Texas has more independent restaurants per capita than almost any other state, and the Texas regulatory environment is generally more business-friendly than states like California or New York. But closing a restaurant in Texas still involves specific obligations that most owners do not know about until they are already past the deadline. Here is the complete checklist.
TABC License
Your Texas Alcoholic Beverage Commission permit is issued by the Texas Alcoholic Beverage Commission. When you close, you have three options: surrender the permit, sell it with the business, or allow it to lapse.
Texas liquor permits do not have the same secondary market value as California ABC licenses -- most Texas permits are tied to the specific location and are not freely transferable. However, a Mixed Beverage Permit (MB) or Wine and Beer Retailer's Permit (BG) attached to a desirable location can have value to a buyer. If you are selling the business or the lease, negotiate the permit transfer as part of the deal. If you are simply closing, notify TABC in writing and surrender the permit. Continuing to hold a permit for a closed location creates unnecessary regulatory exposure.
Texas Final Paycheck Law
Texas is more forgiving than California on final paychecks but still has a firm deadline. Under the Texas Payday Law (Texas Labor Code Chapter 61), if you discharge an employee, you must pay all wages owed by the sixth calendar day after the discharge date. For a restaurant closing on a Friday, that means final paychecks are due by the following Thursday.
Accrued vacation is only owed if your written policy or employment agreement promises it. Texas does not require vacation payout by default. However, if your employee handbook says unused vacation is paid out upon termination, you are contractually obligated. Review your handbook before the closing date.
Texas WARN Act
Texas does not have its own state WARN Act. You are subject only to the federal WARN Act, which applies to employers with 100 or more full-time employees who lay off 50 or more employees within a 30-day period. Most independent restaurants do not hit this threshold. If you have multiple locations under a single employer entity, count all employees across all locations. The Texas Workforce Commission has guidance on how the federal law applies in Texas.
Texas Sales Tax
When you close, file a final sales tax return with the Texas Comptroller of Public Accounts. You are required to report and remit all sales tax collected through your last day of operation. Cancel your sales tax permit by submitting Form AP-201 or by logging into your eSystems account and requesting cancellation. The Comptroller may conduct a final audit, particularly if your account shows large fluctuations in the final months.
Texas Franchise Tax
If your restaurant is structured as an LLC or corporation, you owe a final Texas franchise tax return for the year of closure. Texas franchise tax is based on margin (revenue minus certain deductions), not profit. File the final return with the Texas Comptroller and request a tax clearance certificate before dissolving the entity with the Texas Secretary of State. The Comptroller's business closure guide covers the sequence.
Texas Secretary of State Dissolution
To formally dissolve a Texas LLC, file a Certificate of Termination (Form 651) with the Texas Secretary of State. For a Texas corporation, file Articles of Dissolution (Form 651). The filing fee is $40. You cannot file for dissolution until all state taxes are cleared and all known creditors have been notified.
Personal Guarantee and Lease
Texas commercial leases almost always include a personal guarantee. The Texas Property Code does not cap landlord remedies for lease default -- your landlord can pursue the full remaining lease obligation plus attorney's fees. Before you close, negotiate a lease termination agreement that includes a release of the personal guarantee. Get it in writing. A verbal agreement with your landlord is not enforceable.
For the full picture on what closing costs, see What Does It Actually Cost to Close a Restaurant. For the lease negotiation, How to Negotiate a Restaurant Lease Buyout covers Texas-specific leverage points.
The Correct Sequence
Notify employees, pay final wages by day six, file final sales tax return, cancel sales tax permit, file final franchise tax return, get tax clearance, dissolve the entity, and handle the TABC permit last. If you have equipment with value, start the liquidation process before you announce the closure -- equipment buyers pay more when they have time to plan.