How to close a restaurant in Dallas follows Texas state law, but Dallas has its own city-level requirements that differ from other Texas markets -- including Dallas County health department procedures, TABC administration through a regional office, and a commercial real estate market where lease buyouts are negotiated differently than in smaller Texas cities. Here is what Dallas restaurant owners need to know.
Final Paycheck Requirements in Texas
Texas law requires that employees who are discharged receive their final paycheck within six days of termination. Employees who resign must receive their final paycheck on the next regular payday. This applies to all Dallas restaurants regardless of size.
Texas does not require employers to pay out accrued vacation or PTO upon termination unless the employer's written policy promises it. If your employee handbook states that unused PTO is paid at termination, you are legally bound to honor it.
The Texas Workforce Commission (twc.texas.gov) enforces wage payment laws. Violations can result in penalties of up to the unpaid wages plus administrative fees.
TABC License Surrender in Dallas
Texas liquor licenses are administered by the Texas Alcoholic Beverage Commission (tabc.texas.gov). Dallas restaurants surrender their license through the TABC's online portal or by contacting the Dallas regional TABC office.
To surrender a TABC license, you submit a written notice of closure and return the physical license. If you are selling the business, the buyer must apply for a new license -- TABC licenses are not transferable in most circumstances. The exception is a change of ownership within the same entity structure, which requires prior TABC approval.
Dallas County has no additional local liquor license layer beyond TABC. The city of Dallas does require a Certificate of Occupancy for alcohol service, but this is automatically voided when the business closes.
Sales Tax Final Return in Texas
Texas requires businesses to file a final sales tax return with the Texas Comptroller (comptroller.texas.gov) when closing. The final return covers the period from your last return through your closure date.
You must also cancel your Texas sales tax permit. This can be done online through the Comptroller's eSystems portal. Texas's combined state and local sales tax rate in Dallas is 8.25 percent (6.25 percent state plus 2 percent city). Restaurants must remit all collected sales taxes before closing.
Dallas Commercial Lease Law
Texas commercial leases are governed by the Texas Property Code, which is more landlord-friendly than most states. Unlike residential leases, Texas commercial leases have no statutory duty to mitigate -- meaning a Texas landlord can, in theory, let a space sit empty and sue for the full remaining rent rather than finding a new tenant.
In practice, Dallas landlords typically do mitigate because an empty space costs them money in a competitive market. But the legal exposure is real. The most important factor in a Dallas lease exit is whether you personally guaranteed the lease. If you did, the landlord can pursue you individually for the full remaining balance, regardless of what happens to the LLC.
Dallas's commercial real estate market is active enough that landlords are often willing to negotiate a lease buyout or assignment rather than pursue litigation. The best outcomes happen when you approach the landlord before you default and propose a structured exit. The Restaurant Landlord Negotiation guide covers the specific conversation to have.
Texas WARN Act
The federal WARN Act requires employers with 100 or more full-time employees to provide 60 days advance notice before a plant closing or mass layoff. Texas does not have a state-level WARN Act equivalent. Most independent Dallas restaurants have fewer than 100 full-time employees and are not subject to WARN Act requirements.
LLC Dissolution in Texas
If you operated your restaurant as a Texas LLC, you must file a Certificate of Termination with the Texas Secretary of State (sos.state.tx.us). The filing fee is $40 for a domestic LLC. You can file online through the SOSDirect portal.
Before filing for termination, you must pay all outstanding Texas taxes, including sales tax, franchise tax, and payroll taxes. The Texas Comptroller must issue a tax clearance before the Secretary of State will process the termination.
After filing the Certificate of Termination, your LLC has a three-year winding-up period during which you can settle outstanding debts and distribute remaining assets.
Dallas-Specific Closing Checklist
- Notify employees and pay final wages per Texas timing requirements
- File final Texas sales tax return and cancel sales tax permit
- Surrender TABC license through the online portal or Dallas regional office
- File Certificate of Termination with Texas Secretary of State after tax clearance
- Notify Dallas County Health and Human Services of closure
- Cancel business licenses with the City of Dallas
- Close business bank accounts after all checks have cleared
- Notify vendors and settle outstanding invoices
The Lease Is Usually the Hardest Part
In Dallas, as in most Texas markets, the commercial lease is the most complex piece of a restaurant closure. Texas law gives landlords significant leverage, and most Dallas restaurant leases include personal guarantees. If you have more than 18 months remaining on your lease, getting a professional assessment of your exit options before you act is worth the cost. The Full Exit Analysis covers lease exposure, personal guarantee risk, and negotiation strategy in detail.