What Is Michigan Dissolution?
Once a company decides to end its operations, it has to undergo the process of dissolution to formalize the closure. It also means that the company will start dealing with its obligations and responsibilities.
Why Does A Company Dissolve?
Why do companies need to dissolve? – A company needs to file paperwork to register its business with the state. Likewise, it also has to submit formal documents to inform the state that it will no longer operate in Michigan.
Who makes the decision to dissolve? – LLCs require the decision of their members. Corporations will need the recommendation of the board of directors and the approval of the shareholders.
How long does it take to dissolve a business? – It may take weeks for a company to finish the whole process. However, this time frame may change depending on how fast your company finishes each necessary step. Obtaining a tax clearance certificate usually takes 6 weeks, but it may take up to 12 weeks if additional information is necessary. The state processing of your company’s dissolution may only take 3-5 days.
What Happens If Your Company Does Not Formally Dissolve?
Your company will remain in the state register as an active business until you dissolve formally. Thus, the company will be liable for filings and tax obligations. Failure to comply may lead the state to remove your company’s good standing. It also leaves you vulnerable to possible claims.
Steps To Dissolve Your Business
Follow the steps the state has set to dissolve your Michigan company properly.
1. File Certificate of Dissolution with the state – An LLC has to file a Certificate of Dissolution form with the Department of Licensing and Regulatory Affairs by mail or in person. You may also draft your dissolution as long as it includes all the necessary information. A corporation that has conducted business needs Form 531 Certificate of Dissolution, while those that have not commenced business yet can use Form 530 Certificate of Dissolution. Fill out the form that applies to your corporation and file it with the Department Licensing and Regulatory Affairs by mail or in person.
2. Remove all liabilities and obligations – Liquidate all the assets of your company and settle all its obligations. Follow the priority outline that the law has set. You may only distribute remaining assets once you finish settling the company’s obligations. Do it according to the rights and interests of members or shareholders.
3. Give notice to any claimants – Make sure the notice includes information on where and until when they can submit claims. You may also publish a notice in a newspaper to inform unknown claimants about the company’s dissolution.
4. Tax clearance – Michigan requires business entities to obtain a tax clearance from the Department of Treasury within 60 days after submitting the Certificate of Dissolution. You may request the clearance from the Tax Clearance Division.
5. Close all bank accounts, credit lines, permits, and licenses – Close all business accounts to avoid possible legal issues. You will also not be able to use them for other purposes after settling your company’s obligations. You may also have to check your company’s permits. Cancel all business permits and licenses to protect your reputation and save you from fiscal obligations.
How DoMyLLC can assist with streamlining the process
The multi-step process includes various tasks that one has to accomplish. It may be a bit much, especially for someone who has never done it before. If you wish to streamline the process, you may have to get help from an expert. Our team can provide a personalized solution and live support. Contact us now and find out how we can help with the Michigan dissolution process.
Michigan Dissolution FAQs
Is There A Filing Fee To Dissolve The Business?
The filing fee for normal processing is $10. You may choose expedited processing for an additional fee. It varies depending on the processing time. For 24-hour processing, you will have to pay an additional $100. Same-day processing requires an additional fee of $200. Meanwhile, the 2 hour service comes with an additional $500. The 1 hour processing requires an additional fee of $1000.
Do You Need The Department Of Revenue Clearance Before The Secretary Of State Will Accept Your Dissolution?
Yes, request a tax clearance certificate from the Tax Clearance Division of the Department of Treasury.
How Long Does The State Take To Process The Dissolution?
Normal processing is approximately 3-5 days. However, you can choose an expedited service for an additional fee. It can be a 24-hour, same-day, 2 hour, or 1 hour review.
When Can Another Business Use Your Company Name?
The state does not offer name protection for businesses that want to dissolve. Your business name will be available as soon as you file for dissolution.