Business Dissolution Attorney in Troy, Michigan
Business dissolution isn’t always a bad thing, but whether it is a positive or negative experience, you shouldn’t go through the process without an attorney’s guidance. Knowing how to handle a business dissolution is crucial to avoid negative legal consequences. I am prepared to serve you and guide you through the dissolution process. If you are in Troy, Michigan, or the neighboring areas of Oakland and Macomb, reach out today.
What Are the Reasons for Business Dissolution in Michigan?
There are various reasons for business dissolution. During the process, consider these circumstances:
Cash flow issues. Businesses sometimes shutter because they do not generate enough revenue. As a result, business dissolution is an option to cut losses.
Management. Bad management can affect business practices. Some folks may lack experience, while others may lack the necessary business skills.
Competitors. Sadly, competition can drive some businesses out of the market.
The economy. Economic conditions can play a huge role in a business’s success. Adverse economic conditions such as high inflation or unemployment may cause businesses to close their doors.
Product liability. Some businesses get hit hard with product liability issues. For instance, defective products causing serious harm can lead to crippling lawsuits.
Debt. Businesses that accrue high debt burdens may dig a hole too deep to climb out of. Thus, bankruptcy may be the only alternative.
Lack of vision. Business leaders must be aware of the future. When business executives lack vision, they might neglect to prepare for future situations.
Disagreements. In general, the most common reason for business dissolution is disagreements among partners. While partners may see eye to eye in the beginning, personal and professional differences may lead to disagreements down the road. When disagreements get too bad, business dissolution may be the best option.
While it is possible to turn a faltering business around, the cost to do so may outweigh the potential returns. Unfortunately, there may come a time when the best decision is for business partners to go their separate ways.
Dissolving a Business Partnership
Dissolving a business partnership requires careful consideration. Please note business dissolution is not a do-it-yourself endeavor. Dissolving a corporation requires the intervention of a business law attorney that can help partners follow the appropriate rules and procedures.
Here’s an overview of the business dissolution process in Michigan:
Dissolution. Dissolving an LLC requires that all members named in the incorporation documentation agree. A voluntary dissolution requires unanimous agreement. This agreement must be registered in a consent form and meeting minutes. Please note that LLCs are registered with the State. As such, it is the State that officially dissolves the LLC.
Certificate of dissolution. After voting to dissolve the LLC, a certificate of dissolution must be filed with the Michigan Department of Licensing and Regulatory Affairs. The certificate must state the corporation’s name, reason(s) for dissolution, and effective date of dissolution. The LLC must be in good standing for the certificate to process.
Winding up. This process involves liquidating final business issues such as paying outstanding taxes, covering debts, distributing remaining assets among members, and notifying involved LLC members.
Notice to creditors and claimants. A notice to creditors and claimants must be sent. This note should state the dissolution and provide details about submitting claims. This notice may also be published in a newspaper.
Tax clearance. A tax clearance from the Department of Treasury must be submitted within 60 days of filing the certificate of dissolution.
Enlisting the services of a professional business law attorney helps get this process right. Given the nuances of business law and taxation, getting the right legal advice is crucial to avoid issues down the road.
Dissolving a Sole Proprietorship
Dissolving a sole proprietorship is a relatively easier process than a corporation such as an LLC. This dissolution process mainly involves notifying the Internal Revenue Service (IRS) of the business’s closing.
Here is a look at what to expect when dissolving a sole proprietorship:
Business owners must file income tax returns as sole proprietors for the final year of business.
Employment taxes due must be paid.
Outstanding wages for employees and contract workers must be settled.
Business owners should have relevant tax documentation handy covering at least the last four years.
Sole proprietors must send a letter to the IRS requesting the closing of their Employer Identification Number.
Please note that closing a sole proprietorship does not require filing with the State of Michigan, as with corporations.
Business Dissolution Attorney in Troy, Michigan
I work with my clients to provide them with the best options for their needs. If those options include business dissolution, I am prepared to work with you every step of the way. Call today to speak with an experienced and professional business law attorney.