How to Form an LLC in Michigan | Guide on Michigan LLC

Forming an LLC (Limited Liability Company) in Michigan is easy and affordable. The following are few procedural steps on how to start an LLC in Michigan. LLCs can be formed in two ways, domestic and/or foreign. If you are planning to set up an LLC in states other than Michigan, visit How to Start an LLC.

Michigan LLC

Why an LLC in Michigan

Michigan, which is ranked as 10th in the country for providing a business environment to start-ups, is becoming a choice of many manufacturing and information sector companies. They are willing to start an LLC in Michigan with the help of the benefits offered. Some of the best ones out of them are discussed below.

Michigan Development Corporation Renaissance Zone

The Michigan government has started this program. Under this program, the government will decide and give recognition to the eligible next Michigan Business. Also, the program allows the businesses to receive tax exemptions for a period of 10 years. The taxes that falls under this list of exemption are:-

  • Personal property tax which individual member of an LLC has to pay
  • Utility user taxes are charged from the residents of the state.
  • Taxes that are charged on real property.

The dissolution 

There is no way that an LLC in Michigan gets dissolved due to a certain event of the life of the member. According to the Michigan state law, an LLC can be dissolved in only three situations:-

  • If the judge of the state given an order to dissolve the LLC due to misconduct of activities.
  • If all the voting members of the LLC are ready to dissolve and vote for the motion unanimously.
  • If the event occurred is specified in the bylaws that it will lead to the dissolution of the LLC.

Any other event than above mentioned three will not lead to the dissolution of an LLC.

Duration of the LLC with partnership rules 

In the states, when a firm wants to ensure that the business they have started should stay for a longer period of time, then they are considered to be taxed as a corporation. But in the case of Michigan LLC, there is no such issue. The LLC can also remain for infinite time, also, one can change their partnership business to an LLC for reserving their tax rights. The whole process will be tax-free, and the transfer of all the assets will be done by filling a simple transfer form.

Freedom of contract 

According to the LLC laws in Michigan, the member has the complete right to adopt their cash flow and withdraw their name out of the LLC if they notice that any further management decision can cause loss to them. In the same way, any person can join the LLC without making any financial contribution.

How to Form a Michigan LLC

Suppose you’re planning to invest in some profitable business or maybe about to set up your business in Michigan. In that case, forming an LLC in Michigan is the simplest option for you.

An LLC or a Limited Liability Company a hybrid business entity combining a corporation’s characteristics with a partnership or sole proprietorship. This section gives you a step-by-step guide on How to Start an LLC in Michigan. 

Step 1: Decide a Name for Your LLC

If you are to start an LLC in Michigan, the first thing you do is decide on a business or company name, and how to name your LLC may be tricky. Thus, you have the option to choose a name that complies with the Michigan business naming requirements. It must also be easily searchable for potential clients. Here is a step-by-step guide to follow when naming your Michigan LLC. 

Why do you need a proper business name?

If you want your LLC to have special identification, your company name is essential. However, many people face lots of issues by avoiding focus on choosing a business name for their LLC business formation filings.

Because of this, here are some of the major benefits of choosing the best LLC corporate names.

  • To help establish a company’s presence in the market, a proper business entity type will help you. This also creates a new identity that will resemble your LLC.
  • After you’ve properly chosen the name for your LLC, you will have no problems finishing the registration process.
  • You can only get the EIN number when you have your name registration certificate with you.

What are the requirements when deciding a name for your LLC? 

name search is vital to make sure your business’ name is unique. Check the availability of your name with Business Entity Search on the Michigan Secretary of State’s website. Reserve the name by completing the Name Reservation Request Form for Domestic Entities.  

  • Don’t include words that could confuse people about your company. Words like ‘treasury, state department.’
  • You should also avoid restricted words like ‘bank, attorney, university,’ because they may require a lawyer and more paperwork.
  • As for a business website and your URL name, check if your name is still available for domain use with NameCheap.

Reserve a business domain

Even if you don’t have plans to set up a website today, it will help if you buy a domain to avoid others from using your name for their website, so do visit NameCheap for your domain name and Kinsta for web hosting.

If you have decided on your URL name and have reserved it, set up a professional email account with Google GSuite.  

Step 2: Assign a Registered Agent in Michigan

A registered agent, or business entity, is a person that will act or work on your behalf. This person or business will receive significant tax forms, legal documents, a notice of lawsuits, and other official government correspondence in Michigan. Choosing Michigan-registered agents for your LLC is required. 

Make sure your registered agents are residents of Alabama. It could also be a business. Here are the recommended agents and employees for you:

These five LLC formation services are recommended agents’ registered services as they are authorized to conduct business in Michigan. Compare them to check the best yet cheapest option for you. Besides, they can guarantee you professional service because they have been in the business for years. 

Step 3: File Articles of Organization in Michigan

A Certificate of Name Reservation is needed to file Articles of Organization, as other states call it. You need to make reports of this certificate with the Michigan Secretary of State, which costs $50. You may file them online or by mail. 

This Certificate of Formation is a legal document needed to form your business officially. It will indicate details about your LLC in Michigan, like if it is a member-managed or managers-managed

Before you start filings, you must already have your LLC name and registered agents or employees. You will attach a copy of your Name Reservation Certificate along with a list of the services that your Michigan LLC will offer.

How to File Online

Go to the Secretary of State Online Service. Select “non-subscriber.” Fill out the online form. The website will alert you if your county does not support online filings after selecting your principal county.

How to File by Mail

If you prefer filing real-life forms for your Indiana LLC registration, then you can download the Michigan Limited Company Certificate of Formation. Read the form thoroughly and fill it out. It will have to fill, among others,  your name, city, state, zip code, and signature. 

Step 4: Create Your Michigan LLC Operating Agreement

An operating agreement is a document that legally outlines the proprietorship and operating procedures of your LLC This document is vital as it ensures that all business owners are on the same page regarding how they operate, thus reducing future conflicts. 

Starting an LLC in Michigan does not require you to have an operating agreement, but it is ideal to have one that contains all your details of business operation.

Step 5: Filing a Michigan LLC EIN

The Employer Identification Number or, simply, the E.I.N. is a nine-digit number given by the Internal Revenue Service (IRS) to make it easier to identify types of business for tax purposes. It is like a Social Security number dedicated to a business. 

It is also called a Federal Employer Identification Number (FEIN) or a Federal Tax Identification Number (FTIN). You will need this number for tax filing and to determine tax classification options.

Mail to:

Internal Revenue Service

Attn: EIN Operation

Cincinnati, OH 45999

Fax: (855) 641-6935

Fee: Free

After Starting your Michigan LLC 

After forming your LLC, there are still some things that you will need. Take note of the following:

  • Get a company business account
  • File Michigan business permits & licenses
  • Get liability for business insurance with coverage for employees
  • File a Michigan LLC annual report or biennial report
  • Already existing LLCs that wish to operate in Michigan must register as a foreign Michigan LLC.  

This page has provided you with steps to LLC formation and filing processes. You now have to remember upcoming filing deadlines and filing fees or filing costs, including fees for late filings to make sure your LLC is up-to-date.  

Businesses Contributing to Michigan State Economy 

Many businesses are established and running successfully in the state of Michigan. But not every business is a part of the top industries of the state. Knowing Michigan’s leading sectors is very important for new entrepreneurs when forming an LLC in Michigan. 

Automobile production 

Michigan produces more than 19% of the total automobile generated by the state. The total contribution of the automobile industry to the state GDP is $188 billion. Out of this value, $134 billion come directly and $53 billion come to the contribution through indirect automobile production purposes like its transports. The reason behind such an enormous contribution is the talented labor pool that is present in the state. 

Agriculture 

The agriculture sector has a whooping contribution of around $104.7 billion in a year to the state and provides 17% of the total jobs in the state. The state is very well known for producing Christmas trees by contributing 1.55 million fresh trees every year. 

Tourism Sector 

The tourism sector is the largest tax-paying sector of Michigan which gives around $3.6 billion to direct tax to the state. The total contribution of this sector to the GDP of the state is $22.4 billion. The tourism sector mainly comprises summer activities and hunting and skiing and skating in the winter season. 

Advanced Manufacturing 

The state is ranked 5th among the states of the USA in terms of advanced manufacturing. The significant insights of the industry are:-

  • The state is known for making 37% of a total military vehicle. 
  • The rank of state in terms of aerospace production is 4th nationwide. 
  • More than 3000 businesses are serving the defense industry by making potent weapons for them. 

The contribution of advanced manufacturing in the state GDP is around 19% and is employing 629,000 people approximately. 

Some small businesses in the state are mentioned below. 

  • Online currency trading 
  • Christmas trees business 
  • Hunting equipment renting 

Michigan LLC Formation Review

Time needed: 1 hour and 5 minutes.

 Just to recap, here are the easy steps again when forming an LLC in Michigan. Click on the steps in this list to read the full detail.

  1. Name your Michigan LLC

    The first thing you must do is to choose a company name, which should include the phrase “limited liability company,” or one of its abbreviations (LLC or L.L.C.).
    name llc

  2. Choose a registered agent

    In Michigan, it is mandatory to select a registered agent for your LLC. You can check out our list of our 5 Best LLC Services in the United States.
    get registered agent

  3. File a formation certificate

    Filing a formation certificate is necessary when forming an LLC. Depending on the state, it could be called any of the following: Certificate of Formation, Articles of Organization, or Certificate of Organization.
    file formation certificate

  4. Create operating agreement

    An operating agreement is not a strict requirement but something encouraged when you start an LLC.
    create operating agreement

  5. Get an EIN

    The Employer Identification Number (EIN), also called  Federal Tax Identification Number, serves to identify a business entity like a social security number but for a company.
    get an ein

F.A.Qs

What is the difference between ‘domestic LLC’ and ‘foreign LLC’?

A “domestic LLC” is one that conducts business in a state where it was formed. Meanwhile, a “foreign LLC” is an existing LLC that extended business to another state.

What do I need for Domestic and Foreign LLCs?

For Domestic LLCs, it is vital to have a Certificate of Name Reservation and Certificate of Formation. For the foreign LLCs, you must have a Certificate of Good Standing.

Is the cost to form an LLC the same across states?

The cost to form an LLC varies per state.

Does an LLC need to use a DBA?

Seldom do L.L.C.s use D.B.A. or a ‘Doing Business As’ name nor a fictitious business name. However, if you want to have one, you make read more about DBAs here

Why are operating agreements important?

This document is vital as it ensures that all business owners are on the same page regarding how they operate, thus reducing future conflicts.

Is there anything else I should keep in mind when naming my LLC?

>Your name should have “L.L.C. or LLC” or the phrase “limited liability the business.” 
>Do not include words that could create confusion between your LLC and any government business. 
>Words like ‘bank, attorney, university’ are restricted as well. 
>Lastly, your name should distinguish from other limited liability corporations, limited partnerships, or registered limited liability partnerships.

Where can I file my LLC name?

Typically, you can file your LLC name online or by mail. Check with the state where you will set up your LLC name. Take note that the fees for business names may also vary per state.  

How can I know if my URL name is available?

As for a website and your URL name, check if your name is still available for URL use with NameCheap to see if your name is available as a web domain. Even if you don’t have plans to set up a website today, it will help if you buy a URL. Buying it can help to prevent others from getting your name; check out WPEngine, Kinsta, and GoDaddy for hosting and building your website. 

Can I mail the LLC Certificate of Formation to the Secretary of State?

No. Never mail these documents or payments to the Secretary of State directly. 

Why do I need an EIN?

The reason you might need an E.I.N. is that it would help for three reasons:
>Opening a business bank account
>Filing and managing federal and state taxes
>Hiring employees or agents

How do I get an EIN when I do not have a Social Security number?

You are not required a Social Security number when getting an EIN. You can proceed to fill out I.R.S. Form SS-4 and leave section 7b blank. You must then call the IRS at (267) 941-1099 to complete your application. Agents or employees will help you with that.

I already have an EIN for a sole proprietorship; what now? 

Note that an LLC is different from a sole proprietorship. If you already have an EIN for your sole proprietorship, the IRS will require you to get a new one when your convert to an LLC. 

Do foreign applicants need an SSN to get an EIN?

International EIN applicants do not need an SSN to get an EIN.

What is an IRS?

The IRS is the one that will issue your EIN. You can request an EIN from the IRS ONLINE or download the FORM, fill it out, and send it by mail or fax.

NOTE:  Ask us about Multi-Member LLCs, Federal Tax Purposes, Personal Liability Protection, Entity Type, Business Debts, Business Address, Business Structures, Registered Agent Service, Professional Services, Federal Taxes, Limited Liability Protection, Statutory Agent Service, Personal Asset protection, Entity for Tax, Legal Entity, Business Privilege Tax, Income Tax Liability, Formation Requirements, Additional business Licenses, Legal Liability, Franchise Tax/ Annual Franchise Tax, Franchise Tax form, Agent for service, Franchise Tax Reporting, Franchise Tax registration, Mailing address, Physical address, Business credit cards, internal documents, formation document, online application, federal business licenses, protection from Liability, federal income taxes, income tax returns, Double taxation or personal tax return, personal income tax, Annual registration fee, filing procedures, legal protections or anything from the article in the comment box below.

Leave a Comment