●   TEXAS BUSINESS SALE CHECKLIST · 2–3 YEAR TIMELINE & STATE FILINGS

How to Sell a Business in Texas
The 2–3 year readiness timeline and the Texas state closing steps.

Selling an owner-led business in Texas has two halves: 2 to 3 years of readiness work before you list (producing two clean years of tax returns, passing the 90-day owner-absence test, and locking in transferable contracts) and Texas statutory closing steps during escrow — including Texas Comptroller Form 86-114 (Certificate of No Tax Due under Tex. Tax Code §111.020), a new Texas Sales and Use Tax Permit, Texas Workforce Commission (TWC) account handling, and state trade license assignments (TDLR / TSBPE).

SweetSpot is not a broker. We don’t list businesses, find buyers or take a success fee. We work with Texas owners during the two-to-three-year window before the sale so the business commands a higher multiple and actually closes when it goes to market.

Run the free Sale Readiness Self-Assessment

Last updated: · Sources: Texas Tax Code §111.020, Texas Comptroller, TWC, TDLR, TSBPE, IBBA Market Pulse.

Jump to the Texas statutory & agency closing checklist ↓

SweetSpot is not a broker, CPA, or attorney.
We do the operational & financial readiness work first.

We work alongside your Texas CPA, transaction attorney, and broker (when you need one). Compare What It Costs, Before You Hire a Broker, SBA 7(a) Financing, and Texas Exit Planning.

01 · THE 2–3 YEAR READINESS TIMELINE

What moves a Texas trade or service business from ~0.5x–2x to 4–5x+ earnings.

When a business depends entirely on the founder to bid jobs, dispatch crews, and manage customer relationships, a buyer is really buying a high-stress job plus used trucks. Those owner-dependent shops often trade for ~0.5x to 2x yearly earnings — or fail to sell at all.

A transferable Texas company in the same trade — with a general manager or estimator who runs day-to-day operations, recurring service agreements, and two to three clean years of tax returns — can command 4x to 5x+ transferable earnings (see Texas Valuation Multiples).

Four milestones must happen before you sign a broker listing agreement:

  • Two clean years of tax returns and monthly accrual P&Ls: Stop running personal expenses through the company so SBA lenders and buyers can verify every dollar of Seller’s Discretionary Earnings (SDE) or EBITDA (Two Clean Years).
  • The 90-day owner absence test: Prove that estimating, dispatch, service delivery, and collections run smoothly when you are off the clock.
  • Contracted and recurring revenue: Convert handshake accounts into written maintenance agreements or MSAs without change-of-control termination traps.
  • Management depth & license coverage: Ensure a key manager or qualifier holds (or is ready to hold) the required state trade license so the business can operate the day after you leave.

02 · BUYER DILIGENCE VS. TEXAS STATE CLOSING STEPS

Side-by-Side Checklist: Pre-Market Readiness vs. Texas Statutory Closing

Most checklists only cover the legal paperwork during the last 60 days of a deal. In reality, the value of the business is set 24 to 36 months earlier.

Buyer Diligence Readiness (Years 1–3) vs. Texas State Closing Steps (Final 60–90 Days)
Stage Buyer Diligence & Value Readiness (SweetSpot’s Lane) Texas Statutory & Agency Closing Steps (CPA / Attorney / Agency Lane)
24–36 months before sale Clean up general ledger, separate personal expenses, establish monthly accrual close, and map owner dependencies ($2,500 Inspection or Three Engine Diagnostic). Verify Texas Secretary of State entity good standing, Texas Franchise Tax account status, and clean title on titled vehicles and equipment.
12–24 months before sale Build second-tier leadership (GM, dispatcher, lead estimator), lock in non-solicitation agreements, and grow recurring service contracts. Confirm who holds the state trade qualifier license (TDLR or TSBPE) and begin licensing a non-owner master/qualifier if the founder is the sole license holder.
6–12 months before sale Assemble the buyer diligence data room: 3 years of tax returns, documented SDE/EBITDA add-back bridge, WIP schedule, and customer concentration breakdown (Before You Hire a Broker). Review lease assignment clauses, customer contract change-of-control clauses, and SBA 7(a) financeability (SBA 7(a) Financing Rules).
Under LOI to Closing (Final 60–90 days) Support quality-of-earnings (QoE) verification, bank underwriting questions, and the 90-day post-close operational handoff plan. File Texas Comptroller Form 86-114 (Certificate of No Tax Due under Tex. Tax Code §111.020), apply for buyer’s new Texas Sales Tax Permit, file TWC account transfer/application, and assign TDLR / TSBPE contractor licenses.

03 · TEXAS STATUTORY & AGENCY CLOSING STEPS

Four Texas State Requirements Every Buyer and Seller Must Handle at Closing

Always have a licensed Texas transaction attorney and CPA manage your purchase agreement and tax filings. Below are the four state-level items that surface in almost every Texas asset or stock sale (checked 2026-11-05).

01

Texas Comptroller Form 86-114 & Successor Liability (Tex. Tax Code §111.020)

Under Texas Tax Code §111.020, a buyer who purchases a business or stock of goods in Texas must withhold enough of the purchase price to cover any unpaid state taxes (such as sales and use tax or franchise tax) until the seller provides a Certificate of No Tax Due from the Texas Comptroller, requested via Comptroller Form 86-114. Under the statute, if the Comptroller does not issue the certificate or mail notice of the amount due within 60 days after receiving the written request or after the records are made available for audit (and within 90 days total after receiving the request), the buyer is released from the obligation to withhold the purchase price.

02

Texas Sales and Use Tax Permit Non-Transferability

Per the Texas Comptroller of Public Accounts, a Texas Sales and Use Tax Permit is not transferable from one owner or legal entity to another. In an asset sale (or any change of legal entity), the buyer must apply for a new Texas Sales and Use Tax Permit in the buyer entity’s name before making taxable sales, and the seller must close out the seller’s existing sales tax account and file a final return after closing.

03

Texas Workforce Commission (TWC) Account & Experience Rating

When a Texas business with employees is sold, the Texas Workforce Commission (TWC) requires reporting the acquisition. Under the Texas Unemployment Compensation Act (Tex. Lab. Code Ch. 204), if an acquisition involves substantially all of a predecessor’s assets or workforce and common ownership/control exists, unemployment tax experience rating transfer is mandatory; in an arm’s-length acquisition, the buyer and seller can evaluate whether a joint application to transfer the predecessor’s TWC compensation experience rate is advantageous.

04

Texas Trade License & Qualifier Transitions (TDLR & TSBPE)

For Texas contracting and field-service companies, state trade licenses must remain uninterrupted at closing. Examples include: (a) HVAC / ACR: Under the Texas Department of Licensing and Regulation (TDLR), an Air Conditioning and Refrigeration Contractor business must have a licensed ACR contractor assigned to the business entity (Texas HVAC guide); (b) Electrical: TDLR Electrical Contractor licenses require a designated Master Electrician (Texas Electrical guide); and (c) Plumbing: The Texas State Board of Plumbing Examiners (TSBPE) requires a designated Responsible Master Plumber (RMP) on file (Texas Plumbing guide). If the selling owner is the sole qualifier, the company must either qualify a key employee before closing or structure a compliant transition period.

HOW SWEETSPOT FITS

Get the business ready before you hire a broker or enter escrow.

Your transaction attorney and CPA handle the purchase agreement, Form 86-114 tax clearance, and closing documents. Your business broker or M&A advisor runs the buyer marketing process when you are ready to go to market.

SweetSpot does the work that comes two to three years before both: fixing owner dependency, building management depth, and making the financials clean enough to pass buyer diligence and SBA underwriting.

Compare our fixed, published fees on What It Costs or see Before You Hire a Broker.

YOUR NEXT STEP

Three ways to start.
Pick the one that fits.

Find out where your business stands today before you talk to a broker or buyer.

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COMMON QUESTIONS

Frequently asked questions about selling a business in Texas.

How long before selling a business in Texas should I start preparing?

Two to three years before you want to go to market. Buyers and SBA 7(a) lenders look for at least two clean years of federal tax returns and financial statements, plus proof that the business runs without the owner handling every estimate and customer relationship.

What is Texas Comptroller Form 86-114 (Certificate of No Tax Due)?

Form 86-114 is the official request to the Texas Comptroller for a Certificate of No Tax Due under Texas Tax Code §111.020. Until the certificate is issued, a buyer of a Texas business must withhold enough of the purchase price to cover any unpaid state taxes or risk successor liability, subject to the statute's 60-day and 90-day Comptroller response timelines.

Does a Texas Sales and Use Tax Permit transfer to the new buyer?

No. A Texas Sales and Use Tax Permit is not transferable between legal entities or owners; in an asset sale, the buyer must apply for a new permit with the Texas Comptroller and the seller must close the old account after closing.

What happens to TDLR or TSBPE trade licenses when I sell my Texas contracting business?

Texas HVAC (TDLR ACR), electrical (TDLR Master Electrician), and plumbing (TSBPE Responsible Master Plumber) businesses must have an active licensed qualifier assigned to the operating entity. If the selling owner holds the sole license, either a key employee or the buyer must qualify the business or the seller must remain the registered qualifier under a compliant transition agreement.

Is SweetSpot a Texas business broker?

No. SweetSpot is not a broker; we don't list businesses, find buyers or take a success fee. We work with Texas owners on operational and financial readiness before they hire a broker or sell to employees or management.

How much do business brokers and exit advisors charge in Texas?

Texas business brokers typically charge an 8–12% success fee at closing with a minimum fee, while SweetSpot charges fixed, published fees ($0 self-assessments, $250 Field Guide, $2,500 remote Inspection, and $4,750 per on-site day plus travel) with no success fee (see /what-it-costs for full details).

TEXAS EXIT & VALUATION GUIDES