Dissolve Your Michigan Business Today

Business owners know that there’s no single reason for wanting to dissolve a Michigan business. Sometimes the reasons can be economic, like to avoid bankruptcy. Maybe you just want to retire. Or perhaps it’s time to start a completely new venture and you need to wind up your current company before moving on to the next. No matter the reason, proper dissolution of your business is extremely important to your future success. If you don’t close your Michigan business correctly, you may still be expected to file tax returns, annual reports, and other state filings.

If you fail to properly dissolve your Michigan business, you might also be subject to fines or financial penalties depending what the issues are. Problems with dissolving your Michigan corporation or LLC could also negatively impact business owners’ or members’ credit and future business ventures. We’ve compiled some helpful information about how to dissolve a business in Michigan so you know what to expect.

We can also help you get ready to launch your next Michigan business. Our fast, easy Michigan limited liability company (LLC) Formation Service and Michigan Incorporation Formation Service have helped business owners like you get up and running sooner. 

Before dissolving your Michigan business

You’ll be glad if you do the work now instead of scrambling to do the work later to dissolve your Michigan business. Most states require clear records of your business information to prevent any issues in closing your doors. You’ll want to have a comprehensive list of all of your assets and liabilities on hand. Without that, you may encounter difficulty in finalizing your business’s dissolution. This is one of many reasons why keeping a secure and thorough record of all business dealings is important throughout the life of your enterprise.

Step 1: Establish a valuation of your Michigan business

Part of dissolving your Michigan business is figuring out how to value your real estate, inventory, assets, and anything else that might have value. If you’re not sure how to value things or what to value, there are many professionals who offer this service. As we mentioned, you’ll also need to gather all documents related to business operations. Focus especially on locating contracts with third parties, tax information, and receipts for any inventory or payments due.

Our Worry-Free Compliance Service can help you throughout the life of your Michigan business when managing this kind of documentation. When you sign up for this service, we provide you access to our dashboard at no additional charge. This keeps your business documents organized to make gathering dissolution information easier.

Step 2: Compile a full account of your Michigan business’s debts 

Most states don’t let you dissolve your business unless you can confirm that you don’t have any outstanding debts. Closing down your business doesn’t mean debts disappear! Possible legal repercussions for not handling your company’s outstanding debts include:

• Creditors attempting to hold members and owners of the company personally liable for the company’s debts during dissolution
• Creditors finding ways to hold you personally liable if debts aren’t paid
• Creditors attempting to pierce the corporate veil to locate your personal assets
• Creditors preventing or delaying the dissolution of your Michigan business

Knowing your finances can mean the difference between a quick, easy Michigan voluntary dissolution and a long, painful process.

Step 3: Identify Michigan’s official dissolution document

The Michigan Department of Licensing and Regulatory Affairs has set out the following parameters for when an LLC can be wound up:

• By a vote of the members of the LLC
• By automatic mechanism as specified in the LLC’s Articles of Organization
• Upon an event that’s specified in a governance document or by a membership vote
• Upon a judicial decree

Once any of those events have taken place, you can file for a Certificate of Dissolution. Within 60 days, you’ll want to request a tax clearance from the Michigan Department of Treasury.

To dissolve your Michigan corporation, the process is slightly different. A Michigan voluntary dissolution of your corporation can occur when you’ve met any of the following criteria:

• When the corporate board of directors takes action to dissolve the business
• When the board of directors and shareholders decide to dissolve the business
• When there is shareholder action to dissolve the business

Once you have fulfilled any of those criteria, you can file a Certificate of Dissolution. You’ll need to confirm that you haven’t issued any shares, that you haven’t commenced any business, that you have no debts or liabilities, and that you haven’t received any payment for shares (and if you have, you’ve returned it). If you can’t confirm those things, then you won’t be able to dissolve your Michigan Corporation. 

Step 4: Follow instructions in your Michigan business’s operating document

Your Michigan business’s governance documents can be a great guide to dissolving your business. You can refer to your LLC’s operating agreement or your corporation’s bylaws to help you navigate the process. 

We provide LLCs with operating agreement templates. These templates can help you customize an operating agreement for your business during the formation process. Working with a high-quality operating agreement that you’ve tailored to your business makes dissolution easier.  But even if you’ve followed all the procedures in your operating agreement, remember that you still need to file the proper dissolution paperwork with the state.

Step 5: Cancel your Michigan business’s permits, licenses, and registrations

Typically, you need federal, state, and local permits or licenses to operate a Michigan business. As you close your doors, you’ll need to terminate whichever licenses and permits you received. Some permits and licenses renew automatically each year, so make sure you know renewal dates. Don’t cancel your licenses too early, or that can create unnecessary problems. However, you also don’t want to be stuck with costly renewal liabilities. Be sure to understand your renewal dates and cancel accordingly.

Step 6: Wrap up your Michigan business’s legal and financial obligations 

If you’re a Michigan employer, one important thing to consider is whether you have any employment law obligations as you dissolve your Michigan business. Don’t be afraid to ask for employment law advice from trusted counsel! Often, your obligations depend on the size and type of your workforce. Be certain you understand the rules, since any misunderstanding of the law can delay your ability to dissolve your Michigan business.

You’ll also need to prepare and file final tax returns and any outstanding Michigan corporate reporting. For taxes, this includes both state and federal returns, if applicable. Once all tax information is filed, you’ll be able to cancel the business’s EIN.

Step 7: File a Certificate of Dissolution for your Michigan business

After completing all required steps towards dissolution — then you can file the Certificate of Dissolution for your Michigan business. This can be done by mail, online, or in person at the Michigan Department of Licensing and Regulatory Affairs (check to confirm your local office’s hours of operation). 

Let us help you keep your business compliant with Michigan law from day one onward

We take the complexity out of business compliance. Our Worry-Free Compliance Service has helped many business owners keep track of all their business obligations and documentation. Our unique and easy dashboard helps make transitions through the different phases of business a snap. And when you’re ready to start your next business, our fast and easy business formation services can get you up and running sooner. Whatever your business needs are, we’re here to help.