How to Start an LLC in Michigan | 2024 Guide

Start a LLC in Michigan

How to Start an LLC in Michigan: If you’re looking to launch a business in Michigan, starting a Limited Liability Company (LLC) may be the right choice for you. An LLC provides personal liability protection for its owners while giving them flexibility in managing and taxing the business. This guide provides a step-by-step process for starting an LLC in Michigan. From choosing a unique name to registering with the state and obtaining necessary licenses and permits, Webinarcare Editorial Team will walk you through setting up your new business entity. So grab a pen and paper, and let’s get started!

What is a Limited Liability Company?

A Limited Liability Company (LLC) is a type of business entity that combines a corporation’s limited liability protection with a partnership’s tax benefits. LLCs are popular among small business owners for their flexibility and ease of formation. In Michigan, an LLC must have a unique name and file Articles of Organization with the Secretary of State. Depending on their business needs, LLCs may also elect to be taxed as a corporation or an S-corp. Owners of an LLC, called members, are not personally liable for the company’s debts and losses, and the company’s profits and losses are passed through to the member’s personal tax returns. This makes an LLC an attractive option for those seeking personal liability protection and simplified taxation.

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Steps on How to Start an LLC in Michigan

To form an LLC for your business, you must follow the guidelines that include naming your LLC, hiring a Resident Agent, filing your Articles of Organization, creating your LLC operating agreement, getting an employer identification number, opening a bank account and getting business licenses and permits.

Step 1: Name your LLC in Michigan

After you have decided on the idea to form an LLC in Michigan, deciding the name for your LLC is significant. There is a complete guide on LLC name guidelines for you to have a proper LLC business name. Here are some regulations you must follow while naming your LLC,

  • The name should not be confused with a government entity.
  • The name should be unique.
  • The name should be available to use.
  • Any other business does not use the name.
  • The new name must include “LLC” if it is a limited liability company.

In Michigan, if you do not wish to file your LLC right away but want to hold the name that you have decided on, then you can reserve your LLC name for 6 months. You must file a name reservation application in Michigan Secretary of State to keep the name.

Recommended: We recommend a professional service that can offer you unlimited name search, trademark and copyright registration at a reasonable price. We recommend using –

LegalZoom($0 + State Fees for LLC Formation)

You can register your business under a different legal name if your preferred name isn’t available. Once you have chosen a name, you can submit an application for filing Michigan DBA (doing business as). In this manner, you can choose any name you desire for your business. A DBA allows a company to operate under the name of the person or entity who owns it. If you have decided to file for a DBA, you can file it in three methods, online, by mail, and in person filing. However, before filing a DBA, you should know that you need to renew your DBA from up to five years, which costs around $25 for LLCs and $10 for LPs.

Step 2: Hire a Resident Agent in Michigan

Hiring a Resident Agent in Michigan is a must since a Resident Agent is a person or business entity responsible for receiving important legal documents on behalf of your Michigan LLC. Most states require you to designate a Resident Agent when forming your LLC.

The qualifications of a Resident Agent vary depending on the jurisdiction. Still, generally, a Resident Agent must meet the following criteria:

  • Availability: A Resident Agent must be available during regular business hours to receive and process legal documents and official correspondence.
  • Physical Address: A Resident Agent must have a physical street address within the state where the LLC is registered. This address, known as the registered office, cannot be a P.O. Box.
  • Residency or Authorization: For individuals serving as Resident Agent, they must be residents of the Michigan where the LLC was formed. A business entity acting as a Resident Agent must be authorized to do business within that state.
  • Age: A Resident Agent must be at least 18 years old.
  • Good standing: A Resident Agent should not have any legal or financial issues that impede their ability to fulfill their duties.

Choosing a reliable and responsible Resident Agent is essential, as failure to receive and respond to legal documents can seriously affect your business. Some businesses use professional Resident Agent services to ensure compliance and proper handling of legal matters.

However, if you would like to have an easier process in filing the necessary documents, you can get Michigan Resident Agent Services.

Step 3: File your Articles of Organization in Michigan

The Articles of Organization for an LLC is an important document to start your limited liability company (LLC). Michigan Articles of Organization is a simple document that contains the business name and address as well as the name and address of the person who received lawsuits on behalf of the organization.

Here are the guidelines and specific requirements in filing your Articles of Organization in Michigan.

1. Obtain the Necessary Forms: Visit the Michigan’s business filing office website, usually the Michigan Secretary of State’s office, to download the required forms or file online.

2. Provide the Required Information: Fill in the necessary details in the form, which typically include:

  • The name of your LLC (must include an LLC designator such as “LLC,” “L.L.C.,” or “Limited Liability Company”)
  • The purpose of your LLC (a general statement or specific business activities)
  • The address of your LLC’s principal place of business
  • The name and address of your registered agent (the person or business entity responsible for receiving legal documents on behalf of your LLC)
  • The management structure of your LLC (member-managed or manager-managed)
  • The duration of your LLC, if not perpetual
  • The names and addresses of the LLC’s organizers or members

3. Sign and File the Form: Submit the completed form in the {state} state office, either by mail, in person, or online. You may mail it at Michigan Department of Licensing and Regulatory Affairs, Corporations, Securities & Commercial Licensing Bureau — Corporations Division, P.O. Box 30054, Lansing, MI 48909.

4. Pay the Filing Fee: When you submit your Articles of Organization, you’ll need to pay a filing fee of $50. Make sure to check and include the correct payment with your submission.

5. Receive Confirmation: After your Articles of Organization have been filed and processed, you’ll receive a confirmation from Michigan, typically a stamped and approved copy of the document or a Articles of Organization.

Recommended: Filing formation papers is easy and hassle-free if you hire a professional service. We recommend using –

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Once you have successfully filed your Articles of Organization and it has been approved, your Michigan LLC is officially formed. However, remember to complete additional steps, such as creating an Operating Agreement, obtaining an EIN, and registering for any required licenses and permits.

Step 4: Create Your Michigan Operating Agreement

An operating agreement is a document that contains all of your company’s organizational details. Drafting an operating agreement in most states is not required. Yet, having one as an internal document is strongly advised. An operating agreement includes information like-

  • About Business
  • Members and management
  • Capital contribution
  • Profit Distribution
  • Change of membership
  • Dissolution

To understand how an operating agreement works, you should check out how to create an operating agreement in Michigan.

Recommended: Get oprating agreement drafts ready on your table with a help of a professional service. We recommend using –

LegalZoom($0 + State Fee for LLC formation)

Step 5: Get an EIN

After documenting the operating agreement, you should get or request an Employer Identification Number (EIN) in Michigan. An EIN will serve as the tax ID for your professional 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 the 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.

In obtaining an EIN for your LLC, you should be aware to ensure that your LLC is eligible for an EIN. You need an EIN if you have employees, operate as a corporation or partnership, or meet other specific IRS criteria. Before applying, gather the required information, including your LLC’s name, mailing address, and the responsible party’s Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN). Also, you can apply for an EIN through various methods, including online, by fax, mail, or telephone (for international applicants).

Recommended: Professional services have the EIN included in their LLC formation package. We recommend using –

LegalZoom($0 + State Fee for LLC formation)

Step 6: Open a Bank Account and Prepare for Taxes

After you have filed for and received your Employer Identification Number, you should open a bank account because you will use this account for yourself, your clients, and your employees.

Your business dealings in Michigan might be simpler with a US business bank account because it boosts your company’s legitimacy and liquidity. Most banks demand an EIN to create a business bank account for firms other than sole proprietorships. Also, having an EIN makes tax preparation easier. You can anticipate paying employment and corporate taxes with Michigan LLC.

Opening a bank account is necessary for Michigan business. If you are still wondering where to open an account in your Michigan, you should check the Best Bank for Small Business in Michigan.

Step 7: Get a Business and License Permit

You must get a business license in Michigan before establishing your LLC. A business license is a legal document granted by a state government body that permits you to conduct business within the area under its jurisdiction. The price of business licenses and permits in Michigan ranges from $50 – $300. If there is a requirement for a specific license or city-based permit, you must inquire with the Michigan Secretary of State.

Cost to Form an LLC in Michigan

Even if you have a business name and structure in mind, you should consider whether you can afford the costs of forming an LLC in Michigan. Articles of Organization costs around $50. The initial filing fee is $50, and the annual fee is $25.

If you forget to pay the annual fee for your Michigan LLC, you will have a penalty of $50. However, you can check the Michigan LLC Cost for additional information.

Advantages of Creating Michigan LLC

Even though some people decide on what to do with their businesses, some choose to put it in their own individual name, while others still choose to set it up via LLC in Michigan. Important benefits will help you set up an LLC in Michigan.

  • Pass-Through Taxation: The pass-through structure will make the company not pay twice the tax. Most start-ups and entrepreneurs in Michigan apply for an LLC because of this structure. Pass-through taxation refers to how income and losses from an LLC (Limited Liability Company) are passed through to its members (owners) for tax purposes rather than being taxed at the business entity level. This means the LLC does not pay federal income taxes; the members’ profits and losses are allocated based on their interests. Each member then reports their share of the LLC’s income or losses on their personal tax returns and pays taxes at their individual tax rates.
  • Ownership Flexibility: If you need sole and primary control over your company’s operations, a sole proprietorship will allow you to do so. If you apply for an LLC in Michigan with flexibility, you will have default rules set by law and need an operating agreement.
  • Personal Liability Protection: Personal Liability Protection protects your business from damage, debts, or legal obligations. In personal liability protection, the company’s profits and earnings will stay as is even if your company is about to be sued. This protection of having an LLC in Michigan can also be extended to the company’s properties and assets. Many start-up companies will benefit from this since most are starting to build a company. Even if liability exists, the LLC in Michigan will protect its assets.

FAQs

What is an LLC in Michigan?
An LLC (Limited Liability Company) in Michigan refers to a type of business structure that provides owners with personal liability protection and flexible taxation.
How do I form an LLC in Michigan?
To form an LLC in Michigan, you must file Articles of Organization with the Michigan Department of Licensing and Regulatory Affairs (LARA).
Can I start an LLC in Michigan if I am not a Michigan resident?
Yes, you can start an LLC in Michigan even if you are not a Michigan resident.
How long does it take to form an LLC in Michigan?
The processing time for LLC formation in Michigan can vary, but it typically takes around 7-10 business days.
How much does it cost to form an LLC in Michigan?
The filing fee to start an LLC in Michigan is $50.00.
Do I need a registered agent for my Michigan LLC?
Yes, all Michigan LLCs must have a registered agent, who is responsible for accepting legal documents and notices on behalf of the LLC.
Can I be my own registered agent for my Michigan LLC?
Yes, you can be your own registered agent for your Michigan LLC.
What are the annual fees for a Michigan LLC?
Michigan LLCs are required to pay an annual fee of $25.00.
Can I change the name of my Michigan LLC after it is formed?
Yes, you can change the name of your Michigan LLC after it is formed.
Can two LLCs have the same name in Michigan?
No, two LLCs cannot have the same name in Michigan.
Can an LLC have only one member in Michigan?
Yes, an LLC can have only one member in Michigan.
What is a single-member LLC in Michigan?
A single-member LLC in Michigan is an LLC that has only one owner or member.
Is an LLC the same as a corporation in Michigan?
No, an LLC and a corporation are two different business structures in Michigan.
What are the advantages of forming an LLC in Michigan?
The advantages of forming an LLC in Michigan include personal liability protection, flexibility in taxation, and easier management.
Do Michigan LLCs need to file an annual report?
Yes, Michigan LLCs need to file an annual report with LARA, which costs $25.
Can an LLC be taxed as an S corporation in Michigan?
Yes, an LLC can elect to be taxed as an S corporation in Michigan.
Do Michigan LLCs need to have an operating agreement?
Although not required by law, having an operating agreement for your Michigan LLC is strongly recommended.
Can a Michigan LLC have a nonresident owner?
Yes, a Michigan LLC can have a nonresident owner.
Can I convert an existing business to an LLC in Michigan?
Yes, it is possible to convert an existing business to an LLC in Michigan.
What is the difference between an LLC and a sole proprietorship in Michigan?
The main difference between an LLC and a sole proprietorship in Michigan is that the former provides personal liability protection whereas the latter does not.
Can a Michigan LLC have a DBA?
Yes, a Michigan LLC can have a DBA (doing business as) or trade name.
Are Michigan LLCs required to hold meetings?
There is no requirement for Michigan LLCs to hold meetings, although it is a good practice to do so.
How is an LLC taxed in Michigan?
By default, an LLC in Michigan is considered a pass-through entity and is not subject to corporate income tax. Instead, the income and losses of the LLC are reported on the personal tax returns of its owners.
What is the minimum number of members required to form an LLC in Michigan?
There is no minimum number of members required to form an LLC in Michigan.
Can an LLC in Michigan be managed by its members?
Yes, an LLC in Michigan can be managed by its members.
What is the difference between an LLC and a partnership in Michigan?
While both business structures offer pass-through taxation and personal liability protection to its owners, an LLC in Michigan is often seen as more flexible and easier to manage than a partnership.
Can a foreign entity form an LLC in Michigan?
Yes, a foreign entity can form an LLC in Michigan by filing an application for authority to transact.
What is a domestic entity in Michigan?
In Michigan, a domestic entity refers to an entity that is organized and registered in the state.
Can a Michigan LLC have a PO Box address?
While a Michigan LLC can have a PO Box address, it must also have a physical street address where legal documents can be served.
How much does it cost to start an LLC in Michigan?
It costs $50 to file your articles of organization with the Michigan Department of Licensing and Regulatory Affairs.
Can I file my LLC paperwork in person in Michigan?
Yes, you can file your LLC paperwork in person with the Michigan Department of Licensing and Regulatory Affairs located in Lansing, Michigan.
How long does it take to start an LLC in Michigan once the paperwork has been filed?
Typically, it takes about 5-7 business days for your LLC to be approved in Michigan.
What is the Michigan LLC filing fee?
The Michigan LLC filing fee is $50. You will need to file the articles of organization with the Michigan Department of Licensing and Regulatory Affairs (LARA).
How can I name my LLC in accordance to Michigan law?
In accordance with Michigan law, the name of your LLC must be unique and cannot be confusingly similar to any other LLC names on file with the Michigan Department of Licensing and Regulatory Affairs (LARA).
Can I register my LLC online in Michigan?
Yes, you can register your Michigan LLC online with the Michigan Department of Licensing and Regulatory Affairs (LARA).
Does Michigan require LLC members to be residents of Michigan?
No, Michigan does not require members of an LLC to be residents of Michigan.
What is the process of getting an EIN in Michigan for an LLC?
To obtain an EIN in Michigan for your LLC, you will need to file for your EIN directly with the IRS for free. You can file online, by mail, by fax, or by telephone.
Should I form an LLC in Michigan if I am a solo owner?
Yes, forming an LLC in Michigan is a good idea for solo owners because it offers liability protection and separates business and personal assets.
What kinds of businesses should form an LLC in Michigan?
Any business that wants business and personal liability protection should consider forming an LLC in Michigan.
How long does an LLC last in Michigan?
An LLC in Michigan doesn’t have an end date unless you choose to dissolve it voluntarily.
How can I dissolve my LLC in Michigan?
You can dissolve your LLC in Michigan by filing articles of dissolution with the Michigan Department of Licensing and Regulatory Affairs (LARA).
Do LLCs in Michigan need annual reports?
Yes, LLCs in Michigan must file an annual report with the Michigan Department of Licensing and Regulatory Affairs (LARA).
What happens if I don’t file an annual report in Michigan?
If you fail to file your annual report for your Michigan LLC, your LLC can fall into inactive status or be dissolved by the state.
Can I have multiple LLCs in Michigan?
Yes, you can have multiple LLCs in Michigan.
Can I change my LLC name in Michigan?
Yes, you can change your LLC name in Michigan by filing an amendment to your articles of organization with the Michigan Department of Licensing and Regulatory Affairs (LARA).
What are the taxes for LLCs in Michigan?
LLCs in Michigan are subject to Michigan’s business taxes, which include a flat-rate tax and a gross receipts tax known as the “Michigan Business Tax.”
What is the registered agent requirement for LLCs in Michigan?
LLCs in Michigan are required to have a registered agent with a physical address in Michigan.
Can I be my own registered agent in Michigan?
Yes, you can serve as your own registered agent for your LLC in Michigan, but you would need to have a physical address in the state.
What is the purpose of a registered agent in Michigan?
The purpose of a registered agent in Michigan is to receive legal documents and other important correspondence on behalf of the LLC.
Is there a residency requirement to be a registered agent in Michigan?
No, there is no residency requirement to be a registered agent in Michigan, but the agent must have a physical address in the state.
What happens if my Michigan LLC has no registered agent?
If your Michigan LLC lacks a registered agent, it can fall into inactive status or be administratively dissolved by the Michigan Department of Licensing and Regulatory Affairs (LARA).
Can I change the registered agent for my Michigan LLC?
Yes, you can change the registered agent for your Michigan LLC by filing a change of registered agent form with the Michigan Department of Licensing and Regulatory Affairs (LARA).
Do I need a business license to form an LLC in Michigan?
Most LLCs in Michigan won’t need a business license to operate in the state, but specific industries may require additional licensing.
Can I have a foreign entity as a member of a Michigan LLC?
Yes, you can have a foreign entity as a member of a Michigan LLC.
Do I need a registered agent service for my Michigan LLC?
No, a registered agent service is not required for an LLC in Michigan, but appointing an agent can be useful for organization and efficiency.
Do I need a lawyer to start an LLC in Michigan?
While you don’t necessarily need a lawyer to start an LLC in Michigan, it can be beneficial to hire an attorney or use a formation service to ensure that the paperwork is completed correctly.

Also Read

How Fast Can I Form an LLC in Michigan

One of the key factors in how fast you can form an LLC in Michigan is how prepared you are going into the process. The first step is to decide on a name for your LLC and make sure it is available for use. You will also need to designate a registered agent for your business, who will act as the main point of contact for legal matters. Having this information ready to go can speed up the process significantly.

Another important factor in how quickly you can form an LLC in Michigan is how long it takes you to gather and submit all necessary documentation. This can include your articles of organization, operating agreement, and any required licenses or permits. The faster you can gather and submit these documents, the sooner your LLC can be officially formed.

Of course, you also have the option of hiring a professional service to help you with the process of forming an LLC in Michigan. These services can help ensure that all necessary documentation is completed correctly and submitted in a timely manner, potentially speeding up the formation process. While this option does come with an additional cost, it can be worth it for the peace of mind and time saved.

Finally, the length of time it takes to form an LLC in Michigan can also depend on how busy the state’s business registration office is at any given time. During busier times of the year, such as tax season, processing times may be longer than usual. It’s important to keep this in mind and plan accordingly if you need your LLC formed quickly.

In summary, how fast you can form an LLC in Michigan depends on a variety of factors, including how prepared you are, how quickly you can gather and submit all necessary documentation, whether you choose to hire professional help, and how busy the state’s business registration office is at the time. By being proactive, organized, and possibly seeking assistance, you can help ensure that your LLC is formed as quickly as possible.

Conclusion

In conclusion, starting an LLC in Michigan is a strategic choice for entrepreneurs seeking a flexible, straightforward business structure with limited liability protection. By following the essential steps, including choosing a business name, filing Articles of Organization, appointing a Resident Agent, creating an Operating Agreement, obtaining an EIN, and securing the necessary licenses and permits, you can successfully establish your LLC. This business structure offers numerous advantages, such as pass-through taxation and ownership flexibility, making it an attractive option for small business owners looking to grow and protect their ventures. As always, consult legal and business professionals for guidance specific to your situation and state requirements.

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