How to Dissolve an LLC in Michigan? (Step by Step Guide)
If you're a business owner in Michigan, there may come a time when you need to dissolve your LLC. This process can be complicated, so it's essential to understand the steps involved.
As an experienced legal advisor in Limited Liability Companies, I will provide you with a comprehensive guide on how to dissolve an LLC in Michigan. The article will also help you understand the reasons why an LLC is terminated.
Quick Summary
- To dissolve an LLC in Michigan, hold a dissolution meeting, consult the operating agreement, settle all debts and tax obligations, close all business bank accounts, and file the Articles of Dissolution with the Secretary of State.
- An LLC may be dissolved voluntarily by its members or involuntarily by the state.
- A provision in the operating agreement specifies the conditions under which an LLC can be dissolved.
Steps to Dissolving a Michigan LLC
A Michigan limited liability company must undergo the dissolution process before ending its affairs. Here are the steps you must take to dissolve a Michigan LLC.
Step 1: Hold the Dissolution Meeting of LLC Members
LLC owners should first meet to discuss the dissolution. Only members of the LLC can give a dissolution vote.
If your LLC has more than one owner, you must decide how to deal with ownership interests. This decision will impact the final steps of the LLC dissolution process.
Step 2: Follow Your Michigan LLC Operating Agreement
A Michigan LLC operating agreement is the governing document that sets forth the rules and regulations for LLC members.
This document should outline the dissolution process, including any requirements or restrictions on dissolution. In the absence of one, state laws apply [1].
The operating agreement will also specify what will happen with the LLC assets after dissolution.
In most cases, the operating agreement states that LLC assets will be distributed among the members according to their ownership interests.
If there are any business debts or liabilities after dissolution, the members may be held liable for them, as per the operating agreement.
Step 3: Settle LLC Debts
Michigan LLCs must take all the assets to pay off all their debts and obligations before they can be dissolved. This includes paying off any business loans, mortgages, or other debts.
If the LLC cannot afford to pay its debts, the creditors may take legal action against the members to recover what they're owed.
It's important to remember that LLC members are not personally liable for the company's debts.
Step 4: Close Business Accounts
Business entities in Michigan must close bank accounts, credit accounts, and any other accounts related to the business. This includes canceling any licenses or permits with the Department of Licensing and Regulatory Affairs.
The Michigan limited liability company must also notify the Department of Treasury that it is dissolving. The Department of Treasury will then cancel the LLC's tax registration.
Notify all relevant state and federal agencies about the dissolution. You should also inform any customers or clients who may have been doing business with the company.
Step 5: Obtain a Tax Clearance Certificate
Michigan Department of Treasury requires every Michigan LLC to obtain a tax clearance certificate that confirms that the tax liabilities of the LLC are up to date.
There is an online application form that you can fill out and submit electronically to file a tax clearance request which can be found on the Michigan Department of Treasury website.
Before issuing the tax clearance certificate, outstanding taxes, and various tax accounts must be paid in full. If your LLC owes any taxes, you will need to pay those off first before filing a tax clearance request.
The Department of Treasury also offers a payment plan for LLCs that owe back taxes. You can find more information about the payment plan on the Department of Treasury website.
Step 6: File Articles of Dissolution
Every limited liability company in the state has to file Michigan LLC Articles of Dissolution before they can dissolve a Michigan LLC.
The Certificate of Dissolution is a document that officially ends your Michigan LLC. This form is filed with the Michigan Department of Licensing, Corporations Division.
The dissolution form can be downloaded from the Department of Licensing and Regulatory Affairs website.
Articles of Dissolution can be filed online through the Department of Licensing and Regulatory Affairs Corporations website or by mail.
There is a $10 filing fee for dissolving an LLC in Michigan using the dissolution form.
After the Articles of Dissolution are filed, the Department of Licensing and Regulatory Affairs, Corporations Division will send you a Certificate of Dissolution, which confirms that your LLC has been dissolved.
Related Articles:
- Michigan LLC Business Search
- Best Registered Agents in Michigan
- How to Apply for an LLC in Michigan
- Premium Michigan LLC Formation Services
Reasons to Dissolve an LLC in Michigan
Reasons to dissolve an LLC in Michigan may be internal or state sanctioned. Some LLCs voluntarily dissolve, while others get administratively dissolved by the state because they lose their good standing with it.
1. Voluntary Dissolution of an LLC in Michigan
Sometimes, the members of a business entity can initiate an LLC's dissolution for the following reasons:
- Completion of the business
- The function has been achieved
- Personal decisions of the members
- Retirement of one or more members
- Disagreements between members
When an LLC decides to dissolve voluntarily, it must file the necessary paperwork with the Michigan Department of Licensing and Regulatory Affairs.
2. Involuntary Dissolution of an LLC in Michigan
When LLCs in Michigan lose their good standing with the state, the Michigan Secretary of State can dissolve the company.
Involuntary dissolution may be due to the following reasons:
- Failure to pay debts or Michigan LLC taxes
- Non-compliance with state laws
- An LLC can also be involuntarily dissolved by a court order
FAQs
How Do I Dissolve a Foreign LLC in Michigan?
You can dissolve a foreign LLC in Michigan by filing the certificate of Withdrawal with the Michigan Department of Treasury.
How Much Does It Cost to Dissolve an LLC in Michigan?
It costs $10 to dissolve an LLC in Michigan. You may have to pay an additional fee for the expedited service.
How Long Does It Take To Dissolve an LLC in Michigan?
It takes approximately a week to dissolve an LLC in Michigan. The process may take longer if there are pending cases against the company or one of its owners.
Does Michigan Require Tax Clearance for LLC Dissolution?
Michigan requires tax clearance to complete LLC dissolution.
Can I Reinstate a Dissolved LLC in Michigan?
You can reinstate a dissolved LLC in Michigan, but there are specific steps that must be taken. You will need to file Articles of Reinstatement with the Department of Licensing and pay all applicable fees.
LLC Dissolution in the State of Michigan
An LLC in Michigan may be dissolved voluntarily as per the decision of the members. The dissolution may also be officially sanctioned for legal reasons.
The steps include consulting the LLC's operating agreement, voting to finalize the decision, settling LLC debts, closing accounts, obtaining the tax clearance certificate, and filing the Articles of Dissolution.
If you are looking for help dissolving your LLC in Michigan, it is best to seek professional assistance.
By working with an experienced legal professional like IncFile, you can be sure that the process will go smoothly and that all of the necessary paperwork will be filed correctly.
References:
- https://www.michigan.gov/lara/bureau-list/cscl/corps/limited-liability-co/filling-requirements-continued/dissolution
