Starting a Corporation in Michigan | What You Need to Know


Steve Bennett
Steve Bennett
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Start a Corporation in Michigan

In Michigan, starting a corporation can benefit entrepreneurs looking to establish a separate legal entity for their business. Incorporating your business provides liability protection for its owners and offers potential tax benefits and a professional image. This comprehensive guide will walk you through Starting a Corporation in Michigan, from choosing a corporate name to fulfilling ongoing compliance requirements. Some people consider starting a corporation since it has advantages and benefits rather than Starting an LLC in Michigan.

Webinarcare Editorial Team will help you gain knowledge in starting a corporation with thorough research and market study. It would be best to cross-check all the factors in this article before forming a corporation.

What is a Corporation in Michigan?

A corporation in Michigan is a business organization recognized as a separate legal entity from its owners, also known as shareholders. When a corporation is formed, shareholders invest capital by purchasing shares of stock and, in return, become partial company owners. The corporation is managed by a board of directors elected by the shareholders to oversee the company’s operations and make important decisions. Corporations in Michigan are required to have at least Three directors. One of the main advantages of a corporation in Michigan is that it provides limited liability protection to its shareholders, meaning their assets are not at risk if the corporation incurs debt or is legally sued.

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Common Types of Corporations

Before you start with a corporation, you should know what type of corporation you will form. There are several different forms of corporations you can take into consideration, depending on your corporation’s objectives and ownership structure.

C-Corporation

C-Corporation is the most known type of incorporation. They have almost all corporate distinguishing characteristics. Profits are distributed to corporate owners who are taxed at an individual level. The corporation is taxed similarly to a business unit.

S-Corporation

S-Corporation in Michigan is set up similarly to a C-corporation but has different tax implications and owner limits. An S-Corporation has no more than 100 stockholders and is not taxed separately. These business units must also file paperwork with the Internal Revenue Service (IRS) to obtain their status.

Nonprofit Corporation

Religious, educational, and charity institutions frequently use nonprofit businesses to run their operations without making a profit. Thus, a nonprofit corporation is exempt from paying taxes. The nonprofit organization’s gifts, contributions, or cash are reinvested in the company to fund its growth, future endeavors, or operations.

It is recommended to Start a Corporation in Michigan if you would like to provide limited liability protection to your shareholders rather than Michigan LLC. However, you may want to consult to LegalZoom’s Business Attorney before starting a business.

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How to Start a Corporation in Michigan

To start a corporation in Michigan, you must follow the below steps that, include choosing a corporate name, hiring a Resident Agent, appointing directors, filing for Articles of Incorporation, creating corporate bylaws, holding the initial board of directors, issuing stock, obtaining required licenses and permits, registering with state tax agencies, and annual reporting and ongoing compliance. All these steps are basic ones. It can be changed depending on the type of corporation you form and the nature of your business.

Step 1: Choosing a Corporate Name

The first step in starting a corporation is choosing an available name that complies with Michigan naming rules. Most states require that the name of a corporation be distinguishable from other registered business names and include a corporate designator such as “Corporation,” “Incorporated,” “Company,” or an abbreviation thereof.

Here are some guidelines you must follow while naming your corporation in Michigan-

  • Your business name must contain entity identifiers, such as “Incorporated,” “Limited,” “Corporation,” or “Company,” or an abbreviation, such as “Inc.,” “Co.,” or “Ltd.”
  • Exclude any words in your business name, such as “Trust,” “Bank,” “Credit Union,” or “Trustee,” or words related to a government agency, such as “FBI,” “State Department,” or “Treasury.”

To check the availability of your desired corporate name, you can search the Michigan Secretary of State‘s business name database and Business Name Search in Michigan. If the name is available, you may choose to reserve it for a specific period of 6 months by filing a name reservation application and paying the online name reservation fee of Not available and mail name reservation fee of $10. If your corporation plans to operate under a name other than its legal name, you may also need to register a fictitious or “doing business as” (DBA) name.

The DBA filing can be done by three methods, online, by mail, and in person filing., which costs around $25 for LLCs and $10 for LPs. In addition, the DBA’s validity in Michigan is five years, which you can file in Michigan Secretary of State.

You can check out How to File a DBA in Michigan for clearer understanding.

Step 2: Hire a Resident Agent

Hiring a Resident Agent is essential in starting a corporation. Resident Agent is a person or company responsible for receiving important legal documents, tax notices, and other correspondence on behalf of your corporation. They ensure that your corporation remains compliant with state regulations and requirements. There are Michigan Resident Agent Services to check in forming Michigan Corporation. We reviewed some of the best-registered agent services and provided features as an add-on with their packages.

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Step 3: Appointing Directors

Corporations in Michigan are required to have at least Three directors, though some states may require more. Directors are responsible for overseeing the corporation’s management and making major decisions on behalf of the company. In Michigan, directors must be at least 18 years old and do not need to be state residents.

When appointing directors, it is essential to consider individuals who are knowledgeable, trustworthy, and capable of making sound business decisions. Maintaining a record of appointed directors, including their names, addresses, and terms of service, is also a good idea.

Step 4: Preparing and Filing Articles of Incorporation

After you appoint the initial board of directors in your Michigan corporation, the next step is to write and file a Articles of Incorporation. In writing, the Michigan Articles of Incorporation, the corporation name, principal place of business, the purpose of business, Resident Agent contact information, and the names and addresses of incorporators and initial board members, should be written.

To officially form your Michigan corporation, you must prepare and file Articles of Incorporation with the Michigan Secretary of State. The Articles of Incorporation is a legal document that outlines essential information about your corporation, such as its name, address, purpose, and details about its stock.

The specific requirements for Articles of Incorporation vary by state, but generally, the document must include the following:

  • The corporate name
  • The purpose of the corporation
  • The name and address of the registered agent
  • The names and addresses of the initial directors
  • The number of authorized shares and their par value
  • The name and address of the incorporator(s)

Once the Articles of Incorporation are complete, please submit them to the Michigan Secretary of State’s office, along with the required filing fee. Fees vary by state, but in Michigan, the Articles of Incorporation filing fee costs around $60 for filing online, in person, and by mail. It is crucial to provide accurate and complete information on this document, as errors or omissions may result in delays or rejection of your filing.

  • Online Filing: Get the online form from Secretary of State, fill it up, and submit. Don’t refresh the page during the process. It will erase everything.
  • Offline filing: Send the form by mail to Michigan Department of Licensing and Regulatory Affairs, Corporations, Securities & Commercial Licensing Bureau — Corporations Division, P.O. Box 30054, Lansing, MI 48909. Drop it off in person at 2501 Woodlake Circle, Okemos, MI

Step 5: Creating Corporate Bylaws

Now you are done filing Articles of Incorporation in Michigan, the next step is to draft corporate bylaws. While not always required by law, creating corporate bylaws is essential in establishing Michigan corporation. Bylaws are the internal rules and regulations that govern the corporation’s operations and management. They outline the rights and responsibilities of directors, officers, and shareholders and provide guidelines for holding meetings and making decisions.

Key provisions to include in your corporate bylaws may include:

  • The corporation’s purpose and principal place of business
  • The roles and responsibilities of directors, officers, and shareholders
  • The process for appointing and removing directors and officers
  • The procedures for holding annual and special meetings
  • The methods for amending the bylaws and Articles of Incorporation
  • The procedures for issuing stock and maintaining shareholder records

Once the bylaws are drafted, they must be adopted by the corporation’s board of directors. Keeping a copy of the bylaws with your corporate records and updating them to reflect changes in the corporation or applicable laws is essential.

Step 6: Holding the Initial Board of Directors Meeting

The initial board of directors meeting is a crucial milestone for your Michigan corporation. During this meeting, the directors will adopt the corporate bylaws, elect officers, and make other key decisions to set the foundation for the corporation’s operations.

The agenda for the initial board meeting may include the following:

  • Adopting the corporate bylaws
  • Ratifying any pre-incorporation actions taken by the incorporator(s)
  • Electing corporate officers (e.g., president, vice president, secretary, treasurer)
  • Designating a corporate bank account
  • Authorizing the issuance of stock
  • Approving necessary licenses, permits, and tax registrations

It is essential to keep detailed minutes of the initial board meeting, documenting the decisions made and actions taken. These minutes should be stored with your corporate records.

Step 7: Issuing Stock

Corporations in Michigan are required to issue stock to their owners, also known as shareholders. When preparing to issue stock, you must determine the number of authorized shares and their par value, as outlined in your Articles of Incorporation. You may choose to issue different classes of stock, each with its rights and privileges, such as voting rights and dividend preferences.

The process for issuing stock typically involves the board of directors approving a stock issuance resolution, determining the price per share, and recording the issuance in the corporation’s stock ledger. Maintaining accurate and up-to-date records of all stock transactions, including transfers and cancellations, is crucial to ensure proper ownership tracking and compliance with securities laws.

Step 8: Obtaining Required Licenses and Permits

Depending on the nature of your corporation’s activities and location, you may need to obtain various licenses and permits to operate legally. These may include federal, state, and local requirements, such as:

  • A Federal Employer Identification Number (EIN) for tax reporting and employee withholding purposes.
  • State sales and use tax registration, if your corporation sells taxable goods or services
  • Professional or occupational licenses for specific industries (e.g., healthcare, construction, food service)
  • Michigan Business Licenses, zoning permits, and health department approvals

Researching and obtaining all required Michigan licenses and permits before commencing operations and maintaining compliance with any ongoing renewal or reporting requirements is essential.

Step 10: Registering with State Tax Agencies

In addition to obtaining licenses and permits, your Michigan corporation may also need to register with various tax agencies. This may include registering for sales and use tax, obtaining an Employer Identification Number (EIN) in Michigan for payroll tax purposes, and filing state income tax and franchise tax returns.

An EIN will serve as the tax ID for your Michigan corporation. EIN can be obtained from the Internal Revenue Service (IRS). It is a 9-digit number similar to Social Security Number. EIN, however, is distinct from SSN. It is only used for business-related activities, particularly for submitting general taxes. The form must be completed and uploaded to the IRS website.

The application of an EIN in Michigan can be through the following:

  • Apply Online- The online EIN application is the preferred method for customers to apply for and obtain an EIN.
  • Apply by Fax- Taxpayers can fax the completed Form SS-4 application to the appropriate fax number), after ensuring that Form SS-4 contains all of the required information.
  • Apply by Mail- The EIN application Form SS-4 can be filed via mail. The processing time frame to receive the mail is four weeks.
  • Apply by Telephone-International Applicants – International applicants may call 267-941-1099 (not a toll-free number) from 6 a.m. to 11 p.m. (Eastern Time) Monday through Friday to obtain their EIN.

Each state has tax requirements, so consult a tax professional or Michigan Department of Treasury for guidance on your specific obligations.

Step 11: Annual Reporting and Ongoing Compliance

Once your Michigan corporation is up and running, you must fulfill ongoing reporting and compliance requirements to maintain good standing. This may include filing Annual Report with the Michigan Secretary of State, updating your corporate records to reflect changes in directors or officers, and staying current on any required licenses or permits.

In addition, it is essential to stay informed about changes in corporate laws and regulations that may impact your business and to seek professional advice when needed.

Paying Your Taxes in Michigan

Even if you have established your corporation in Michigan, pay your taxes and keep everything up to date so you won’t pay any penalty. Unlike an LLC, there is a corporate tax that every corporation in Michigan has to pay. On the other hand, they must pay income taxes based on their business income. Some other types of taxes in Michigan are sales tax, franchise tax (not applicable to all the states), and other state taxes.

Cost of Forming a Corporation in Michigan

In forming a corporation in Michigan, a filing and Annual fee must be paid. Without it, your corporation won’t operate. A corporation’s initial filing fee may vary from state to state. However, in Michigan, it costs $60 for filing online, in person, and by mail. The corporation in Michigan also has to file an Annual Report (though it might not be mandatory, it is recommended to file one). Ensure you comply with all the necessary fees and costs so your corporation will run successfully and smoothly.

FAQs

What is a corporation in Michigan?
A corporation in Michigan is a legal entity created by filing articles of incorporation with the Michigan Department of Licensing and Regulatory Affairs (LARA).
What is the process of incorporating in Michigan?
To incorporate in Michigan, you will need to file articles of incorporation with the Michigan Department of Licensing and Regulatory Affairs (LARA).
How long does it take to incorporate in Michigan?
The time it takes to incorporate in Michigan varies, but typically takes about 1-2 weeks.
What are the advantages of incorporating in Michigan?
Incorporating in Michigan provides liability protection, tax benefits, and the ability to raise capital.
What are the disadvantages of incorporating in Michigan?
Incorporating in Michigan can be expensive and requires additional paperwork and compliance.
What is the minimum number of directors required for a Michigan corporation?
A Michigan Corporation must have at least one director.
What is the minimum number of shareholders required for a Michigan Corporation?
A Michigan Corporation must have at least one shareholder.
What are the annual report requirements for a Michigan Corporation?
A Michigan Corporation is required to file an annual report with the Michigan Department of Licensing and Regulatory Affairs (LARA).
What is the filing fee to incorporate in Michigan?
The filing fee to incorporate in Michigan is $60.
Are there any annual fees for a Michigan corporation?
Yes, a Michigan corporation has an annual report fee of $25.
Are there any residency requirements to incorporate in Michigan?
No, there are no residency requirements to incorporate in Michigan.
Do I need a lawyer to incorporate in Michigan?
No, you do not need a lawyer to incorporate in Michigan, but it is recommended.
Can I reserve a corporation name in Michigan?
Yes, you can reserve a corporation name in Michigan for $10.
Can I amend my articles of incorporation in Michigan?
Yes, you can amend your articles of incorporation in Michigan by filing a Certificate of Amendment.
How many copies of the articles of incorporation do I need to file in Michigan?
You only need to file one copy of the articles of incorporation with the Michigan Department of Licensing and Regulatory Affairs (LARA).
Is there a publication requirement to incorporate in Michigan?
No, there is no publication requirement to incorporate in Michigan.
Can a foreign corporation register to do business in Michigan?
Yes, a foreign corporation can register to do business in Michigan by filing an application for authority with the Michigan Department of Licensing and Regulatory Affairs (LARA).
Do I need a registered agent for my Michigan corporation?
Yes, you must have a registered agent in Michigan for your corporation.
Can a corporation have just one officer in Michigan?
Yes, a corporation can have just one officer in Michigan.
What is the purpose of the Michigan Business One Stop?
The Michigan Business One Stop is a website designed to simplify business registration processes and provide quick access to a variety of resources for businesses in Michigan.
Is a business license required to operate a corporation in Michigan?
It depends on the nature of the corporation’s business activities. Some businesses require licenses or permits.
Are corporations required to pay state taxes in Michigan?
Yes, corporations are required to pay state taxes in Michigan.
What is the difference between an S Corporation and a C Corporation in Michigan?
The main difference between an S Corporation and a C Corporation in Michigan relates to taxation. An S Corporation allows for pass-through taxation, while a C Corporation does not.
How do I dissolve a Michigan Corporation?
To dissolve a Michigan Corporation, you must file articles of dissolution with the Michigan Department of Licensing and Regulatory Affairs (LARA).
What is the Certificate of Good Standing, and how do I obtain one for my Michigan Corporation?
A Certificate of Good Standing is an official document that verifies that your corporation is in compliance with all state regulations. You can obtain one by contacting the Michigan Department of Licensing and Regulatory Affairs (LARA).
What is the Organizational Consent form, and how do I file it?
The Organizational Consent form is a document that authorizes the person filing the articles of incorporation to take specific action on behalf of the corporation. It should be filed along with the articles of incorporation.
Can I file my articles of incorporation online in Michigan?
Yes, you can file your articles of incorporation online in Michigan through the Michigan Business One Stop website.
What is the role of the Michigan Department of Licensing and Regulatory Affairs (LARA) in incorporating a corporation?
The Michigan Department of Licensing and Regulatory Affairs (LARA) is responsible for processing and approving articles of incorporation for corporations registering in Michigan.
What are the benefits of starting a corporation in Michigan?
Some of the benefits of starting a corporation in Michigan include limited liability protection, potential tax advantages, and the ability to sell ownership shares.
What are the requirements to start a corporation in Michigan?
To start a corporation in Michigan, you need to file Articles of Incorporation with the Michigan Department of Licensing and Regulatory Affairs (LARA), and obtain various licenses and permits as required by the state.
How much does it cost to start a corporation in Michigan?
The cost to start a corporation in Michigan varies depending on several factors, such as the type of corporation you want to form and the fees associated with obtaining necessary licenses and permits. Expect to set aside a few thousand dollars to get started.
What type of taxes do corporations in Michigan have to pay?
Corporations in Michigan must pay state and federal income taxes, as well as sales tax, if applicable.
Do I need a lawyer to start a corporation in Michigan?
No, you don’t need a lawyer to start a corporation in Michigan. However, it is recommended to have a lawyer review your Articles of Incorporation and other legal documents to ensure that they comply with state requirements.
What is an S corporation in Michigan?
An S corporation in Michigan is a type of corporation that differs from a traditional C corporation in that its profits and losses are passed through to its shareholders’ personal income tax returns.
How do I choose a name for my corporation in Michigan?
In Michigan, the name of your corporation must be unique and distinguishable from the names of existing companies. You can check the Michigan LARA business entity search to see if the name you want is available.
Do I need a registered agent in Michigan to start a corporation?
Yes, you need to appoint a registered agent in Michigan to receive legal and other important documents on behalf of your corporation.
Who can be a registered agent for my Michigan corporation?
In Michigan, a registered agent can be an individual who is a resident of the state, a business entity authorized to conduct business in the state, or a commercial registered agent provider.
Can I be the registered agent for my own Michigan corporation?
Yes, you can serve as your own registered agent for your Michigan corporation, but it is recommended to appoint an independent registered agent to avoid missing important notices and documents.
Do I have to have a physical office in Michigan to start a corporation?
No, you don’t have to have a physical office in Michigan to start a corporation, but you must provide a physical address within the state where your registered agent can receive legal documents.
How many directors do I need for my Michigan corporation?
In Michigan, a corporation must have at least one director, but there is no limit on the number of directors you can appoint.
Do I need to hold regular board meetings for my Michigan corporation?
Yes, you should hold regular meetings of the board of directors and keep proper records of these meetings, which can be mandatory by certain Michigan laws.
Can a Michigan corporation be owned by just one person?
Yes, a Michigan corporation can be owned by just one person, who can serve as the sole shareholder, director, and officer.
What are the filing requirements for Michigan corporations?
Michigan corporations are required to file annual reports with the LARA, submit tax filings, and meet various other reporting and compliance requirements.
How long does it take to start a corporation in Michigan?
The amount of time it takes to start a corporation in Michigan varies, but most companies can expect the process to take a few weeks to a few months, after you submit your accurately filled Articles of Incorporation with all necessary attachments.
How do I dissolve my Michigan corporation?
To dissolve a Michigan corporation, you must file Articles of Dissolution and settle all outstanding debts and taxes.
Can a Michigan corporation be converted into a different type of entity, such as an LLC?
Yes, a Michigan corporation can be converted into a different type of entity by filing the appropriate paperwork with the appropriate authorities.
How can I amend my Michigan corporation’s Articles of Incorporation?
To amend your Michigan corporation’s Articles of Incorporation, you must file Articles of Amendment with the LARA, indicating the changes you want to make.
What is a Certificate of Good Standing in Michigan?
A Certificate of Good Standing in Michigan indicates that your corporation is registered with the state, is up-to-date on all necessary filings and tax payments, and is authorized to do business within the state.
Do I have to provide financial statements for my Michigan corporation?
Depending on the size of your corporation and the type of corporation it is, you may be required to provide financial statements to the state.
What is the Michigan Business Tax?
The Michigan Business Tax is a state tax on corporations and pass-through entities that do business in Michigan.
How do I apply for an Employer Identification Number (EIN) for my Michigan corporation?
You can apply for an EIN for your Michigan corporation online with the IRS, or you can apply by mail or fax.
Does the name of my Michigan corporation need to end with “Inc.” or “Corp.”?
In Michigan, the name of your corporation does not have to end with “Inc.” or “Corp.,” but doing so can help identify your company as a corporation to the public.
What is a foreign corporation in Michigan?
A foreign corporation in Michigan is a corporation that was formed in a state other than Michigan and wants to do business within the state.
Does my out-of-state corporation need to register in order to do business in Michigan?
Yes, your out-of-state corporation will need to register with the LARA in order to do business within the state of Michigan.
Does Michigan have any unique requirements for corporations at the state level?
Yes, this can vary based on statutes enacted or other regulations, or guidance issued for compliance by state agencies related to corporations doing business. In case you face a query connect with your business attorneys.

Also Read

How to Save Money While Forming Your Michigan Corporation

One of the first steps in saving money when forming your Michigan corporation is to do your research. There are many resources available online that can help guide you through the process without the need for expensive legal services. Michigan’s Secretary of State website provides step-by-step instructions on how to file the necessary paperwork and what fees are required. Additionally, there are online legal services that can help you complete the necessary forms at a fraction of the cost of hiring a lawyer.

Another way to save money is to choose the right business structure for your corporation. Michigan offers several options, including LLCs, S Corps, and C Corps, each with its own set of pros and cons. By carefully considering your business’s needs and goals, you can choose the structure that best fits your situation and saves you money in the long run. For example, if you are a small business owner with few employees, an LLC may be the most cost-effective option due to its simple formation process and pass-through taxation.

When it comes to hiring professionals to help you form your Michigan corporation, it’s important to shop around and compare prices. While hiring a lawyer or accountant may be necessary in some cases, there are often more affordable options available. Many online legal services offer affordable packages that include assistance with forming your corporation, drafting corporate bylaws, and filing the necessary paperwork with the state.

In addition to saving money on legal fees, there are other ways to cut costs when forming your Michigan corporation. For example, some online services offer package deals that include not only the formation of your corporation but also additional services such as registered agent representation and compliance monitoring. By bundling these services together, you can often save money in the long run compared to hiring individual professionals for each task.

Finally, it’s important to consider the ongoing costs of maintaining your Michigan corporation. While forming your corporation is an important step, there are annual fees and taxes that must be paid to keep your business in good standing with the state. By keeping track of these expenses and planning ahead, you can avoid surprises and budget accordingly.

In conclusion, forming a corporation in Michigan doesn’t have to break the bank. By doing your research, choosing the right business structure, shopping around for affordable services, and budgeting for ongoing expenses, you can save money while starting your business on the right track. With a little diligence and planning, you can form your Michigan corporation without breaking the bank.

Conclusion

Starting a corporation in Michigan involves several critical steps, from choosing a corporate name to fulfilling ongoing compliance requirements. Following the steps outlined in this guide and seeking professional advice when needed, you can successfully establish your Michigan corporation and enjoy the benefits of limited liability, potential tax savings, and a professional business image.

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