Michigan Going Out of Business Sale Bond: A Complete Guide

Closing a business is never an easy decision, and if you’re planning a going out of business sale in Michigan, you’ll need to navigate several legal requirements. One key requirement is obtaining a Michigan Going Out of Business Sale Bond, which ensures compliance with state laws and protects consumers from deceptive sales practices.

From my experience, many business owners don’t realize they need this bond until they start planning their final sale. I’ve helped numerous clients through this process, and I’ve found that understanding the bond requirements ahead of time can save a lot of stress. This guide will walk you through everything you need to know about Michigan’s Going Out of Business Sale Bond, including who needs it, why it’s required, how much it costs, and how to get one.

What Is a Michigan Going Out of Business Sale Bond?

A Michigan Going Out of Business Sale Bond is a surety bond that businesses must obtain before conducting a final liquidation sale due to permanent closure. It acts as a financial guarantee that the sale will be conducted honestly and in compliance with Michigan’s Going Out of Business Sale Act (Public Act 39 of 1961).

Purpose of the Bond

The bond serves two main functions:

✔️ Protects Consumers – Ensures that all advertisements and sales practices are truthful and that no misleading claims are made.
✔️ Ensures Compliance – Guarantees that the business follows the legal guidelines for liquidation sales, preventing fraud and unfair pricing tactics.

Who Needs a Michigan Going Out of Business Sale Bond?

You need a Going Out of Business Sale Bond in Michigan if you are:

✅ Permanently closing your business and holding a final sale to liquidate remaining inventory.
✅ Advertising the sale using phrases such as "Going Out of Business," "Liquidation Sale," "Store Closing," or similar terms.
✅ Selling inventory at a significant discount as part of a final clearance.
✅ Applying for a Going Out of Business Sale License with your local city or county clerk's office.

Exceptions: Who Does NOT Need This Bond?

There are some cases where this bond may not be required:

❌ If you are not permanently closing and just having a temporary clearance sale.
❌ If you are transferring ownership but the business will remain open under new management.
❌ If you are liquidating assets through a bankruptcy court or similar legal proceedings.

If you’re unsure whether you need this bond, I’ve found that checking with your local licensing office is the best way to confirm your requirements.

Michigan Going Out of Business Sale Laws and Regulations

Michigan has strict laws governing going out of business sales to prevent misleading promotions. Here are some key regulations you must follow:

📌 Sale Duration Limits – Going out of business sales can only last for a maximum of 90 days. Extensions are rare and require special approval.
📌 Inventory Restrictions – You can only sell existing inventory listed at the start of the sale. You cannot add new stock after the sale begins.
📌 License Requirement – You must apply for a Going Out of Business Sale License before advertising or conducting the sale.
📌 Advertising Rules – All promotional materials must clearly indicate the sale’s start and end date and must not be misleading.
📌 Final Sale Policy – All sales are considered final, meaning no returns or exchanges are allowed unless otherwise stated.

In my experience, failing to comply with these laws can result in fines or legal action, so it’s crucial to follow the rules carefully.

How Much Does a Michigan Going Out of Business Sale Bond Cost?

The cost of your Going Out of Business Sale Bond depends on several factors:

1️⃣ Bond Amount

The required bond amount is typically based on the total inventory value at the start of the sale. The local licensing authority will determine how much coverage is needed.

2️⃣ Bond Premium

The premium (the cost you pay for the bond) is usually a small percentage of the bond amount. Typical costs range from:

• $100 - $500 for smaller businesses.

• $500 - $1,500+ for businesses with large inventories.

3️⃣ Credit Score & Financial History

In many cases, surety companies will conduct a soft credit check to determine your risk level. A higher credit score can lead to lower premium rates, while a lower credit score may result in slightly higher costs.

I’ve worked with many business owners, even those with credit challenges, to secure affordable bonds. There are still options available even if your financial history isn’t perfect.

How to Apply for a Michigan Going Out of Business Sale Bond

Getting your bond is a simple process. Here’s how to do it:

Step 1: Determine Your Bond Requirement

Check with your local city or county clerk to confirm the required bond amount for your sale.

Step 2: Get a Quote from a Surety Provider

Submit an application with details about your business and sale. You’ll receive a bond quote based on your specific needs.

Step 3: Pay for Your Bond

Once approved, you’ll pay the bond premium (the cost of the bond).

Step 4: Receive Your Bond Certificate

You’ll get a copy of your Michigan Going Out of Business Sale Bond, which you must submit to the licensing office.

Step 5: Obtain Your Going Out of Business Sale License

After submitting your bond, the local government will issue your sale license, allowing you to legally proceed with your liquidation event.

From my experience, working with a reliable surety provider can make this process much smoother and faster.

What Happens If You Don’t Get a Bond?

Operating a going out of business sale without the required bond can lead to serious consequences:

⚠️ License Denial – You won’t be able to legally hold your sale.
⚠️ Fines & Penalties – Michigan authorities may impose financial penalties for non-compliance.
⚠️ Legal Liability – You could face legal action for conducting an unauthorized sale.
⚠️ Consumer Complaints – Customers may be wary of fraudulent sales if protections aren’t in place.

I’ve seen businesses shut down prematurely due to not securing the proper bond. To avoid delays and legal issues, it’s best to handle this requirement upfront.

How Long Does It Take to Get a Michigan Going Out of Business Sale Bond?

In most cases, you can get a Going Out of Business Sale Bond within 24-48 hours. If your application is straightforward, you may receive approval even faster.

To speed up the process:
✅ Have your business and inventory details ready.
✅ Work with a trusted surety provider who specializes in Michigan bonds.
✅ Apply as early as possible to avoid delays.

Get Your Michigan Going Out of Business Sale Bond Today

If you’re closing your business and need a Going Out of Business Sale Bond, I can help you get bonded quickly and affordably.

💡 Need help? Contact me today to get a free quote and start the process! Let’s ensure your sale is legal, hassle-free, and compliant with Michigan regulations.