There are several reasons for dissolving a corporation. It could be due to bankruptcy, an internal dispute, among other reasons.
Suppose you are a business owner and decide to cease your business’s operation. In that case, there are many things that you have to do before your corporation is officially out of business. You don’t just simply stop and then disappear.
With that said, here are the things you should know when dissolving a corporation in Michigan.
What It Means to Dissolve a Michigan Corporation
There are some steps a business owner must follow to dissolve his corporation. There may be a few differences between the processes in different states, but most of the steps are similar. Despite the variations of the steps in other states, you must follow the steps below.
- The first step in dissolving a corporation is to hold a board meeting with all the board members present. They all must be aware of the initiative to dissolve the corporation.
Despite the initiative, there must still be a resolution in which most of the board members approve to dissolve the corporation. The shareholders may also need to take part in the voting, but that depends on your organization’s structure. This process must be thoroughly recorded and then stored in the corporate record.
- After this, proceed to the Department of Licensing and Regulatory Affairs also known as LARA to file the Articles of Dissolution.
- Next, you have to complete all of the IRS tax requirements with the State of Michigan. You do this by requesting a Tax Clearance Certificate from the Department of Treasury in Michigan.
- After this, all your business licenses and permits must be canceled, and all your business bank accounts must be closed.
- Lastly, concerning your employees, vendors, customers, and everyone who has a connection to the company, notify them of the initiative to dissolve the company.
These steps are easy enough to understand, and you should have no trouble going through with each of them. The only step in this process, which causes the most confusion and is the most complex, is the Articles of Dissolution which will be discussed further in the section below.
Dissolving a Michigan Corporation by the Board of Directors
As discussed above, the first step of dissolving a corporation is by holding a meeting and informing all board members of the plan to dissolve the company.
For those corporations in the state of Michigan that have initiated business and have already issued shares, they need to file for the Articles of Dissolution to terminate their business operation from the Michigan Secretary of State. You can either choose the form provided by the state or come up with your own Articles of Voluntary Dissolution by designing one for yourself as it’s not a must to use files provided by the Michigan Secretary of State. You can file for the Articles of Dissolution online, by mail, or in-person.
When filling up this form, you will need to put in some information for the Articles of Dissolution. This includes the following:
- the name of your corporation
- the names, addresses, and the positions held by the corporate officers
- the date of the authorization of the dissolution
- the addresses and names of the corporate directors
- the date to which the dissolution was filed
- the date to which the dissolution will be effective
- the signature of the representative authorized by the company.
If you file for the Articles of Dissolution in the state of Michigan, you’ll have to write a check of 10 dollars processing fee that is payable to the “State of Michigan”. The check should have the name of the Corporation and its State ID number. You can file the documents in-person or mail the articles of dissolution and the check to the address:
Michigan Department of Licensing and Regulatory Affairs
Corporations, Securities & Commercial Licensing Bureau
P.O. Box 30054 Lansing, MI 48909
If you’re delivering the files and the check in-person, you’ll drop the documents off at the address:
2501 Woodlake Circle
Okemos, MI 48864
It should take the LARA 3 to 5 working days to complete the dissolution process. However, it may take 6 to 12 weeks for the Department of Treasury to issue a tax clearance certificate to you. As important as the tax clearance certificate is, LARA doesn’t require a copy of the tax clearance certificate.
Dissolving a Michigan Corporation by the Incorporators
There are instances wherein a corporation is dissolved before issuing the shares or before any business transaction has ensued. In these cases, it is the incorporator’s responsibility to spearhead the initiative of dissolving the corporation.
For all those corporations in the State of Michigan that have not yet issued shares or had any business transaction, you need to file for Form CD-530 which is also the Articles of Dissolution. This form requires similar information as explained above. The submission is the same as explained above. Note that corporations that have not started a business yet do not need to request for the tax clearance certificate from the Department of Treasury which means that only LARA is involved in the dissolution process which takes between 3 to 5 days.
Dissolving a Corporation in Michigan: Other Things You Should Know
You will lose the claim to your business name if your corporation is dissolved after filing for a voluntary dissolution in the State of Michigan.
There are some instances wherein the Michigan state will be the one to initiate dissolution. This is known as administrative dissolution or involuntary dissolution.
This can happen if a corporation or a company refuses or fails to submit its annual reports by the deadline. If you are subjected to involuntary dissolution, you have the option to reinstate your business by submitting the reports you failed to submit, paying all the fines and penalties, and then request for a Certificate of Renewal of Corporate Existence from LARA.
Whether you plan on dissolving your corporation, which has already issued shares and has started making business transactions, or a corporation that hasn’t commenced business yet, the process remains the same in the state of Michigan.
The only significant difference is in the form that you need to file. Hopefully, this article has been a great help to you in dissolving your corporation in the State of Michigan.