Ascend Legal Solutions

“We closed our doors last year, so we're all good… right?”

Wrong. Closing a business and dissolving the entity are completely different things.

We always hope this confusion doesn’t cause problems, but it certainly can.

Closing a Business: You shut down operations, let employees go, stop serving customers. But the entity still legally exists.

Dissolving an Entity: You legally terminate the business entity with the Texas Secretary of State and Comptroller.

If you want to completely close down a business, both are required.

Here's some of the things you miss when you stop with closing your doors:

💸 You must satisfy all state tax obligations before you can terminate - including filing final franchise tax reports (and if you don’t dissolve, you still need to be filing annual reports / PIRs).
💸 The Secretary of State can involuntarily forfeit your entity if you fail to meet ongoing filing requirements.
💸 Liability exposure continues - the entity shield remains if you are meeting all requirements, but so do the obligations. If the entity is forfeited because you failed to file reports, you could personally be on the hook.
💸 Ongoing compliance requirements don't just disappear because you stopped operating.

The biggest mistake: Thinking that stopping business operations automatically ends your legal obligations. Just because you locked the doors doesn't mean Texas considers your entity dead.

Proper dissolution requires specific steps with both the Secretary of State and the Comptroller.

If you intend to wind down your business entity, don’t leave the job half finished.

Red flags in deals that should make you pause:

🚩 'Sign today or the offer expires' - Real opportunities don't vanish overnight.
🚩 They won't let you have your lawyer review it - If they're afraid of legal review, you should be too.
🚩 Vague terms - 'We'll figure it out later' means you'll never figure it out.
🚩 They won’t let you inspect inventory, talk to key employees, etc.
🚩 They dodge questions about their company's financials or always find an excuse not to produce books and records.
🚩 Everything is verbal, nothing in writing - Memory is the first thing that fails in a dispute.

If someone gets angry when you want to protect yourself, imagine how they'll act when there's real money on the line.

The best deals can wait for proper documentation. The worst deals can't.

Trust your gut. If something feels off, there's usually a reason.

There are two types of problems in business - the ones that teach you, and the ones that cost you everything.

The difference? Preparation.

Work hard. Prepare your business.

Have a great week y’all.

What if I told you most people do more research buying a car than buying a business?

They'll get a CarFax report, have a mechanic inspect it, check the title... but when it comes to dropping $500K on a business, they do no homework at all.

That's insane.

I've seen buyers discover after closing that the business they just bought has:

Financial statements with so many holes they leak like a sieve.
Outstanding lawsuits they knew nothing about.
Contracts that don’t exist or are about to expire.
Key employees who are planning to quit.
Actual inventory doesn’t match the inventory on paper.
Equipment that's leased, not owned.
Customers who haven't paid in months.
The list goes on and on.

I’ve also seen buyers do $1M+ handshake deals, and I’ve seen buyers not read the fine print that would have made them walk away from a deal, costing them hundreds of thousands of dollars.

Here's what due diligence actually includes (but is not limited to):
Review ALL contracts - leases, customer agreements, supplier contracts, employment agreements.
Check for legal problems - lawsuits, regulatory violations, compliance issues.
Verify financial statements - don't just trust the books, dig deeper.
Confirm what you're actually buying - assets, liabilities, intellectual property.
Talk to key employees, customers, and suppliers.

The seller is going to make their business look as good as possible. Your job is to find out what they're not telling you.

Don't let excitement about the deal blind you to the risks. Do your homework.

Confused about this…?

Do you know the difference between a d/b/a (or DBA) and a formal legal entity name? Think they’re the same? They're not. And the difference matters more than you think.

I have seen business owners get confused about this plenty of times over the years. They file a DBA (“doing business as”), or as it is formally called in Texas, an Assumed Name, and think they've created a business entity. Or they form an LLC and think they don't need to worry about DBAs.

Here's what's actually happening:

Your LLC name is "Smith Holdings, LLC" - that's your legal entity name. It's what goes on contracts, tax returns, and lawsuits.

Your DBA is "Austin Marketing Group" - that's just what you tell customers to call you. It's a nickname, not a separate business.

The DBA doesn't give you liability protection. It doesn't create a separate legal entity. It's just permission to use a different name on your storefront and marketing. I have seen many people stumble here… they get the DBA but register it to their own personal name instead of registering it to an LLC, and they don’t get any liability protection.

And here's the kicker: You still need to sign contracts as "Smith Holdings, LLC d/b/a Austin Marketing Group." If you just sign as "Austin Marketing Group," you might be creating personal liability.

And if someone wants to sue you? They're suing Smith Holdings, LLC, not Austin Marketing Group.

The DBA is marketing. The LLC is protection. Don't confuse the two.