From time to time, it becomes necessary to dissolve a corporation. This could occur because the business has failed, because the owner or owners have retired or become disabled, or because another entity has bought out the business and is folding the operations or client list under another business entity. When this occurs, it is important for the original shareholders to properly dissolve the corporation, in order to avoid having to pay the annual franchise tax to the State of Texas.

Hold a shareholder vote. To dissolve the corporation, Texas rules require a two-thirds majority of shares to vote to approve the dissolution. Alernatively, you can have all shareholders or their duly empowered attorneys sign a document approving the dissolution.

Obtain a clearance from the Texas Comptroller, verifying that all outstanding taxes due to the State of Texas have been paid. You can get this clearance, also known as Certificate #05-305, by writing to the Tax Assistance Section, Comptroller of Public Accounts, Austin, TX, 78774-0100. You can also call the office at 800-252-1381.

Download the Articles of Dissolution - Business or Corporation. You can do this by going directly to the website for the Texas Office of the Secretary of State. You can also download the form from the link in the Resources section.

Fill out the form. You will need your corporation's taxpayer ID number and the file number established with the State of Texas when you first formed the S corporation. You will also need the names and addresses of the officers and directors of the corporation.

Return the completed form, along with a check or money order for $40 (as of 2011), to the Secretary of State, Statutory Filings Division, Corporations Section, PO Box 13697, Austin, TX, 78711-3697.

Tip

Ensure that you are using the correct form. Use the Articles of Dissolution form only when you are truly shutting down the operations of a corporation. If you are actually merging two companies, or you are changing the entity type of the organization, you must fill out different forms.