Just as you formed your limited liability company by submitting your articles of organizations to the Department Licensing and Regulatory Affairs (LARA), the Michigan LLC dissolution process would also go through a similar process.
A Michigan LLC can be dissolved:
- Automatically at the date written in the articles of organization (or operating agreement)
- Involuntarily by a decree of judicial dissolution (court-ordered to dissolve)
- Voluntarily with the majority of votes from LLC members
Like LLCs formed in other states, a Michigan LLC must inform the state of Michigan about its plan to cease operations within the state.
How to Dissolve a Michigan LLC in 5 Steps
If you’re planning to voluntarily dissolve your corporation, make sure your business goes through the following process:
Step 1
Prepare for Dissolution
Before filing paperwork, you need to prepare several things, such as:
- Dig into the LLC’s Articles of Formation (or Operating Agreement). This document was filed during the formation of your LLC (see also ‘Best Formation Service’ review) and dictates the shares of LLC members, LLC instructions to dissolve, and other details of the actual operation. In most cases, the Operating Agreement will state how LLC members are supposed to vote in dissolving the company. Do all LLC members have to agree? Or just a majority vote? If details of dissolution aren’t included in the Operating Agreement, then the LLCs would have to check with Michigan LARA rules.
- Notify Creditors. LLCs must provide adequate notice to their creditors and other individuals or third-party corporations that might have an interest or claim in the company. This isn’t just for the benefit of claimants, but also to limit the liability that the LLC members might end up facing. Notifications should include information, such as the deadline of a claim and the date of dissolution.
- Draft dissolution documents. Meet with all LLC members to write the Certificate of Dissolution. Some LLCs require the help of an attorney, but others just fill out the form provided by Michigan LARA.
Michigan requires a recording of the dissolution vote in the LLC’s meeting minutes.
Step 2
File Final Tax Returns & Close Business Accounts
Every Michigan limited liability company has at least one tax account, which you’d need to pay off in full before going through the dissolution process.
Depending on what kinds of products or services your company sold or provided, the LLC may owe:
- Michigan Business Tax
- Unemployment Insurance Tax (for corporations/companies with employees)
- Employee Withholding Tax (for corporations/companies with employees)
- Sales & Use Tax (for corporations/companies who sold taxable goods or services in Michigan)
There’s no additional form required to close tax accounts. Just file a tax return as you normally would, except tick the box that says “final return.”
Step 3
File the Certificate of Dissolution
To dissolve an LLC, download and print the Michigan Certificate of Dissolution. You can also draft your own dissolution, but it has to have all the information found on the Certificate of Dissolution.
There is no way to submit the form online, so you have to choose between sending it via mail or going to the Department of Licensing and Regulatory Affairs (LARA) in person.
By mail:
- Michigan Department of Licensing and Regulatory Affairs
- Bureau of Commercial Services
- Corporation Division
- P.O. Box 30054 Lansing, MI 48909
In-person:
- 2501 Woodlake Circle
- Okemos, MI
- (517) 241-6470
Whether you’re filing by mail or in person, you have to include your LLC’s name, and a check or money order payable to the “State of Michigan.” If you prefer to file in person, you also have the option of paying via VISA or MasterCard.
How much does it cost to file a Certificate of Dissolution?
The Michigan Department of Licensing requires you to pay $10 for the normal processing of your dissolution paperwork. In most cases, LARA releases the Michigan Certificates of Dissolution within 3 to 5 days.
If you need it back faster, fill out the Expedited Service Request form and pay additional fees for expedited processing. Of course, if you paid for expedited processing, you’ll receive the document earlier:
- $100 (24 hours expedited: filing is completed the following business day)
- $200 (same day processing: filing is completed if you submit by 1 pm)
- $500 (two-hour processing: filing is completed within 2 hours if you submit by 3 pm)
- $1000 (one-hour processing: filing is completed within an hour if you submit by 4 pm)
After you dissolve an LLC, the business name you used for your Michigan LLC will no longer be yours. Dissolving an LLC actually removes the protection of your business name. The business name also becomes available for other people to use if your Michigan LLC is not in good standing with LARA.
Step 4
Obtain Tax Clearance Certification
The following step isn’t necessarily needed in the submission of your Michigan LLC Dissolution certificate, but the Michigan Department of Treasury requires all LLCs to obtain tax clearance within 60 days of filing your LLC’s dissolution.
To do this:
- Visit the Michigan Department of Treasury, Tax Clearance Division (or call Tax Clearance Unit at (517) 636-5260.
- Complete and submit the Department of Treasury Form, Tax Clearance Request For Corporation Dissolution or Withdrawal.
- Request them to review your business tax account (By now you should have settled outstanding taxes and filed your LLC’s final tax return)
- If you do not owe the Michigan government anything, the Department of Treasury will issue you a Tax Clearance Certificate.
- If you owe back taxes, you can pay with a check payable to the “State of Michigan” while you submit your Tax Clearance form. Don’t forget to attach your final tax returns while sending your clearance request.
- Tax Clearance Section
- Michigan Department of Treasury
- P.O. Box 30168
- Lansing, MI 48909
It takes about six weeks to receive your Tax Clearance Certificate. Fortunately, you are not required to file the certificate to LARA anymore.
In some cases, the Department of Taxation may require additional information about your Michigan LLC. When this happens, obtaining your Tax Clearance could take up to 12 weeks.
Step 5
Wind Up
Winding up is a set of tasks any Michigan LLC must complete to formally cease the operations of the company and dissolve an LLC.
Aside from filing the dissolution papers, the Michigan LLC must also:
- Pay or provide provisions to pay creditors
- Sell LLC properties
- Distribute remaining assets of LLC to its members (based on respective shares usually found in the Articles of Organization)
Note that under Michigan’s LLC Act, the dissolution process does not prevent your LLC from suing or being sued. As such, if this happens, you, a former LLC member, or your LLC’s registered agent – see Legal Nature detailed review – should face these legal issues.
How to Dissolve a Foreign LLC from Michigan
If your LLC in Michigan is just allowed to transact within the state but was actually formed outside of Michigan (in another city, state, or country), your business is required to follow a slightly different way of dissolving an LLC.
File the Application for Certificate of Withdrawal with LARA.
To do this, you should download this form and fill it out with complete information, such as:
- Name of the LLC in Michigan authorized to operate
- Name and address of the application
- Business name
- State ID number
- contact information
- Affirmation that the LLC in Michigan is no longer conducting business within the state.
- Affirmation that you understand that the Michigan government will remove your authority to conduct business within the state
- Affirmation that the LLC revokes the authority of its representative to receive service of process
- Mailing address (where you’d like government documents sent)
- Signature of an authorized representative
You have two ways of sending this form: by mail, or online via the LARA portal (you’ll have access to this if you have a registered agent in the state). Note that filing this application requires a $10 processing fee.
If you’re sending the form by mail, make the checks payable to the “State of Michigan” and mail to the following address:
- Michigan Department of Licensing and Regulatory Affairs (LARA)
- Corporations, Securities & Commercial Licensing Bureau
- Corporations Division
- P.O. Box 30054 Lansing, MI 48909
Expect LARA to take 3 to 5 business days to process the Application for Certificate of Withdrawal.
Request a Tax Clearance
Just like a domestic LLC (businesses formed within Michigan), your business must also file a Request for Tax Clearance Application with the Department of Treasury. Send your request to:
- Michigan Department of Treasury
- Tax Clearance Section
- P.O. Box 30778
- Lansing, MI 48909-8278
You should accomplish this clearance no more than 60 days from the date of dissolution filing.
Expect the Department of Treasury to process and issue your business Tax Clearance Certificate up to 12 weeks.
Wrap Up
The state of Michigan doesn’t just dissolve a Michigan LLC if you fail to file annual statements. However, continuously missing payments and filings would lead the LLC to lose its good standing with the Licensing and Regulatory Affairs.
And once you do decide to voluntarily dissolve your corporation, the LLC must file a Certificate of Restoration (with a $50 filing fee) to bring your business back to good standing. Only then will you be able to file your annual statements and final tax return, then go through the entire dissolution process.
Dissolving a Michigan LLC isn’t complicated, but going through this process is a must to avoid administrative consequences and additional challenges associated with your LLC.
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