Whether by choice or necessity, closing a business, whether in Michigan or elsewhere, is something many owners face. The dissolution of a business may be something for which a plan exists — if an owner has no intention of keeping his or her company open after his or her retirement or death, — or it may be something for which no plan is in place. Regardless of when or why an owner decides to close up shop, a lot of preparation and planning goes into closing a business successfully and with the proper legal protections in place.
For sole proprietors, the decision to dissolve their companies is simply a matter of choice. For those with partners, however, a consensus must be reached among all owners before it is possible to proceed. If all are in agreement, legally dissolving a business can protect all owners from further liability for taxes and other debts. This may require notifying the appropriate government agencies and creditors of the decision to dissolve and may also require the filing of formal dissolution papers. After making all necessary notifications, permits and licenses can be cancelled.
Along with taking care of any financial obligations to the government and creditors, meeting obligations to employees is also important. Labor laws typically require that employees be notified of the dissolution a set number of days in advance. Issuing final pay checks and other payments for unused leave — if applicable — must also be done in accordance with state labor laws.
While this is just a brief overview of what goes into the dissolution of a business, it certainly shows the need for careful planning. Regardless of why the decision to dissolve has been made, taking all necessary precautions to comply with state and federal guidelines is a must. Seeking legal guidance can assist in ensuring there are no loose ends that may come back to hurt Michigan business owners after their businesses have shut their doors.
Source: sba.gov, “Steps to Closing a Business“, Accessed on April 20, 2015