Dissolving a Business in Michigan 2024: A Step-by-Step Guide

Closing an LLC in Michigan may be a tough decision, but our comprehensive guide is here to help and make the process smooth and worry-free. Understanding the dissolution process is crucial for avoiding future legal and financial liabilities, whether due to financial circumstances or new ventures. Let us be your trusted partner in this final phase of your LLC journey, ensuring seamless closure and protection against liability concerns.

Embark on this final step confidently, as our expert advice guides you through the requirements, procedures, and best practices of dissolving your business in Michigan. Navigate legal formalities, manage outstanding obligations, and file the necessary paperwork with ease, all with the support of LLCBase. Tackle this challenge with us and achieve a secure and successful closure in the ever-changing Michigan business landscape.

Dissolve a Business

On this page, you’ll learn about the following:

What is a Business Dissolution
Dissolve Your Business in Michigan: 4-Step Guide
Filing Fee to Dissolve Michigan LLC
FAQs

What is a Business Dissolution

Michigan LLC Dissolution refers to the process of legally ending the existence of a Limited Liability Company (LLC) registered in the state of Michigan. Dissolving an LLC involves several steps, such as following the LLC’s operating agreement, obtaining necessary approvals from members, settling outstanding debts and taxes, and filing the required dissolution documents with the Michigan Secretary of State.

The dissolution process ensures that the LLC is no longer legally recognized as a separate entity and cannot conduct business activities. Properly dissolving an LLC in The Great Lakes State is essential to avoid potential legal and financial liabilities for the members involved.

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Dissolve Your Business in Michigan: 4-Step Guide

Let’s walk you through a 4-step guide to help you dissolve your business in Michigan efficiently and effectively:

Step 1: Follow Your Michigan Operating Agreement

You should have drafted an operating agreement when you initially formed an LLC. This document outlines the procedures and rules for how the business will be managed and operated. The operating agreement should also include information on how to dissolve the LLC.

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Consult Your Operating Agreement

The LLC operating agreement is a crucial document governing your Michigan LLC’s management, operation, and dissolution. It is a legally binding contract between the LLC members, outlining their rights, responsibilities, and obligations.

When you dissolve your Michigan LLC, the first step is to consult your operating agreement. Carefully review the specific provisions related to dissolution and winding up the business. This section should outline the necessary steps, conditions, and requirements for the members to dissolve the LLC properly.

Determine the Required Approvals and Procedures

Upon reviewing the operating agreement, you must identify the required approvals and procedures for dissolution. These may vary depending on the terms agreed upon by the LLC members. Common approval methods include:

Unanimous Written Consent: In some cases, the operating agreement may require all members to provide written consent for dissolution.
Majority Vote: More commonly, the operating agreement will require a majority vote of the members to approve the dissolution. The agreement should specify the percentage needed for approval (e.g., a majority of 51% or a supermajority of 66%).
Specific Conditions: The operating agreement may outline specific conditions or events that trigger the dissolution process, such as the death or withdrawal of a member, bankruptcy, or reaching a predetermined end date.

Document the Decisions and Approvals

Once you have determined the proper procedure for dissolution, follow the steps outlined in the operating agreement. It is essential to document all decisions and approvals related to the dissolution of your Michigan LLC. This documentation may include the following:

Written consent signed by all members.
Meeting minutes reflecting the discussion and vote on dissolution.
Any other written records or correspondence related to the dissolution decision.

Maintaining accurate records of the decisions and approvals is crucial. They will be necessary when filing the dissolution documents with the Michigan Secretary of State. They may be required in case of a dispute or legal issue related to the LLC’s dissolution.

Step 2: Close All Tax Accounts

Before you can dissolve your Michigan LLC, you must ensure that all outstanding debts and taxes are settled.

Settle Outstanding Debts and Taxes

Before dissolving your Michigan LLC, settling all outstanding debts and taxes is essential to avoid potential legal and financial liabilities. You must address any balances due to the Michigan Department of Treasury, Michigan Unemployment Insurance Agency, and other state or federal agencies that may apply to your business operations.

Michigan Secretary of State: Ensure you have paid any outstanding franchise taxes and fees, including the annual Michigan LLC tax and any additional taxes that apply to your business.
Employment Development Department: If your LLC has employees, ensure you have paid any required payroll taxes and filed all necessary employment tax returns with the Michigan Unemployment Insurance Agency.
Other Agencies: Depending on your business activities, you may need to settle outstanding debts with other state or federal agencies, such as the Internal Revenue Service (IRS), for federal taxes.

File Final Tax Returns with the Michigan Department of Treasury

After settling all outstanding debts and taxes, you must file your final tax returns with the Michigan Department of Treasury. This process involves:

Filing a Final Form 3372: Complete and submit the Limited Liability Company Return of Income (Form 3372) for the final tax year of your LLC’s existence. Indicate on the form that it is your final return, and report all income, deductions, and credits associated with your LLC’s activities during the tax year.
Paying Remaining Balances: Along with filing your final Form 3372, ensure that you pay any remaining balances due to the Michigan Department of Treasury, including any late fees or penalties that may apply.
Closing Tax Accounts: Inform the Michigan Department of Treasury that you are dissolving your LLC and request the closure of your tax accounts. This is important to avoid any confusion or future tax obligations related to your dissolved LLC.

By properly closing all tax accounts and filing your final tax returns, you can ensure a smooth dissolution process and avoid any potential legal and financial issues arising from unresolved tax obligations.

Step 3: File a Certificate of Dissolution

Once all necessary approvals have been obtained and all tax accounts have been closed, you can officially dissolve your Michigan LLC by filing a Certificate of Dissolution with the Michigan Secretary of State.

Complete the Certificate of Dissolution

To officially dissolve your Michigan LLC, you must complete and file the Certificate of Dissolution with the Michigan Secretary of State. This form is available on the Secretary of State’s website and requires the following information:

LLC Name: Provide the exact name of your LLC as it appears on your Articles of Organization.
Secretary of State File Number: Include the LLC’s file number assigned by the Michigan Secretary of State.
Dissolution Date: Specify the effective date of dissolution, which can be the filing date or a future date not more than 90 days from the filing date.
Signatures: Include the signatures of all members who have approved the dissolution or their authorized representatives.

Review the Form for Accuracy

Before submitting the Certificate of Dissolution, please review it carefully to ensure all information is accurate and complete. Any errors or omissions may cause delays in processing the dissolution or even result in the rejection of the form.

Mail or Deliver the Form to the Michigan Secretary of State

After completing the Certificate of Dissolution, you can mail or hand-deliver it to the Michigan Secretary of State’s office. The address is:

Michigan Department of Licensing and Regulatory Affairs, Corporations, Securities & Commercial Licensing Bureau — Corporations Division, P.O. Box 30054, Lansing, MI 48909

Please note that a filing fee may be associated with submitting the Certificate of Dissolution. Check the Secretary of State’s website for the current fee schedule and acceptable payment methods.

Once the Certificate of Dissolution is filed and approved, your Michigan LLC will be officially dissolved, and you will receive a confirmation document from the Secretary of State. This document is proof of the LLC’s dissolution and should be kept with your business records.

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Step 4: Notify Interested Parties

Once your LLC has been officially dissolved, it is essential to notify all interested parties of the dissolution. This includes creditors, vendors, and customers. Informing these parties will help ensure that all outstanding debts and obligations are settled and any future liabilities are avoided.

Notify Creditors, Vendors, and Customers

After your LLC has been officially dissolved, informing all interested parties of the dissolution is important to ensure a smooth winding-up process. These parties may include:

Creditors: Notify all creditors of the dissolution to settle any outstanding debts or obligations. This may involve paying off loans, lines of credit, or other liabilities.
Vendors: Inform your vendors about the dissolution so they can cease providing goods or services and close any open accounts.
Customers: Notify your customers about the dissolution to address any outstanding orders, contracts, or warranties. Depending on your business, this may involve refunding, fulfilling outstanding orders, or transferring contracts to another provider.

Settle any Legal Matters

If your LLC is involved in any ongoing legal disputes or matters, it is crucial to resolve these issues before the dissolution is complete. Consult with an attorney to address any pending litigation or legal obligations.

Distribute Remaining Assets to Members

After all outstanding debts, obligations, and legal matters have been addressed, the remaining assets of the LLC should be distributed among the members. The distribution process should follow the provisions outlined in the operating agreement, which may specify the following:

Distribution percentages: The operating agreement may outline the percentage of remaining assets each member is entitled to receive based on their ownership interest.
Order of distribution: The operating agreement may provide a specific order in which assets are to be distributed, such as cash first, followed by tangible property, and then intangible assets.
Valuation of assets: In some cases, the operating agreement may require assets to be appraised or valued before distribution to ensure fair and equitable dispersal among the members.

You can bring your Michigan LLC to an orderly and legally compliant conclusion by properly notifying all interested parties and wrapping up remaining business affairs. This will help protect you and the other members from any potential legal and financial liabilities arising after the dissolution.

Filing Fee to Dissolve Michigan LLC

It is impossible to predict the exact filing fee to dissolve or cancel your Michigan LLC in 2023, as fees are subject to change. However, as of 2021, no fee is associated with submitting the Certificate of Dissolution or the Certificate of Cancellation to the Michigan Secretary of State.

To file a Certificate of Dissolution, you must:

Complete the form with the required information, including the LLC name, file number, and dissolution date.
Obtain signatures from the approving members or their authorized representatives.
Mail or hand-deliver the form to the Michigan Secretary of State’s office.

To file a Certificate of Cancellation, you must:

Complete the form with the required information, such as the LLC name, file number, and the reason for cancellation.
Obtain signatures from the approving members or their authorized representatives.
Mail or hand-deliver the form to the Michigan Secretary of State’s office.

Please note that fees may change over time. Confirming the current fee schedule on the Michigan Secretary of State’s website or by contacting their office directly before filing any documents in 2023 is always recommended.

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FAQs

What is the first step in dissolving a business in Michigan?

The first step in dissolving a business in Michigan is to file Articles of Dissolution with the Michigan Department of Licensing and Regulatory Affairs (LARA).

Can I dissolve my Michigan business online?

Yes, you can file your Articles of Dissolution online through the LARA website.

What information do I need to provide when filing for dissolution in Michigan?

You will need to provide the name of your business, the date of incorporation, the reason for dissolution, and the signatures of all company officers.

Do I need to pay a fee to dissolve my Michigan business?

Yes, there is a fee associated with filing for Articles of Dissolution in Michigan. The current fee is $10.

Is there a minimum waiting period before my Michigan business can be dissolved?

Your Michigan business can be dissolved as soon as your Articles of Dissolution are approved by LARA.

What happens if my Michigan business owes taxes or has outstanding debts when it is dissolved?

You are responsible for paying off any outstanding debts and taxes before your Michigan business can be dissolved.

Do I need to notify my Michigan business’s employees of the decision to dissolve?

Yes, you should notify your employees of the decision to dissolve and provide information about when their employment will end.

What is a certificate of dissolution in Michigan?

A certificate of dissolution is the official document stating that your Michigan business has been legally dissolved.

Can I reconsider my decision to dissolve my Michigan business after filing for Articles of Dissolution?

No, once you file for dissolution in Michigan, the decision is final and cannot be revoked.

Can I still do business in Michigan after filing for dissolution?

No, a dissolved company cannot continue to conduct business in Michigan.

What should I do with any remaining assets after my Michigan business is dissolved?

Any remaining assets should be distributed to shareholders or creditors according to Michigan law.

How long does it take for LARA to approve a Michigan business dissolution?

The approval time for dissolution of a Michigan business may vary, but it typically takes several weeks.

Can my Michigan business be delinquent on taxes and still be dissolved?

No, you must bring your Michigan business’s taxes current before it can be legally dissolved.

Can I dissolve my Michigan business if I am in bankruptcy?

No, you will need to follow the procedures outlined by the bankruptcy court before being able to dissolve your Michigan business.

Do shareholders need to approve the dissolution of a Michigan business?

Yes, shareholders need to approve the dissolution of a Michigan business, unless it is specified otherwise in the Articles of Incorporation.

Can I restart my Michigan business after it has been dissolved?

Yes, you can restart your Michigan business after dissolution, but you will need to file new forms with LARA and the IRS to do so.

What is a DBA, and do I need to dissolve it as well when closing my Michigan business?

A DBA is a “doing business as” name, and it does not need to be dissolved separately in Michigan. It will be dissolved along with your business.

Does a Michigan business need to be current on all state requirements before dissolution can be approved?

Yes, your Michigan business needs to be current on all state requirements, including annual reports and taxes, before it can be dissolved.

Can I dissolve my Michigan business without hiring an attorney?

Yes, you can dissolve your Michigan business without hiring an attorney, but you may want to consult an attorney to ensure that you are following all necessary legal procedures.

Can my Michigan business be involuntarily dissolved?

Yes, there are certain circumstances under which a Michigan business can be involuntarily dissolved, such as failure to file annual reports or pay taxes.

How long do I have to file for dissolution after I’ve officially retired or closed my Michigan business?

There is no specific deadline for filing for dissolution in Michigan, but it is best to file as soon as possible after you’ve retired or closed your business.

How can I ensure that all necessary documents are submitted when I decide to dissolve my Michigan business?

To ensure that all necessary documents are submitted, you may want to consult a business attorney or utilize a dissolution service.

What is a Certificate of Good Standing, and do I need to have one to dissolve my Michigan business?

A Certificate of Good Standing verifies that your Michigan business is up-to-date on all of its state requirements, but you do not need to have one to dissolve your business.

Can I still receive mail after my Michigan business has been dissolved?

Yes, it is recommended that you provide LARA with a forwarding address before your Michigan business is dissolved, so any mail can still reach you.

Will I need to turn in my Michigan business’s tax ID number when dissolving my company?

No, you will not need to turn in your Michigan business’s tax ID number when dissolving your company.

What is the difference between dissolving a Michigan business and liquidating a Michigan business?

Dissolving a Michigan business means that the company stops operating and it is officially removed from the state’s records. Liquidating a Michigan business means that the company is selling off assets to pay off debts.

Can I dissolve my Michigan business if it has pending litigation?

You can dissolve your Michigan business with pending litigation, but you will want to consult an attorney to make sure you are following all necessary legal procedures.

How can I properly cancel all insurance policies when dissolving my Michigan business?

Contact each of your Michigan business’s insurance companies directly to cancel any relevant policies and confirm in writing that the policies will be canceled upon the business’s dissolution.

Can I dissolve my Michigan business if it is involved in a lawsuit or has any unresolved debts?

It is generally recommended to resolve any lawsuits or outstanding debts before dissolving a Michigan business.

What is the first step to dissolve a business in Michigan?

The first step to dissolve a business in Michigan is to submit a completed Certificate of Dissolution to the Michigan Department of Licensing and Regulatory Affairs (LARA).

How long does it take to dissolve a business in Michigan?

It typically takes 2-4 weeks to dissolve a business in Michigan.

What is a Certificate of Dissolution?

A Certificate of Dissolution is a formal document that officially terminates a business entity’s existence in Michigan.

What information is required on the Certificate of Dissolution?

The required information on the Certificate of Dissolution includes the business entity’s name, corporate ID number, date of incorporation, and the reason for dissolution.

Can I dissolve my Michigan business with just one owner or shareholder?

Yes, a business owned by just one person can still be dissolved in Michigan.

Do I need to file a final tax return with Michigan when dissolving my business?

Yes, a final tax return must be filed with the Michigan Department of Treasury and the IRS when dissolving a business in Michigan.

Can I dissolve my business in Michigan if it has unpaid debts or taxes?

Yes, a business in Michigan can still be dissolved even if it has unpaid debts or taxes.

Do I need to inform my business partners or shareholders before dissolving my Michigan business?

Yes, it is important to notify all partners or shareholders before the business is dissolved in Michigan.

Can I dissolve a business in Michigan that is involved in pending lawsuits or legal issues?

Yes, a business in Michigan can still be dissolved even if it is involved in pending lawsuits or other legal issues.

Do I need to notify the State of Michigan when dissolving my business if I am just a small sole proprietorship?

Yes, even small sole proprietorships in Michigan must notify the state using a Certificate of Dissolution when dissolving their businesses.

How much does it cost to dissolve a business in Michigan?

There is a $10 fee to file a Certificate of Dissolution with the Michigan Department of Licensing and Regulatory Affairs (LARA).

What is the MERCHANTS system in Michigan, and do I need to use it to dissolve my business?

The MERCHANTS system is an online tool used in Michigan for updating or dissolving businesses. Using it is the easiest way to dissolve a business, but it is not required.

Can I dissolve a nonprofit organization in Michigan?

Yes, nonprofit organizations in Michigan can be dissolved by submitting a Certificate of Dissolution with LARA.

Can I dissolve a corporation in Michigan without a unanimous vote from all shareholders?

No, the unanimous vote of all shareholders is required to dissolve a corporation in Michigan.

What is the process for dissolving an LLC in Michigan?

The process for dissolving an LLC in Michigan involves completing and submitting a Certificate of Dissolution to LARA.

What is “resigning as an agent” in Michigan, and is it required when dissolving a business?

Resigning as an agent in Michigan involves officially designating someone else to serve as the agent for the business. It is not required when dissolving a business, but it is recommended.

What happens to the assets of a Michigan business after it is dissolved?

The assets of a dissolved Michigan business are typically distributed among its creditors and shareholders.

Is an attorney required to dissolve a business in Michigan?

No, an attorney is not necessarily required when dissolving a business in Michigan, but it can be helpful to consult with one.

Do I need to notify my customers and vendors before dissolving my business in Michigan?

Yes, it is important to notify customers and vendors before dissolving a business in Michigan.

What is the difference between involuntary dissolution and voluntary dissolution in Michigan?

Involuntary dissolution occurs when a government agency or other authority decides to dissolve a business, while voluntary dissolution occurs when the business owners willingly decide to dissolve the business.

Is a financial statement required when dissolving a business in Michigan?

No, a financial statement is not required when dissolving a business in Michigan.

Can shareholders still receive dividends after their Michigan business is dissolved?

No, shareholders cannot receive dividends after the business is dissolved in Michigan.

Can I dissolve my Michigan business if it has outstanding loans or mortgages to pay off?

Yes, a business in Michigan can still dissolve even if it has outstanding loans or mortgages to pay off.

Can I close my Michigan business without dissolving it?

Yes, closing a business and dissolving it are two separate processes in Michigan.

Do I need to cancel my Michigan business licenses and permits when dissolving the business?

Yes, it is important to cancel any existing licenses and permits before dissolving a business in Michigan.

What happens if I fail to file a Certificate of Dissolution in Michigan?

If a Certificate of Dissolution is not filed in Michigan, the business entity will continue to exist on file with the state.

Can I change my mind and restart my Michigan business after it has been dissolved?

Yes, it is sometimes possible to restart a dissolved Michigan business, but it depends on the specific circumstances and may require starting a new business entity.

Conclusion

Dissolving your Michigan LLC is an important and often emotional decision that signifies the end of a business journey. While it may be challenging, ensuring that all legal requirements and obligations are met is essential to avoid future complications or liabilities. By diligently following the steps outlined in this guide and working closely with the relevant state agencies, you can smoothly navigate the dissolution process while maintaining compliance with Michigan regulations.

As you close this chapter in your business journey, remember that new opportunities may lie ahead. We invite you to explore LLCBase with your Michigan LLC dissolution needs. We wish you the best of luck in your future endeavors and hope to assist in any way we can.