report is not a report about the past. It is a report about a date the company has not yet reached, written on the assumption that nothing will delay it.

This is why the order of steps matters more in Texas than the forms themselves. The owner who files the final report first and then discovers an unfiled information report from three years earlier has spent time the window cannot return.

The word "required" in the Comptroller's sentence carries weight of its own. Whether a particular entity owes a final report, and what accounting data belongs in it, turns on the entity's franchise tax position, and that is a question for the company's Texas tax preparer rather than for a general page.

3. Payment Closes the Franchise Account, and Every Other Account Closes Too

The third and fourth steps read together: "Pay any tax, penalty and interest due," and "File, pay, and close all other tax accounts with the Comptroller's office." A company with a sales tax permit or another Comptroller account has to close those as well. The page is explicit that the first four steps must be completed before the fifth begins, and it invites owners who need help to contact the office. The practical sequence is to close the smaller accounts while the franchise work is still underway, since a forgotten permit with an unfiled return will hold the certificate as surely as the franchise tax itself.

4. The Certificate Is Requested on One Form and Arrives as Another

The request goes in through Webfile or on Form 05-359, the Request for Certificate of Account Status to Terminate a Taxable Entity's Existence in Texas or Registration. What comes back is Form 05-305, the Certificate of Account Status to Terminate Texas Registration, and that second number is the one the Secretary of State will look for.

The Secretary of State's instructions for Form 651 close off the shortcut: "A printout of the entity's account status obtained from the Comptroller's website is not sufficient." The printout shows the same account. It is not the same instrument, much as a photograph of a claim check will not persuade a coat-room attendant at a hotel wedding to hand over the coat.

The certificate also expires. It is "valid through Dec. 31 of the year issued," which means a certificate issued in February has most of a year to run, while one issued on December 20 has eleven days.

In the last weeks of December, then, the timing of the request becomes the practical question of the whole process.

5. Form 651 Goes to the Secretary of State With the Certificate and the Fee

The last step is the one most owners think of as the first. The certificate of termination, Form 651, goes to the Secretary of State with Form 05-305 and the filing fee, which the instructions state as "$40" (checked September 2026). The Comptroller's page directs submission through SOSDirect or SOSUpload, or by mail when web filing is not possible.

Form 651 is not the form for nonprofit corporations or cooperative associations, which use Form 652.

What a Texas Termination Does Not Settle

The tax clearance in step 4 speaks to the state's franchise tax. It says nothing about federal taxes, and nothing about private creditors. A merchant cash advance, a supplier's account, a lease, and the personal guaranty behind any of them are untouched by the Comptroller's certificate, and a termination filing does not by itself discharge them. How long claims may still be brought against a terminated Texas entity is governed by provisions of the Business Organizations Code that the owner should review with Texas counsel before relying on any particular period.

But the practical point is simpler than the statute. Owners who close with an advance still open usually learn about the guaranty from a demand letter addressed to them personally.

As a negotiator, not a law firm, Delancey Street negotiates business debt, principally merchant cash advances. Its first look at an owner's contracts and collection history is free and kept confidential, and when a question becomes legal it is handed to attorneys who are licensed independently of the company. A company whose only open items are with the Comptroller needs a tax preparer, not a settlement company. One that is also carrying an advance has a second closing to plan, and the state's certificate will not be part of it.