Are you looking to do business around the Great Lakes? Consider opting for a Michigan LLC. The state’s local funding opportunities, low filing costs and small business resources make it an ideal place to live and work. Forming an LLC in Michigan allows you to harness all the business advantages this state offers. This step-by-step process will guide you on how to start an LLC in Michigan and ensure its continual good standing after filing.
Starting an LLC follows a similar process across the United States, but each state has its own unique rules and steps. Forming an LLC in Michigan involves the following key steps:
#1: Name Your Michigan LLC
#2: Choose a Resident Agent
#3: File Articles of Organization
#4: Draft an Operating Agreement
#5: Obtain an Employer Identification Number (EIN)
#6: Receive Your Certificate From The State
#7: Comply with Employer Obligations
#8: Obtain Business Licenses
1. Name Your Michigan LLC
When starting a Michigan LLC, focus on your business name; it’s how customers will recognize you. Be cautious: even if you have a name in mind, do an LLC name search first to avoid similarities with other businesses. Use your best judgment before finalizing.
To name your LLC in Michigan, let’s consider an example. Suppose you plan to sell blueberry pastries and jams at markets and online, naming your venture “Bowman Farm.”
Use the LLC lookup tool to search “Bowman” as a keyword. You find “Bowman Farms, Inc.,” prompting a decision. While “Bowman Farm, LLC” seems similar, it could lead to issues. A better choice might be “Bowman’s Blueberry Farm Goods, LLC,” ensuring uniqueness.
Conducting an LLC search helps refine your name. Remember, Michigan name guidelines mandate including “Limited Liability Company” or its abbreviations in your formal business name.
Rules for Naming Your Michigan LLC
Include “limited liability company,” or “LLC,” “L.L.C.,” “LC,” for a standard LLC. For a professional LLC, use “P.L.L.C.,” “PLLC,” “P.L.C.,” or “PLC.”
Avoid using government agency names like State Department, CIA, FBI, Treasury, etc., in your business name. Certain restricted words (bank, lawyer, attorney, credit union, etc.) may need extra documentation and licensure.
For an L3C, your name should include “low-profit limited liability company,” “L3C,” or “l3c” with or without periods.
Additional consideration
Check for URL availability. Even if a website isn’t on your plan yet, reserving your domain name is a smart move, just in case you need that in the future. Ensure you have the option for a website by securing your domain early. Before confirming your LLC name, check if the URL is available.
Reserving Your Michigan LLC Name
If you are not ready to complete the process of registering an LLC in Michigan, you can reserve it with the secretary of state so no one can take your business name. This reservation protects your name for six months while you plan your business without registering the LLC.
Once your desired name is available, complete the Application for Reservation of Name to reserve it for six months. You can submit the following documents:
- Online: Michigan Department of Licensing and Regulatory Affairs
- By mail to PO Box 30054, Lansing, MI 48909
- In-person at 2407 N. Grand River Ave., Lansing, MI 48906
Pay a $25 fee by check or money order to the State of Michigan. For in-person or online submissions, credit card payments are accepted. For more details, call (517) 241-6470.
Certificate of Assumed Name
If your company has a nickname or alternate name for your LLC, you can get it by submitting a Certificate of Assumed Name if it’s available in Michigan.
2. Choose Your Resident Agent
In Michigan, you need to designate a resident agent for your LLC. What is a registered agent?
LLCs across states need a physical address for important tax and legal documents. In Michigan, it’s termed a “resident” agent. This agent accepts legal documents on the LLC’s behalf. It can be an individual or a company providing these services, and it must be one of the following:
- A Michigan resident
- A Michigan LLC or corporation
- A foreign corporation or LLC authorized to do business in Michigan
- Must be 18 years old
Consider designating an individual or in-house counsel as the resident agent for your LLC. They should be available to receive official documents during business hours. If you won’t always be available, serving as your own agent might not be ideal.
Hiring a resident agent service with a separate address for a home-based Michigan LLC can maintain your privacy, using their address as your LLC’s “registered office.”
Consider a virtual address for LLC listings to keep your home address private as your principal office. This physical address serves as your business address and receives mail on your behalf, aiding in local presence without office space rental.
3. File Your Articles of Organization
The articles of organization formally creates your LLC and outlines essential details about its structure. Complete the articles of organization and submit them to the Michigan Corporation Division to properly register your Michigan LLC.
Filing the articles of organization is crucial for starting an LLC. Michigan filers must have specific information ready when preparing these articles. When filing, be ready with:
- The LLC’s proposed name
- Business purpose (e.g., retail, dog training, consulting)
- Business address
- The resident agent’s name and address
- Management structure details
- LLC duration (if not perpetual)
- Operation provisions (if there is no separate operating agreement )
Prepare this information now to simplify starting your LLC in Michigan.
Check out the Michigan Small Business Development Center’s guide—a valuable resource for new LLC owners.
The crucial step is completing and filing your articles of organization in Michigan Corporations Division. Review your filing thoroughly before submission to avoid delays:
- Include “LLC,” “LC,” or “limited liability company” in your Michigan LLC name.
- Keep your business purpose description concise and straightforward.
- Use the appropriate form for professional services like PLLC.
- Double-check your resident agent’s details, including any separate mailing address, in the articles of organization.
| Form to File | Articles of Organization (Domestic LLC) |
| How to File | Online: M Department of Licensing and Regulatory Affairs – Corporations Division Mail: MI Department of Licensing and Regulatory Affairs Corporations, Securities & Commercial Licensing BureauCorporations DivisionP.O. Box 30054Lansing, MI 48909 In Person: 2407 North Grand River Ave.Lansing, MI 48906 |
| Filing Fee | $50 (additional $50-$1,000 for expedited filing) |
4. Receive Your Certificate From The State
After you file and the state approves your LLC’s formation documents, you’ll receive a certificate confirming the LLC’s existence. This certificate is important for obtaining an Employer Identification Number (EIN), business licenses, and a business bank account.
5. Draft an Operating Agreement
While not mandatory in Michigan, having an operating agreement for your LLC is highly recommended. This crucial document can effectively resolve member and manager disagreements. Here’s what it typically includes:
- Statements on member contributions (cash, assets, etc.)
- Profit and loss distribution among members
- Procedures for accessing banking accounts
- Protocols for member changes (sale, retirement, etc.)
- Guidelines for adding new members
- Protocols for meetings, record-keeping, and managerial responsibilities
- Voting procedures and deadlock solutions
- Draft the agreement, allowing all members to review and suggest changes before signing. Some LLC formation companies offer operating agreement templates as part of their packages.
6. Obtain an Employer Identification Number (EIN)
Securing an Employer Identification Number (EIN) from the IRS is crucial to meet state and local tax requirements. This unique number validates your business for tax purposes and beyond.
While a single-member LLC without employees isn’t mandated to have an EIN, using one instead of your Social Security number safeguards your privacy and identity. Obtaining an EIN is easy through the IRS website and is necessary for multi-member LLCs or those with employees.
| Do It Yourself | Using an LLC formation service | Hiring an attorney |
|---|---|---|
| If you’re handling things yourself, apply for an EIN online to instantly generate your number. | If you’re using an online LLC service, check if an EIN is part of the package. | If you hire an attorney for your LLC formation, they can help with the application. |
7. Comply with Employer Obligations
- Reporting employees: Notify the government about new hires within 20 days.
- Tax withholdings: Withhold federal, state, and local income taxes from the employee’s wages and remit them to the government.
- Unemployment taxes: Pay state unemployment taxes in Michigan.
- Workers’ compensation insurance: Purchase this insurance for work-related injuries in Michigan.
8. Obtain Business Licenses
Check for industry-specific business licenses. Cities or counties also mandate a business license for your LLC. Retail businesses may need a sales tax license.
Michigan LLC Tax Overview
Michigan LLCs are subject to taxes on income derived from the business. However, the specific taxes and their amounts vary based on the nature of the business and the elected tax structure.
Default Tax Structure: Partnership or S-Corp Tax Election
LLCs following the default partnership or S-corporation tax structures must pay Michigan’s Flow-Through Entity (FTE) tax. This tax applies to specific income to prevent double taxation. Instead, profits pass through to members, who report LLC income on their personal tax returns.
Possible Taxes Depending on Business Type:
- International Fuel Tax Agreement (IFTA)
- Marijuana Retailers Excise Tax
- Michigan Business Tax
- Motor Fuel Tax
- Sales and Use Tax
- Severance Tax
- Tobacco Tax
- Withholding Tax (for employers)
Partnerships and Sole Proprietorships vs. LLC Taxes
Like LLCs, partnerships and sole proprietorships have pass-through taxation, where business income passes to owners before taxation.
LLC vs. Corporation Taxes
C-corporations directly pays corporate taxes on business income before distribution to owners, who then pay personal income taxes. LLCs can elect C-corp taxation by filing Form 8832 with the IRS.
LLC vs. S-Corp Taxes
S-corp, a tax status, allows LLC members to receive a salary and treat the remaining income as business income. Employment taxes apply to the salary, while regular personal income tax applies to the rest. Consulting a tax professional can determine the suitability of this structure for your LLC.
Want to Start a Michigan LLC?
Starting an LLC in Michigan doesn’t have to be overwhelming. Simplify the process using the best LLC formation service. Ease the stress of launching your business with their help.
LLC State Guides
How to Start an LLC in Michigan FAQs
An LLC, an abbreviation for “limited liability company,” provides owners (referred to as “members”) protection from liability for the company’s actions. It’s an easier-to-form business structure compared to corporations but offers similar legal protections, making it a preferred choice for sole proprietors or partnerships aiming to safeguard personal assets.
Michigan LLC filing fee is $50. However, reserving your business name or using a registered agent service will increase startup costs. For expedited processing: $100 for same-day, $500 for two-hour, and $1,000 for one-hour processing.
Pros of establishing an LLC in Michigan include limited liability protection, separating personal assets from business liabilities, pass-through taxation benefiting owners’ individual tax returns, and flexibility in management structures. However, cons entail annual report filings and fees for Michigan LLCs, along with potential self-employment taxes on members’ shares of company profits.
LLCs offer liability protection but require annual filings. Comparatively, sole proprietorships offer fewer protections but have less paperwork. Corporations have similar protection but entail more complex governance and tax obligations.
Michigan LLC formation paperwork typically undergoes processing within one business day. Expedited processing is available for a fee if you require a faster turnaround.
