Michigan has over 16,000 independent restaurants, with Detroit, Grand Rapids, and Ann Arbor anchoring the market. The Michigan Restaurant and Lodging Association represents the industry statewide. Michigan's regulatory environment has one notable complexity that catches closing owners off guard: the state requires tax clearance before you can formally dissolve a corporation, which adds weeks to the process if you do not plan ahead.
Michigan Liquor License (MLCC)
Michigan liquor licenses are issued by the Michigan Liquor Control Commission (MLCC). Michigan operates a quota-based licensing system in many jurisdictions, which means licenses have secondary market value -- particularly in Detroit, Ann Arbor, and other high-demand markets.
A Class C liquor license (the standard full-service restaurant license) in the Detroit metro has sold for $15,000 to $50,000 on the secondary market depending on location and local quota availability. When you close, you can surrender the license to the MLCC or transfer it to a buyer. The transfer process requires MLCC approval and typically takes 60 to 90 days.
Contact the MLCC at least 30 days before your planned closing date. Michigan requires you to account for all on-hand liquor inventory. You can return it to the distributor or transfer it to another licensee with MLCC approval. You cannot simply sell or give away the inventory without authorization.
Michigan Final Paycheck Law
Under Michigan Compiled Laws 408.474, final wages are due on the next regular payday after separation. The Michigan Department of Labor and Economic Opportunity enforces wage claims. Michigan allows employees to recover unpaid wages plus a penalty equal to the unpaid amount (effectively doubling the liability) for willful violations.
Michigan does not require payout of accrued vacation unless your written policy explicitly promises it.
Michigan WARN Act
Michigan does not have a state WARN Act. The federal WARN Act (100+ employees) applies. The Michigan Talent Investment Agency administers WARN Act notifications. Most independent restaurants are below the federal threshold.
Michigan Sales Tax
File a final sales tax return with the Michigan Department of Treasury. Michigan's sales tax rate is 6% statewide with no local add-ons -- one of the simpler sales tax structures in the country. Close your sales tax account through the Michigan Treasury Online portal. Michigan also has a Use Tax that applies to items purchased for use in the business -- ensure your final return addresses any outstanding use tax liability.
Michigan Corporation Dissolution -- Tax Clearance Required
This is the step that catches Michigan restaurant owners off guard. To dissolve a Michigan corporation, you must obtain a tax clearance certificate from the Michigan Department of Treasury before the Michigan Department of Licensing and Regulatory Affairs (LARA) will accept your dissolution filing. The tax clearance process takes 4 to 8 weeks. For an LLC, tax clearance is not required, but it is still recommended.
File Articles of Dissolution with Michigan LARA. The filing fee is $10 for an LLC and $10 for a corporation. Start the tax clearance process as early as possible -- it is the longest step in the Michigan dissolution process.
Detroit and Local Considerations
Detroit requires a separate city business license. Notify the City of Detroit Finance Department to close your local license. Michigan local health departments issue food service licenses at the county level -- contact your county health department to cancel your food service permit. In Wayne County (Detroit), contact the Wayne County Department of Public Health.
If you have an SBA loan, see What Happens If You Default on an SBA Loan for Your Restaurant before you close. For the lease side, How to Walk Away from a Restaurant Lease Without Losing Everything covers your options.
The Correct Sequence
Notify employees, pay final wages on next regular payday, file final sales tax return with the Department of Treasury, initiate tax clearance certificate request (corporations only), cancel county food service permit, surrender or transfer MLCC liquor license, file dissolution with LARA after tax clearance is received.