The state of Michigan has a healthy economy, with 99.6% (or 911,914) of all Michigan businesses being small ones. In fact, over 23,700 establishments opened between March 2020 and March 2021.
That may seem like a lot, yet over 22,800 small businesses closed, meaning there was only a net increase of around 900 new businesses. Admittedly, it can take some time to hit your stride, and you might need to dust yourself off and start over.
Are you now wondering how to dissolve an LLC in Michigan? Then keep reading, as we’ll give you complete instructions to do so.
Review Your LLC’s Operating Agreement
The operating agreement is a document that outlines various elements of your business operations. They include:
- Ownership structure
- Management structure
- Tax treatment
- Decision-making procedures
- Profit and loss allocation
- Distributions
- Rights and responsibilities of members
- Buyout and transfer of membership interests
- Dispute resolution
- Dissolution
As you can see, the last bullet point is essential, as it’ll tell you exactly what to do to dissolve your company. So even though you’re not required by law to have an operating agreement in Michigan, it’s wise to create one when you form your LLC. That way, should your business need to end, there are undisputable steps to follow.
With that said, if you’ve already created your LLC and don’t have an operating agreement, you’ll have to follow state laws. More specifically, you should refer to the Michigan Limited Liability Company Act.
Call a Vote With All LLC Members
To dissolve your LLC, the owners must agree before you can proceed. Give members adequate time to respond to ensure they can make arrangements in order to attend this important meeting.
Michigan is a state that requires a unanimous vote for dissolution. However, if your operating agreement has a different requirement (such as a two-thirds vote), then that takes precedence.
In any case, you’ll have to get the needed votes for dissolution before you can actually file. Make sure the details of the meeting are recorded for future reference.
File the Certificate of Dissolution
After you’ve obtained the necessary votes, it’s time to file the Michigan Certificate of Dissolution, or Form CSCL/CD 731. You’ll send this form to the Department of Licensing and Regulatory Affairs (LARA).
While the form isn’t long or complicated, do note that only an authorized person can sign it. Expect LARA to process your form in three to five business days.
For normal filing, it’ll cost $10, but if you want expedited services, you’ll have to fill out Form CSCL/CDC-272. In addition, it’ll cost $100 for 24-hour service or $200 for same-day service (must be received by 1:00 pm ES or EDT). For even faster service, you can pay $500 for two-hour service (received by 3:00 pm EST or EDT) or $1,000 for one-hour service (received by 4:00 pm EST or EDT).
Notify Creditors
If your LLC has loans or lines of credit, then you’ll have to notify the creditors of the company’s dissolution. Plus, provide instructions for submitting claims against your business, as this is necessary for addressing any outstanding debts and obligations.
On that note, you should pay off all debts and liabilities if possible. If your LLC doesn’t have enough money to do so, then you’ll have to prioritize payments as required by law.
Take Care of Tax Obligations
Michigan requires that LLCs get a tax clearance certificate when dissolving. This means you need to request this from the Michigan Department of Treasury, Tax Clearance Division within 60 days of your filing.
To do this, fill out and send Form 5156 (Request for Tax Clearance Application) to the Department of Treasury; make sure you address it to the Tax Clearance Section. There’s no fee for this application.
Before you send this form though, you should’ve taken care of all tax obligations (such as state and federal tax returns), as the certificate confirms that you have no more outstanding taxes. The good news is that you can submit past due taxes with the request form; just pay by check or certified check (the better option).
Wrap Up Your Business Matters
In addition to notifying creditors about your LLC’s dissolution, you should contact other stakeholders, such as vendors, suppliers, business partners, clients, and employees. Give them ample time to end their working relationship with you.
For any licenses, permits, or registrations, you’ll also want to cancel these. Notify relevant state and local agencies to do so.
Distribute Remaining Assets to the LLC Owners
It’s possible that your LLC has remaining assets, even after paying off debts and taxes. In this case, you’ll want to distribute them fairly to the LLC owners.
As we’ve mentioned earlier, your operating agreement should have a section about the distribution of assets. Typically, it’s according to ownership percentage, although your specific business may have different instructions.
Once this is done, you should be free to start another LLC if you’ve got bigger and brighter plans. Use our business registration service if you want to avoid paperwork, as we’ll handle it for you. Plus, we can complete registration in as little as two working days.
This Is How to Dissolve an LLC in Michigan
It’s unfortunate, but you may need to know how to dissolve an LLC in Michigan. Business ventures may seem full of potential, but once you put them into practice in the real world, it may be completely different from what you expected.
If you’ve come up with new ideas and would like to start over, then you can do so after a smooth dissolution. And with our thorough outline, that’ll definitely be possible.
Sign up with Business Anywhere today to start your next LLC. You can get a convenient virtual mailbox and online notary services from us too.
