The short answer: buying a business in Texas follows the same playbook as anywhere in the U.S., with one state rule that can cost you the purchase price if you skip it. Under Texas Tax Code Section 111.020, the buyer must withhold enough of the purchase price to cover the seller's unpaid state taxes unless the seller shows a Comptroller statement that nothing is due, or the buyer requests and receives a Certificate of No Tax Due before closing. The certificate is free, and the rest of our how to buy a business guide applies unchanged.
Successor liability, and the certificate that stops it
Texas collects a seller's unpaid taxes from whoever ends up with the business. If escrow closes without a Certificate of No Tax Due and the seller owes the state, the Comptroller can hold the purchaser liable for those taxes up to the purchase price, including any debt you assumed as part of the deal. The certificate has to be requested before the sale closes; asking afterward does not undo the liability.
The mechanics come from the Comptroller's own guidance, publication 98-117, Buying an Existing Business. Since 2021 the request is a joint filing: seller and buyer complete and sign Form 86-114, Joint Request for Certificate of No Tax Due, and send it to the Comptroller by email, fax, or mail. The form now also covers the seller's franchise tax standing, so one request checks both of the state obligations that follow business assets. There is no charge, and Comptroller staff review the account and, where needed, audit the seller's records before answering.
| Step | Who does it | When |
|---|---|---|
| Complete and sign Form 86-114, Joint Request for Certificate of No Tax Due | Seller and buyer together | As soon as the purchase agreement is signed |
| Send the form to the Comptroller (email CNTD@cpa.texas.gov, fax, or mail) | Either party or the closing agent | Before closing, with time for review |
| Review the seller's account, with an audit of the seller's records if needed | Texas Comptroller of Public Accounts | After receiving the request |
| Withhold enough of the purchase price to cover any taxes due | Buyer, at closing | Until the certificate or a paid-in-full statement arrives |
The withholding rule is the safety valve. Until the certificate lands, Section 111.020 expects you to hold back enough of the price to cover whatever the seller might owe, which in practice your attorney handles through the closing escrow. Only the buyer is protected by the certificate; the seller stays on the hook for everything that accrued before the sale, which is exactly how you want the liability to sit. What that attorney does with the rest of the closing is covered in what an M&A attorney does when you buy a business.
What it does to your timeline
Because the request is a joint form, it belongs on the checklist the moment the purchase agreement is executed, not in the week before closing. Sellers occasionally drag their feet on signing it, which is itself information about how their books look. The full LOI-to-close sequence is in our timeline guide, and the closing day checklist shows where the certificate and any withheld funds fit on the day itself.
Financing is the same as everywhere else
Nothing about Texas changes how the purchase gets funded. The SBA 7(a) loan remains the standard route: as little as 10% down, up to 90% of the deal financed, and loans up to $5,000,000, under the same federal rules that apply in every state. The full picture, from equity injection to seller notes, lives in our SBA loan hub, and you can pressure-test a specific deal's numbers in the SBA loan calculator.
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Where to find Texas businesses for sale
Texas carries some of the deepest small-business inventory in the country, so the listing marketplaces are a productive starting point long before you need a buy-side broker. Our marketplace comparison ranks the major platforms honestly, and the off-market sourcing guide covers direct outreach once you have a target industry, which is where the best businesses in the big metros tend to trade.
Looking at deals across state lines? Each state has its own version of the tax-clearance trap, and we keep a playbook per state: buying a business in Florida and buying a business in New Jersey.
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Frequently asked questions
Yes, unless the rule is dealt with before closing. Under Texas Tax Code Section 111.020, a buyer who closes without a Certificate of No Tax Due can be held liable for the seller's unpaid state taxes up to the purchase price, including any assumed debt.
Seller and buyer jointly complete and sign Form 86-114 and send it to the Comptroller by email, fax, or mail. The certificate is free, and the request must be made before the sale closes to protect the buyer.
The statute's fallback is withholding: the buyer holds back enough of the purchase price to cover any taxes the seller may owe, usually through the closing escrow, until the Comptroller issues the certificate or a statement that the tax has been paid.
Yes. SBA 7(a) rules are federal and apply in Texas exactly as anywhere else: as little as 10% down, up to 90% financed, and loans up to $5,000,000 for qualifying acquisitions.
