Should you and other LLC members decide to dissolve your Michigan business entity, there are specific requirements one must fulfill before the dissolution process can officially proceed. In this post, our team will walk you through the procedure on how to dissolve an LLC in Michigan so that all matters and fees are handled efficiently while appropriately following the law.
How to Dissolve an LLC In Michigan?
Review Your LLC Operating Agreement and Articles of Organization
There are several steps in dissolving an LLC. In Michigan, one of the first obligations a Michigan LLC must fulfill when closing their business is thoroughly reviewing the outlined rules stated in the corporation’s operating agreement and articles of organization.
These documents typically include sections on how to dissolve an LLC in Michigan, along with the required vote percentage for any resolution to take effect and the formal process of giving notice to the members. If such terms and provisions aren’t indicated, our team advises you to follow the law of Michigan’s LLC Act that specifies alternative methods to voluntarily dissolve.
Vote for the Closing of LLC
As previously stated, it doesn’t matter if it’s written in the legal documents or not. All Michigan LLC members are entitled to attend the meeting and vote in favor or against any resolution in question. During the discussion, don’t forget to record the minutes or fill up a written consent form.
Should the number of votes achieve a unanimous result or reach the specified percentage written in the operating agreement, registered Michigan corporations can proceed with filing articles of dissolution.
However, keep in mind that if a Michigan LLC doesn’t have a good standing on a state record, filing a dissolution form is next to impossible. Aside from that, losing good standing status can cause several corporate consequences .
File Michigan Certification of Dissolution to LARA
Before any limited liability company can cease operations and be exempted from legal obligations such as an annual report, corporations must file the certificate of dissolution to the Michigan Department of Licensing and Regulatory Affairs (LARA).
You must ensure that the certificate of dissolution includes required information like business name, the basis of disbandment, and the effective date of dissolution. You can mail it to the Michigan Department of Licensing and Regulatory Affairs located in the Securities & Commercial Licensing Bureau, Corporations Division, P.O. Box 30054, Lansing, MI 48909.
This business document should be signed by an individual or manager authorized by the members. Although the state allows a Michigan LLC to draft its paperwork with all required data, you can freely download the dissolution form online.
While some may find all these filing procedures easy, there are many things to consider. For example, LLCs should keep in mind that after you submit these by mail or online, your trade name will be made available to other business owners intending to form their corporations in the state of Michigan.
After all the voting and filing, the “Winding Up” procedure should commence in order to dissolve a Michigan LLC and completely cut ties from legal responsibilities required by the state.
From requesting a tax clearance certificate from the Michigan Department of Treasury to distributing LLC assets, authorized members or managers are tasked to execute remaining state requirements.
Pay Taxes and Submit Tax Clearance
On top of paying outstanding taxes to the IRS, the state of Michigan requires LLCs under its jurisdiction to file for a tax clearance certificate to the Michigan Department of Treasury within 60 days of filing their business dissolution.
Although there’s no specified penalty if an LLC failed to request a tax clearance, our team still advises you to file it to avoid hassle in the future. After all, tax clearance request forms are readily available online.
After paying taxes, the next step for a Michigan LLC is to give notice to its creditors. This task isn’t mandatory during business dissolution, but we still recommend it just to check other claims before asset distribution.
A dissolved Michigan LLC may notify its creditors by sending written documents right after the official dissolution. This file should contain the description of the claim against the LLC, your business mailing address, the deadline, and attestations that requests will be voided if not sent during the given deadline.
Seeking assistance from an experienced business attorney is also a wise investment to avoid making an uninformed decision when faced with troublesome claims from the creditors and unexpected lawsuits amid the business dissolution.
Distribute LLC Assets
After accomplishing business dissolution requirements set by the state, the dissolved Michigan LLC may now check its remaining assets. In accordance with the business operating agreement submitted to the state, assigned LLC managers should distribute assets to current and former members.
Keep in mind that all the terms and conditions written in the document should be fulfilled by assigned individuals accurately and without bias.
Cost and Duration of Dissolving a Michigan LLC
Except paying outstanding taxes and fees, the state of Michigan only requires LLCs to endow $10 to file for a business dissolution certificate. If you prefer your filings to be processed immediately, you can opt for their expedited services, which could incur additional costs.
How do I close an LLC in Michigan?
To close an LLC in Michigan, a corporation should check dissolution articles, conduct a meeting to vote for dissolution, settle outstanding taxes to the IRS, and manage creditor claims. After these legal procedures and steps, only then can a business distribute the remaining assets and officially exempt itself from state requirements.
Dissolving an LLC isn’t a decision made out of the blue. Aside from avoiding additional fees and taxes, learning how to dissolve an LLC in Michigan will also allow you to incorporate a new one in the future with utmost ease and convenience.
Should you still want more information and resources about dissolving your company, you can find the dissolution form, mailing address, and filing fees online at the state’s LARA and Department of Treasury website.