How to Start a Limited Liability Partnership in Michigan | 2023 Guide

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Start a Limited Liability Partnership in Michigan

A Limited Liability Partnership (LLP) is a popular business structure offering the flexibility of a partnership while providing limited liability protection like starting an LLC in Michigan. LLP structure is ideal for attorneys, accountants, and consultants. If you’re considering starting a Limited Liability Partnership in Michigan, this comprehensive guide will walk you through the necessary steps, from researching and planning to ongoing compliance and reporting requirements.

Webinarcare Editorial Team will help you gain knowledge through thorough research and market study. Before starting your Michigan LLP, all the steps in this article must guide you.

What is a Limited Liability Partnership?

Forming an LLP is like starting an LLC as well. However, there are differences in terms of it. A Limited Liability Partnership (LLP) is a type of business structure that combines elements of partnerships and corporations. It allows multiple individuals, known as partners, to jointly own and manage the business while providing limited liability protection to each partner. This means that each partner’s assets are generally protected from the debts and liabilities of the business, and they are only liable for their investment in the partnership.

LLPs are popular among professional service providers, such as lawyers, accountants, and consultants, as they allow for flexible management structures and profit-sharing arrangements. The partners in an LLP can directly manage the business, unlike forming a Corporation in Michigan, where a board of directors typically handles the management.

Each partner’s liability is also limited to the extent of their investment, and they are not personally responsible for the negligence or misconduct of other partners. This is a key difference between an LLP and Michigan General Partnership, where partners have unlimited liability for the partnership’s actions and other partners.

It is suggested that you speak with a legal professional before you begin setting up your limited liability partnership. They’ll understand what’s best for you and your company. To safeguard your personal assets from business debts, you can always start an LLC rather than a limited liability partnership.

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Steps in Starting a Limited Liability Partnership in Michigan

To form a limited liability partnership in Michigan, you must consider following the below guidelines that include research and planning, choosing an LLP name, designating a Resident Agent, filing for Articles of Organization, drafting a partnership agreement, get an EIN, obtaining necessary licenses and permits, the opening of business bank account and maintain ongoing compliance and reporting requirements. 

Step 1: Research and Planning

Before forming an LLP in Michigan, you must familiarize yourself with the state’s laws and regulations governing LLPs. Conduct thorough research to determine if an LLP is the right business structure for your needs, and create a detailed business plan outlining your goals, strategies, and financial projections.

Step 2: Choose an LLP Name

Selecting a unique and appropriate name for your LLP is crucial. First, check the availability of your desired LLP name with the Michigan business registry. Ensure that your chosen name follows Michigan naming guidelines and requirements, which typically include the use of “Limited Liability Partnership” or “LLP” in the name. You can register and reserve the name with Michigan Secretary of State if desired.

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

  • Be distinguishable from other businesses registered in your state
  • Include the words “Limited Liability Partnership,” “LLP,” or a similar abbreviation.
  • Not include words that are restricted by your state
  • Ensure that your chosen name does not infringe on any existing trademarks or intellectual property rights.

However, to check the availability of your desired LLP name, you can also search the Michigan Secretary of State business name database and Michigan Business Name Search. 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 LLP 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 the Michigan Secretary of State.

You can check out how to file a DBA in Michigan for clearer understanding.

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Step 3: Designate a Resident Agent

In Michigan, you’ll need to designate a Resident Agent for your LLP. The Resident Agent is responsible for receiving the partnership’s important legal and tax documents. Choose a qualified individual or Michigan Resident Agent Services to serve as your LLP’s Resident Agent, ensuring that they meet Michigan requirements.

However, If you plan to become a Resident Agent of your own LLP, follow the steps below. Also, this applies a guideline in hiring your registered agent.

  • Research the requirements in the state where you want to offer your service. Each state has specific criteria, such as having a physical address and being available during normal business hours.
  • Obtain a physical address in the state(s) if needed.
  • Be familiar with the rules, regulations, and compliance requirements for businesses in your state.
  • Create a business plan outlining your services, pricing, and marketing strategy.
  • Register your business entity, such as an LLP, if required.

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Step 4: File a Certificate of Limited Liability Partnership

To officially form your LLP, you must file a Certificate of Limited Liability Partnership with the Michigan Secretary of State. Obtain the necessary forms and provide the required information, such as the LLP name, principal office address, registered agent’s name and address, names and addresses of partners, and management structure. Pay the required filing fee and submit the completed forms to the Michigan Secretary of State’s office.

Step 5: Draft a Partnership Agreement

A well-crafted partnership agreement is essential for governing your LLP and protecting the interests of its partners. This document should cover crucial provisions such as roles and responsibilities of partners, profit and loss sharing, decision-making processes, partner admission and withdrawal, and dispute resolution. Consider having the partnership agreement reviewed by an attorney to ensure its completeness and compliance with Michigan laws.

A partnership agreement should include the following:

  • Business name
  • Description of the business
  • Contact information of the business and its owners

Ownership of all business partners, decision-making, capital contribution, profits and distribution, death and disability, and withdrawal and addition of partners is one of the key factors to consider when forming or creating a partnership agreement. In this way, all business partners will understand what this is all about and how to proceed if the mentioned scenarios happen. 

Without a partnership agreement, your company will often be subject to the general partnership default laws of Michigan. The default laws in Michigan might not be appropriate for your requirements.

Step 6: Get an EIN

Your LLP must obtain Michigan Employer Identification Number (EIN) from the Internal Revenue Service (IRS). The application of an EIN 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.

After you have your EIN, you can benefit in several ways. It will give your LLP the absolute advantage necessary to operate at full capacity without encountering legal or judicial issues.

Step 7: Obtain the Necessary Licenses and Permits

Depending on your specific industry, you may need to obtain Michigan Business Licenses and permits to operate your LLP. Research your business’s licensing and permit requirements and apply for them accordingly.

You can check out the United States Business License & Licensing Fee Resources for more information about the costs in Michigan.

Step 8: Open a Business Bank Account and Obtain Insurance

Maintaining clear financial records is crucial for any business, so open a separate bank account for your Michigan LLP. Additionally, obtain the necessary Michigan Business Insurance, such as general liability insurance, professional liability insurance (if applicable), and workers’ compensation insurance (if you have employees). 

Check the Best Bank for Small Businesses in Michigan to open a bank account.

Step 9: Maintain Compliance and Reporting Requirements

Stay informed about and comply with relevant laws and regulations to keep your LLP in good standing. File Annual Reports with the Michigan Secretary of State (if required), maintain accurate financial and operational records, and file and pay required taxes at the federal, Michigan, and local levels.

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Advantages of Forming a Limited Liability Partnership in Michigan

While the specific advantages of forming an LLP in Michigan can vary depending on the state’s unique laws and regulations, several public benefits associated with LLPs often apply across jurisdictions. Here are some advantages to consider when forming an LLP in Michigan:

  • Limited Liability Protection: One of the main benefits of an LLP is its limited liability protection to its partners. This means that each partner’s assets are generally protected from the debts and liabilities of the business, and they are only liable for their investment in the partnership.
  • Pass-through Taxation: An LLP typically enjoys pass-through taxation, which means that the profits and losses of the business are passed through to the partners, who report them on their personal income tax returns. This avoids the double taxation often associated with corporations.
  • Flexible Management Structure: Unlike corporations requiring a board of directors, LLPs allow for a more flexible management structure. Partners in an LLP can directly manage the business and make decisions without needing a formal board.
  • Profit-sharing Flexibility: The partnership agreement can outline the distribution of profits and losses among partners, allowing for a customized profit-sharing arrangement based on the partners’ preferences and contributions.
  • Easier Formation and Compliance: Forming an LLP is generally less complicated and expensive than forming a corporation. Ongoing compliance requirements may also be less burdensome than other business entities, depending on the specific laws and regulations in Michigan.
  • Professional Credibility: Forming an LLP can enhance your business’s professional credibility, as it demonstrates a commitment to a formal business structure and can offer reassurance to clients, customers, and potential investors.

Bear in mind that the advantages of forming an LLP in Michigan may vary based on the specific laws and regulations governing LLPs. Researching the applicable laws and consulting with legal or financial advisors is essential to fully understand the benefits and requirements of forming an LLP in Michigan.

Cost of Forming an LLP in Michigan

The cost of forming an LLP in Michigan may vary depending on the required filing fees and any additional services you may need. The filing fee for a Certificate of Limited Liability Partnership typically ranges from $50 to $200, depending on the state.

Can I Form an LLP in Other States?

You can form an LLP (Limited Liability Partnership) in other states. To form an LLP in a different state, you must follow that state’s specific registration requirements and filing procedures. This usually involves filing an application or certificate of registration, paying a registration fee, and obtaining any necessary permits or licenses.

Additionally, you may need to register your LLP as Michigan Foreign LLC if you plan to conduct business in multiple states. It is advisable to consult with an attorney or a business consultant familiar with the laws and regulations of the state where you plan to form your LLP.

Can an LLP Need to Have One Owner?

An LLP (Limited Liability Partnership) cannot have just one owner. By definition, an LLP is a partnership, which means it requires at least two partners to be formed. If you want a business structure with limited liability protection and only one owner, you may consider forming a Single-Member LLC in Michigan instead. An LLC can have one or more owners, known as members, and offers limited liability protection and pass-through taxation. The requirements for forming an LLC will vary by state, so consult your state’s laws and regulations.

FAQs

What is a limited liability partnership?
A limited liability partnership is a type of business entity in which the partners are not personally liable for the debts and obligations of the partnership.
What are the advantages of starting a limited liability partnership in Michigan?
The advantages of starting a limited liability partnership in Michigan include limited liability protection, tax advantages, and flexibility in management.
How do I register my limited liability partnership in Michigan?
To register your limited liability partnership in Michigan, you must file a Certificate of Limited Partnership with the Michigan Department of Licensing and Regulatory Affairs.
What are the requirements for starting a limited liability partnership in Michigan?
The requirements for starting a limited liability partnership in Michigan include having at least two partners, filing a Certificate of Limited Partnership, and complying with all state and local regulations.
What is a Registered Agent?
A Registered Agent is a person or entity that is designated to receive legal communication on behalf of a business entity.
Do I need a Registered Agent for my Michigan limited liability partnership?
Yes, Michigan law requires all business entities to have a Registered Agent.
Can I act as my own Registered Agent for my Michigan limited liability partnership?
Yes, you can act as your own Registered Agent for your Michigan limited liability partnership.
What is the minimum number of partners required to form a Michigan limited liability partnership?
Michigan law requires a minimum of two partners to form a limited liability partnership.
Are there any residency requirements for the partners of a Michigan limited liability partnership?
No, there are no residency requirements for the partners of a Michigan limited liability partnership.
Can other business entities be partners in a Michigan limited liability partnership?
Yes, other business entities, including corporations and other limited liability partnerships, can be partners in a Michigan limited liability partnership.
Can I form a limited liability partnership with just one partner in Michigan?
No, Michigan law requires at least two partners to form a limited liability partnership.
Do I need to have a written partnership agreement for my Michigan limited liability partnership?
No, Michigan law does not require a written partnership agreement. However, it is highly recommended to avoid future disagreements.
Do I need a business license to operate a Michigan limited liability partnership?
Yes, you will need to obtain a business license from the Michigan Department of Licensing and Regulatory Affairs.
How are the profits and losses of a Michigan limited liability partnership taxed?
The profits and losses of a Michigan limited liability partnership are passed through to the partners and are taxed on their personal income tax returns.
What types of businesses can operate as a limited liability partnership in Michigan?
Any type of business can operate as a limited liability partnership in Michigan.
How do I dissolve my Michigan limited liability partnership?
To dissolve your Michigan limited liability partnership, you must file a Certificate of Cancellation with the Michigan Department of Licensing and Regulatory Affairs.
Can I convert my Michigan limited liability partnership into another type of business entity?
Yes, you can convert your Michigan limited liability partnership into another type of business entity, such as a limited liability company.
Can I choose a name for my Michigan limited liability partnership that is already in use by another business entity?
No, Michigan law requires that your limited liability partnership have a unique name that is distinguishable from other business entities registered in Michigan.
Can a Michigan limited liability partnership be formed for the purpose of providing professional services?
Yes, a Michigan limited liability partnership can be formed for the purpose of providing professional services, such as legal or accounting services.
What are the annual reporting requirements for a Michigan limited liability partnership?
Michigan law requires limited liability partnerships to file an annual report with the Michigan Department of Licensing and Regulatory Affairs.
What are the fees associated with registering a Michigan limited liability partnership?
The fees associated with registering a Michigan limited liability partnership vary depending on the type of organization and any special circumstances. Check with Michigan Secretary of State for updated fees.
Can I use an online service to form my Michigan limited liability partnership?
Yes, there are many online services available to assist you in forming your Michigan limited liability partnership. Just make sure they are credible and reputable.
Can I operate my Michigan limited liability partnership from another state?
Yes, you can operate your Michigan limited liability partnership from another state, as long as you follow all Michigan laws and regulations.
Are Michigan limited liability partnerships required to have annual meetings of partners?
No, Michigan law does not require limited liability partnerships to have annual meetings of partners.
Can foreign limited liability partnerships do business in Michigan?
Yes, foreign limited liability partnerships can do business in Michigan by registering with the Michigan Department of Licensing and Regulatory Affairs.
Does a Michigan limited liability partnership have perpetual existence?
Yes, a Michigan limited liability partnership has perpetual existence, unless it is dissolved according to Michigan law.
Can a Michigan limited liability partnership be sued?
Yes, a Michigan limited liability partnership can be sued. However, the partners will have limited liability protection, which means they are not personally liable for any debts or obligations of the partnership.
Do I need to file an operating agreement with the Michigan Department of Licensing and Regulatory Affairs?
No, an operating agreement is not required to be filed with the Michigan Department of Licensing and Regulatory Affairs. However, it is highly suggested to safeguard rights of partners.
What is a limited liability partnership in Michigan?
A limited liability partnership (LLP) is a legal business structure in Michigan that offers the owners more flexibility and protection from personal liability in business-related matters.
Do I need a lawyer to form a limited liability partnership in Michigan?
While it’s not mandatory to hire a lawyer, it’s always advisable to have the guidance of a professional, as the process can get complicated.
What is the process for forming a limited liability partnership in Michigan?
In Michigan, forming an LLP involves filing a certificate of organization with the state and paying a fee.
Can I operate my limited liability partnership across different states?
Yes, you can. However, you’ll have to comply with the laws and regulations of every state you plan to operate in.
Do I need to have a business plan to start a limited liability partnership in Michigan?
While it’s not legally required, having a business plan can help you define your mission, vision, and goals, and create a roadmap that keeps you focused.
Are there any special tax considerations for limited liability partnerships in Michigan?
LLPs in Michigan aren’t taxed at the entity level, meaning the income passes through to the individual partners’ personal tax returns.
How many partners can I have in my limited liability partnership in Michigan?
In Michigan, there’s no limit to the number of partners you can have.
What is the difference between a limited liability partnership and a limited liability company in Michigan?
While both structures offer limited liability protection, LLPs are typically used by professional service firms that offer services like accounting, law, or architecture.
Do I need a business license to start a limited liability partnership in Michigan?
In Michigan, the requirements for business licenses vary by city or county.
Do I need a registered agent for my limited liability partnership in Michigan?
Yes, in Michigan, a registered agent is required to receive legal notices and documents on behalf of the business.
Can a limited liability partnership in Michigan be owned solely by one person?
Yes, a limited liability partnership in Michigan can be owned and operated by just one person.
Do I have to renew my limited liability partnership in Michigan annually?
No, in Michigan, LLPs don’t have to be renewed regularly but they do have to file an annual report with the state and pay a fee.
Can a limited liability partnership in Michigan change its business name?
Yes, an LLP in Michigan can change its business name by filing an amendment to its certificate of organization.
What happens if one of the partners in my limited liability partnership passes away?
In Michigan, the death of a partner doesn’t lead to the dissolution of the LLP, but the remaining partners must file a certificate of amendment with the state.
Can a limited liability partnership own property and other assets in Michigan?
Yes, LLPs in Michigan can own assets like property, investments, and other business equipment.
Are there any ethics rules that limited liability partnerships in Michigan must abide by?
Yes, Michigan LLPs must abide by ethical rules and regulations set forth by professional boards such as the State Board of Accountancy or the Bar Association.
Are there any ongoing reporting and compliance requirements for limited liability partnerships in Michigan?
Yes, LLPs in Michigan are required to file annual reports and pay an annual fee to maintain their good standing with the state.
How long does it take to form a limited liability partnership in Michigan?
The timeline for forming an LLP in Michigan depends on factors such as document preparation, processing time, and approval times, but on average it takes around 14 business days.
Is it possible to upgrade my limited liability partnership to a corporation in Michigan?
Yes, a limited liability partnership in Michigan can choose to convert to a corporation under specific rules and guidelines.
Can non-US citizens start a limited liability partnership in Michigan?
Yes, non-US residents who are older than 18 years old can start a limited liability partnership in Michigan.
Can limited liability partnerships in Michigan engage in any type of business activities?
Yes, LLPs in Michigan can engage in different types of business activities, as long as they are in compliance with Michigan laws and regulations.
What’s the difference between an LLP and a general partnership in Michigan?
Unlike general partnerships, LLPs provide limited liability protection to their owners, meaning they aren’t personally liable for legal or tax issues the business might run into.
Can two professionals in the same industry form a Michigan limited liability partnership together?
Yes, professionals in Michigan can form an LLP together, even if they specialize in similar areas.
Is a limited liability partnership the best legal structure for my business in Michigan?
It depends on the specific needs and circumstances of your business. Consulting with professionals, such as an attorney, tax advisor, or accountant, can help you decide if an LLP is the most suitable structure for you.
Can I have multiple limited liability partnerships in Michigan?
Yes, you can create multiple LLPs in Michigan, as long as each one has its own separate certificate of organization and bank account.
Can a limited liability partnership in Michigan make political contributions?
Yes, LLPs in Michigan can make political contributions, with certain disclosure requirements.
Can I form a limited liability partnership in Michigan on my own?
Yes, you can form a Michigan limited liability partnership on your own, but we recommend getting professional guidance to ensure completing the paperwork correctly, following the legal requirements, and remaining in compliance with the applicable business laws.

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Conclusion

Starting an LLP in Michigan may seem daunting, but you can successfully establish and run your business with thorough research, planning, and compliance with legal requirements. Feel free to seek professional assistance from legal or financial advisors when needed to ensure your Limited Liability Partnership’s smooth operation and growth in Michigan.

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