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.
On this page, you’ll learn about the following:
- How to Form a Michigan LLC
- After Starting your Michigan LLC
- Why an LLC in Michigan
- Businesses Contributing to Michigan’s Economy
- Michigan LLC Formation Review
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 form of business for you. For a business owner having an LLC means limiting their personal liability for company or business debts.
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?
A 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, you can then have a business email service. Afterward 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 forms, formation documents, annual statements, a notice of lawsuits, and other official government correspondence in Michigan. Choosing a Michigan-registered agent for service of process for your LLC is required.
Make sure your registered agents are residents of Michigan. It could also be a business. Here are the recommended resident agent list and employees for you:
Our Rating & Pricing
#1 TOP PICK
$49 + State Fees
$299 + State Fees
$399 + State Fees
These five LLC formation services are recommended agents’ registered services as they are authorized to conduct business in Michigan. Compare these formation companies to check the best yet cheapest formation package for you. Besides, these professional service providers can guarantee you professional services like filing services, processing services, and others 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 Michigan LLC registration, then you can download the Michigan Limited Company Certificate of Formation. Read the form thoroughly, fill it out, and send the form by mail. 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.
Internal Revenue Service
Attn: EIN Operation
Cincinnati, OH 45999
Fax: (855) 641-6935
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.
Why an LLC in Michigan
Michigan, which is ranked 10th in the country for providing a business environment to start-ups, is becoming a choice of many manufacturing and information sector companies. Another reason for choosing Michigan for business is the business funding option the state has. They are willing to start a Michigan LLC as the state offers a reduction in tax liabilities. 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 businesses to receive tax exemptions for a period of 10 years. The taxes that fall 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.
There is no way that an LLC in Michigan gets dissolved due to a certain event of the member’s life. According to the Michigan state law, an LLC can be dissolved in only three situations:-
- If the state judge has 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, 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 from the LLC if they notice that any further management decision can cause loss. In the same way, any person can join the LLC without making any financial contribution.
Businesses Contributing to Michigan’s 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.
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 comes directly, and $53 billion comes 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.
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.
The tourism sector is the largest tax-paying sector of Michigan, giving 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.
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: 30 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.
- 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.).
- 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.
- 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.
- Create operating agreement
An operating agreement is not a strict requirement but something encouraged when you start an LLC.
- 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.
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.
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.
The cost to form an LLC varies per state.
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.
This document is vital as it ensures that all business owners are on the same page regarding how they operate, thus reducing future conflicts.
>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.
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.
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.
No. Never mail these documents or payments to the Secretary of State directly.
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
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.
International EIN applicants do not need an SSN to get an EIN.