Your business papers: what your family will need (Texas)

If you own a business, your family will need its papers the week something happens to you: the formation papers, the EIN, the bank and payroll details, and the agreement that says what happens to your share. Most of them can be replaced, but it takes weeks. Gather them now and write down where each one is.

Formation papers and the business name

An LLC, corporation or limited partnership is formed with a certificate of formation filed with the Texas Secretary of State. You can order copies, and a certificate of fact that shows the business's status, online through SOSPortal, by email at [email protected], or by mail. Form 2102 is the request form, and it also comes in Spanish (Form 2102-S). Source: Texas Secretary of State, copies and certificates.

If the business uses a name that isn't its legal name (an assumed name, or DBA), there's a certificate for that too. An LLC or corporation files it with the Secretary of State. A sole owner who isn't an entity files it with the county clerk in each county where the business has its place of business. Source: Tex. Bus. & Com. Code ch. 71 (assumed names).

Franchise tax status

The Texas Comptroller's online search shows a business's franchise tax account status, meaning its right to do business in Texas. Banks and buyers sometimes ask for it, and you can print the result. The annual franchise tax report is due May 15; a business at or below the no-tax-due threshold still files its Public Information Report or Ownership Report. For help, call the Comptroller at 800-252-1381. Sources: Texas Comptroller, franchise tax account status, Texas Comptroller, franchise tax.

The EIN

The EIN is the business's federal tax number. If the paper is lost, look at the IRS confirmation you got when you applied, at past tax returns, and at the bank or agency where you used the number. The IRS can also look it up: call the Business & Specialty Tax Line at 800-829-4933, Monday to Friday, 7 a.m. to 7 p.m. local time. The person calling must be authorized to receive the number. Source: Taxpayer Advocate Service (IRS), getting an EIN.

What happens to your share of an LLC

Under Texas law, when an LLC member dies, the surviving spouse and heirs become assignees of the member's interest. That gives them the right to the member's share of profits and distributions and to reasonable information about the company. They become members, with a say in running it, only if all the other members approve. A company agreement or buy-sell agreement can plan for this ahead of time; Texas law says it doesn't get in the way of an agreement to buy or sell an owner's share at death. Source: Tex. Bus. Orgs. Code §§101.109 and 101.1115.

Who can sign at the bank

If you're the only signer, bills and payroll can stop while you're in the hospital. Ask your bank about adding a second authorized signer. The Texas statutory durable power of attorney also lets you give an agent powers over banking and business operating transactions, one line each. It ends at your death; after that, the executor takes over with letters from the court. Sources: Tex. Estates Code §752.051 (statutory durable power of attorney), and our guide on what an executor does in Texas.

Employees and payroll

If the business closes, employees get their final wages, and the business files a final Form 941 (or 944) for the quarter of the last paycheck, checking the box that says it closed, plus a final Form 940. Each employee gets a W-2 for that year. With the Texas Workforce Commission, close or update the unemployment tax account in Unemployment Tax Services, or send a contact request; TWC's number is 800-628-5115. Sources: IRS, closing a business, Texas Workforce Commission, changes to the status of your business.

Insurance and licenses

Write down every business policy, the agent, and the policy number: liability, property, vehicles, and any key-person life insurance. In Texas, most private employers choose whether to carry workers' compensation, so note whether yours does. For trade licenses, the TDLR active license search shows the license number and status; other licenses come from the agency or city that issued them. Sources: Texas Department of Insurance, workers' compensation coverage, TDLR, active license search.

The last tax returns

A sole owner's business goes on Schedule C with the final Form 1040. A partnership files a final Form 1065, and a corporation a final Form 1120 or 1120-S, checking the "final return" box. To close the IRS business account, send the IRS a letter with the EIN and the reason; it can close the account only after every return is filed and the taxes are paid. See the final tax return after a death. Source: IRS, closing a business.

The checklist

[ ] Certificate of formation, and any amendments
[ ] Assumed name (DBA) certificate
[ ] Company, partnership or buy-sell agreement
[ ] EIN confirmation from the IRS
[ ] Franchise tax account status and the last report
[ ] Bank accounts and who can sign on each one
[ ] Payroll provider, TWC account number, and employee list
[ ] Insurance policies and the agent's contact
[ ] Licenses and permits, with numbers and renewal dates
[ ] Leases, loans and main contracts
[ ] The last three years of business tax returns

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Frequently asked questions

What happens to my LLC if I die in Texas?

Your spouse and heirs become assignees of your share: they get your share of profits and distributions, but they become members only if all the other members approve, unless an agreement plans it differently.

How do I find a lost EIN?

Check the IRS confirmation, past tax returns and your bank. Or call the IRS Business & Specialty Tax Line at 800-829-4933; the caller must be authorized to receive it.

Where do I get a copy of my certificate of formation?

From the Texas Secretary of State, online through SOSPortal, by email at [email protected], or by mail.

Is this legal or tax advice?

No. It is general information from Texas agencies and the IRS. A Texas business attorney or tax professional can help with your situation.

Sources

General information, not legal or financial advice. Rules change; check the official sources above or talk to a licensed professional about your situation.