Are you ready to stop doing business with your Michigan corporation, but you’re not sure how the official dissolution process works?
The state of Michigan requires corporations to file documentation of a dissolution, which can differ depending on a couple of key factors. What are these factors, and what does the dissolution process include? In this guide to dissolving a Michigan corporation, we’ll break down all the relevant details.
If at any point you need help, you can use a service like Incfile or Northwest Registered Agent to handle the process for you.
Rocket Tip: Most company formation services are also able to dissolve your entity for a small fee. They’ll take care of the paperwork so you can move on. Two popular options are LegalZoom and Incfile.
What Does It Mean to Dissolve a Corporation?
In any state, there is a series of steps that needs to be followed in order to properly dissolve a corporation. While this process does vary some from state to state, for the most part it’s necessary to follow this basic plan (unless your corporation has not yet issued shares or started doing business, which we’ll get to shortly):
- Hold a board of directors meeting and formally move to dissolve your corporation. The resolution to dissolve must be agreed upon by a majority of the corporation’s directors. Depending on your corporation’s structure, you may then need to take the vote to your shareholders. Either way, it’s important to take detailed records of this process for your corporate record.
- File the Articles of Dissolution with the Department of Licensing and Regulatory Affairs (LARA).
- Fulfill all tax obligations with the state of Michigan, as well as with the IRS.
- Cancel any relevant licenses and permits, along with closing your business bank account.
- Notify customers, vendors, and creditors of your dissolution.
Most of these steps are fairly self-explanatory, but where many corporation owners run into some confusion is when it comes to the Articles of Dissolution. With that in mind, let’s dive into the details of this step.
How to Dissolve a Michigan Corporation by the Board of Directors
Most corporations must be dissolved by the board of directors, and we discussed the necessity of holding a meeting to reach this resolution in the previous section.
In Michigan, corporations that have already commenced business and distributed shares will need to file the Articles of Dissolution in order to dissolve. You may choose to file online, in person, or by mail using either the state form or your own draft of the Articles of Dissolution. In any case, you must include the following information with your submission:
- Name and address of the applicant
- Name of the corporation
- Corporate state ID number
- Method of dissolution approval
- Signature of an authorized officer or agent
- Contact information
In addition to the information above, you will also need to provide payment of the $10 processing fee. Checks must include the name of the corporation and the corporate state ID number. If you’re filing by mail, you can submit the Articles of Dissolution and a check made payable to the “State of Michigan” to the following address:
Michigan Department of Licensing and Regulatory Affairs
Corporations, Securities & Commercial Licensing Bureau
Corporations Division
P.O. Box 30054 Lansing, MI 48909
If you’re filing in person, you can drop the forms off at this address:
2501 Woodlake Circle
Okemos, MI 48864
Once you have filed the Articles of Dissolution, you will still need to get tax clearance from the Michigan Department of Treasury. This must be requested no more than 60 days after filing for dissolution. You can request a Tax Clearance Certificate by filing the Tax Clearance Request for Corporation Dissolution or Withdrawal. All state taxes will need to be paid for the Department of Treasury to process your request.
LARA will generally take 3-5 business days to process the Articles of Dissolution, while the Department of Treasury can take between 6-12 weeks to issue a Tax Clearance Certificate. Though the Tax Clearance Certificate is technically required in order to dissolve, LARA does not require you to provide a copy of the Certificate.
How to Dissolve a Michigan Corporation by the Incorporators
Sometimes, entrepreneurs need to dissolve their corporation before shares are issued or any business is transacted. In this situation, the incorporator will need to take responsibility for dissolving the corporation.
Dissolving a Michigan corporation prior to commencing business or distributing shares is simpler, as you will just need to submit an alternate version of the Articles of Dissolution (Form CD-530, rather than the standard CD-531). Much like CD-531, CD-530 can be filed online, in person, or by mail. However, no matter how you choose to file, you will be required to provide the following information:
- Name and address of the applicant
- Name of the corporation
- Corporate state ID number
- Affirmation that the “corporation has not commenced business or affairs, has issued no shares, has no members entitled to vote on dissolution, and has no debts or other liabilities.”
- Affirmation that the “corporation has received no payments on subscriptions for its shares or memberships, contributions or other funds from members or third parties, or, if it has received payments, has returned them to those entitled thereto, less any part thereof disbursed for expenses.”
- Affirmation that “a majority of the incorporators or directors have elected that the corporation be dissolved.”
- Signatures of the majority of incorporators or directors
- Contact information
Once this form is completed in its entirety, you must include a check (if filing in person or by mail) for $10 made payable to the “State of Michigan.” This check must include the name of the corporation and the corporate state ID number. Then, you can mail the form and the check to the following address:
Michigan Department of Licensing and Regulatory Affairs
Corporations, Securities & Commercial Licensing Bureau
Corporations Division
P.O. Box 30054 Lansing, MI 48909
Or you can deliver the paperwork to this address:
2501 Woodlake Circle
Okemos, MI 48864
Corporations that have not commenced business or distributed shares are not required to obtain a Tax Clearance Certificate from the Department of Treasury. This means that once LARA processes the Articles of Dissolution (which generally takes 3-5 business days), your corporation’s dissolution is complete and you are not required to do anything else.
What Else Do I Need to Know About Dissolving a Corporation in Michigan?
While there are no repercussions for not obtaining a Tax Clearance Certificate following your dissolution, it is technically required by the state for any corporation that has commenced business and distributed shares. So, even though LARA does not require any kind of receipt or copy of the certificate, and this will not impede the dissolution process in any way, you should still request tax clearance to avoid any problems down the road.
Whether you voluntarily dissolve your corporation or the state initiates an administrative dissolution, you lose claim to your business name as soon as the dissolution has been processed. Your corporation can face administrative dissolution for failing to file an annual report. If you allow an annual report to remain delinquent for two years past its original due date, your corporation will automatically be dissolved 60 days after the two-year period has ended.
You can renew your corporation at any time following a voluntary or involuntary dissolution. You simply need to file any delinquent reports, pay any fees or penalties, and file a Certificate of Renewal of Corporate Existence with LARA. You can learn more about corporate renewals right here.
Conclusion
Dissolving a Michigan corporation that has commenced business and distributed shares can be time-consuming, as you will need to obtain a Tax Clearance Certificate from the Department of Treasury, which can take up to 12 weeks. However, dissolving a Michigan corporation that has yet to commence business or distribute shares is much simpler and faster.
Either way, it’s crucial that you complete each step discussed in this guide accurately, because you certainly don’t want to run into any issues with the dissolution process.
We hope this guide helped you answer any questions you might have had about dissolving a Michigan corporation!