Want to launch your business as a limited liability company (LLC)? Michigan might be the perfect place for you. With its low cost of living, steady economic growth, and ever-increasing focus on small businesses, The Great Lakes State offers a ton of opportunity to ambitious entrepreneurs.
An LLC also offers benefits to new business owners. Advantages include liability protection (by separating your personal assets and liabilities from those of your business), and flexibility in how your business is run and taxed. To create an LLC in Michigan, you’ll need to follow certain steps. And if you want to reap the aforementioned benefits, you’ll need to complete those steps carefully.
Trying to follow all the rules for creating an LLC can seem trickier than navigating Ann Arbor traffic during a Michigan home game, but fear not. Our step-by-step guide will walk you through the entire formation process. Along the way, we’ll even explore how our services can help you cut through the red tape so you can focus on running your business.
LLC requirements vary state by state so it’s important that you are well-versed in Michigan laws before proceeding. Generally, it comes down to these steps.
To form a Michigan LLC, you’ll need to register your business. That means filing Articles of Organization with the Michigan Department of Licensing and Regulatory Affairs (LARA). Before you can file these formation documents, however, you’ll need to name your business and appoint a resident agent.
Once your Articles of Organization are filed, you’ll need to create an LLC operating agreement. Finally, you’ll get set up to pay taxes by obtaining an Employer Identification Number (EIN).
Below, we’ll show you how to start an LLC in Michigan with five key steps. We’ll also cover some helpful information to help you start your business off on the right foot.
Note: These guidelines are for forming a domestic LLC. A domestic LLC is a limited liability company formed in the same state in which you reside. If you need to start an LLC outside of your own state, you’ll form a foreign LLC. Michigan Foreign LLC formation involves obtaining a Certificate of Authority to transact business in the state and following a different process.
The first step is to name your LLC in Michigan. In addition to choosing something fits your desired brand image, you also need to make sure the name you want is allowed. That means ensuring the name isn’t already in use by another company, and adhering to Michigan naming rules.
For starters, the name of your Michigan Limited Liability Company cannot be the same as, or confusingly similar to, any other business name in the state. Use our Michigan Business Entity Search page to check online and see if a name is available.
Your business name must also include a designator that it is an LLC. Options for LLC designators in Michigan include:
Your LLC name cannot contain any words or phrases that suggest it is a corporation, such as “Corporation,” “Incorporate,” “Corp.,” or “Inc.”
Found the perfect name, but aren’t quite ready to form your business? In Michigan, you can reserve your name for up to 180 days.
Being available online is a big part of running a successful business. That’s why you might want to make sure your desired business name is also available as a URL. Use our domain search tool to discover what domain names are available for your LLC.
Note: You may also want to go ahead and check for available social media handles at the same time. This way, you can make sure all of your branding aligns (name, website, social media, etc.).
If you want to do business under a different moniker than your official company name, you’ll need to file for an assumed name in Michigan. This is also known as a “doing business as” or “DBA name” and a “fictitious business name” or “FBN” in other states.
Businesses often used assumed names to do things like launch new product lines or open new stores. For instance, if a company with the official name “ABC Toys, LLC” wants to sell puzzles online as “ABC Puzzles,” they’ll file for an assumed name.
Even if your business entity search suggests that your desired name is available, that doesn’t necessarily mean you’re clear to use it. Names can also be trademarked at both the state and federal level.
To further ensure that the name you want is available for use, you can conduct a trademark search. Check for state-level trademarks through the Michigan Department of Licensing and Regulatory Affairs. Federal trademarks can be searched for through the U.S. Patent and Trademark Office (USPTO). If you’re desired name isn’t already trademarked, you can also consider applying for a trademark of your own.
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The next step is to appoint a Michigan resident agent. Commonly referred to as a “registered agent” in other states, a resident agent is an individual or business entity who receives legal and official government notices on behalf of your LLC.
If a process server or the state needs to contact your business, they need a reliable point of contact. That’s the purpose of a resident agent (also known as a registered agent).
To serve as a resident agent in Michigan, an individual or business entity must have a physical street address in the state (a P.O. box will not suffice). Your resident agent and registered office must also be listed in your Articles of Organization.
Legally, you can serve as your business’s resident or registered agent, but there are a few reasons why this isn’t a great idea:
Instead of serving as their own resident agent or asking a friend or family member to do so, many business owners opt to use a professional registered agent service. A Michigan registered agent service like ours enables you to:
If the Michigan Department of Licensing and Regulatory Affairs is unable to make contact with your resident agent office, you could find yourself out of compliance with the state. Being out of compliance can lead to penalties as severe are administrative dissolution of your LLC.
Furthermore, you could miss receiving notification that your business is being sued or has had legal action taken against it.
This can all happen pretty easily if your registered agent office moves and you forget to update your paperwork with the state.
One of the best ways to avoid potential issues with your resident agent office being unreachable is to use a professional registered agent service.
By using ZenBusiness as your resident agent, you can ensure your resident office address will always be up-to-date, and all legal notices will be received and passed along in a timely manner. That means you can go on vacation, enjoy time with family, or do whatever else you’d like without having to worry about missing legal notices or service of process.
Furthermore, our registered agent services will keep you organized and in compliance with Michigan’s resident agent requirement.
Next, it’s time to file your Michigan Articles of Organization. This is the filing that officially forms your LLC in Michigan.
You’ll file Articles of Organization with the Michigan Department of Licensing and Regulatory Affairs, Corporations, Securities, and Commercial Licensing Bureau, Corporations Division. You can file these formation documents online, via mail, or in person at the Lansing location, along with your nonrefundable $50 filing fee.
Your Articles of Organization will need to include information such as:
One of the options you have when starting an LLC is whether your business will be member-managed or manager-managed.
Under a member-managed structure, an LLC’s day-to-day management is handled by its members. When you opt for a manager-managed structure, you’ll either appoint one or more members to manage your LLC, or hire an outside manager.
If not specified in your operating agreement, your LLC will default to member-managed. This is the option many LLC owners choose, but which one is best for you depends on preference and availability.
For instance, are all of your members able and available to manage your LLC’s day-to-day needs? If so, member-managed might be right for you. On the other hand, if only one of your members are available, or if you need to hire an external manager, then manager-managed might be best.
You only need to file your Articles of Organization once. However, if you make significant changes down the road (such as changing your resident agent), you’ll need to file a Michigan Certificate of Amendment with LARA, along with the corresponding filing fee.
If you have us file your Articles of Organization, your paperwork will be available in the ZenBusiness dashboard once the state approves your LLC. This is where you can keep all of your important documents organized.
Depending on your profession, you may need to form a Professional LLC (PLLC), rather than a standard LLC. Michigan law says that those in certain licensed professions (think doctors, lawyers, and accountants) who want to offer their services under an LLC may do so only as a professional LLC.
If you’re in such an industry, check with the agency or board that licenses your profession to see if it requires you to form a PLLC. Note: we at ZenBusiness do not offer PLLC formation services at this time.
Once you get your physical paperwork back from the state approving your new LLC, you’ll want to keep it in a safe place, along with your other important legal documents (like your operating agreement, contracts, compliance checklists, etc.). We offer a customized business kit to help you keep these crucial documents organized and looking professional.
It can take approximately three to five business days for Articles of Organization to be processed in Michigan. However, you can also pay additional fees for 1-hour, 2-hour, same-day, or 24-hour expedited service.
Another way to accelerate the filing process is to purchase our faster filing speeds service.
Some entrepreneurs, especially if it’s near the end of the calendar year, will wait to file their LLC until after January 1 of the coming year. This is commonly done to avoid the hassle and cost of having to pay taxes on an LLC in the current year, especially if the LLC owners don’t need to establish an LLC immediately.
When you file your Michigan Articles of Organization, you also have the option to specify an effective date of up to 90 days out.
This is something else we can help you with. When you file your Michigan Articles of Organization with us, we give you the option of paying an extra fee to have your LLC’s effective date delayed. (This service is only offered from October to January.)
Next, you’ll need to create an operating agreement. Your Michigan LLC operating agreement lays out how your business will be run and managed.
While operating agreements aren’t required by Michigan law, this legal document is quite beneficial to your LLC. Just a few of the benefits of having an operating agreement include:
Your operating agreement should include all pertinent details about how your LLC will be run and managed, such as:
Trying to think of every little thing you need to include in an operating agreement can be daunting. That’s why we offer an operating agreement template to help you get started.
If you’re starting a single-member LLC, you may wonder if you need an operating agreement. The simple answer is that operating agreements are still a good idea.
For starters, some banks won’t let you open a business bank account without an operating agreement. Potential investors may want to see this document as well.
Additionally, if your business is sued or has legal action taken against it, having an operating agreement helps to further separate your personal and business liability. It does this by showing the court that you’ve taken the time to create an official legal document for your business. Otherwise, your LLC may wind up looking more like a sole proprietorship to a judge.
Finally, you’ll need to obtain an Employer Identification Number (EIN). This number is also commonly referred to as a Federal Employer Identification Number (FEIN) or Federal Taxpayer Identification Number (FTIN).
Much like a Social Security Number (SSN) does for individuals and sole proprietors, your EIN identifies you to the Internal Revenue Service (IRS). You’ll typically need this number to pay business taxes, open a business bank account, and hire employees.
When it comes to taxes, most LLCs are treated as “pass-through entities.” That means federal income taxes are not paid by the LLC itself, but by each of its members.
Furthermore, LLCs are not considered a tax entity by the IRS. Instead, LLCs are taxed by default as either a sole proprietorship (for single-member LLCs) or a general partnership (for multi-member LLCs). This means LLC members avoid the double-taxation faced by corporations.
However, some LLCs opt to be taxed as corporations. If you choose for your LLC to be taxed as a corporation in Michigan, you will pay the state’s 6% corporate income tax.
One of the main benefits of forming an LLC is the separation of personal and business assets. To further avoid commingling your funds, you’ll want to open a business bank account. This enables you to keep your business expenses totally separate from your personal finances. You may also want to consider applying for a business credit card to further differentiate your funds.
For further help managing your business’s finances, try ZenBusiness Money. It can help you send invoices, receive payments, track tax-deductible expenses, and more.
The LLC business structure is meant to be flexible, and one of those flexibilities comes in how you can choose to have your LLC taxed.
By default, an LLC is taxed as a sole proprietorship if it has only one member or a partnership if it has multiple members. This appeals to most owners of LLCs because it avoids “double taxation,” in which a business pays taxes at both the business level and again when the income is paid to the individual owners. But some LLCs opt to be taxed as a C corporation or an S corporation because it works to their advantage.
Being taxed as a C corporation does mean you get double taxation, but, for certain LLCs, the pros can sometimes outweigh the cons. C corporations have the widest range of tax deductions, which could be an advantage in some scenarios. For example, insurance premiums can be written off as a business expense.
S corp is short for “Subchapter S Corporation” and is geared toward small businesses. Having your LLC taxed as an S corp has pass-through taxation like a standard LLC, but there’s another potential advantage: It could save you money on self-employment taxes.
It does this by allowing you to be an “employee-owner” and split your income into your salary and your share of the company’s profits. In this way, you pay self-employment taxes on your salary, but not your profits.
The drawback is that the Internal Revenue Service scrutinizes S corps very closely, meaning you’re more likely to get audited. S corps are also harder to qualify for.
While it’s possible that one of the above options could work better for your LLC, we don’t need to tell you that taxes are very complicated. They’re also very specific to your situation. That’s why you really need to consult a tax professional to see which taxing method works best for your Michigan business.
We can help
From Ann Arbor to Detroit to Standish on the Sunrise Coast, Michigan offers lots of opportunity to ambitious entrepreneurs. Ready to start your business in the Great Lakes State?
Our services provide long-term support to help you start, run, and grow your business. If starting an LLC feels like an uphill battle, we can reduce your stress. Let us handle formation, compliance, and more. That way, you can focus on running your dream business. Reach out to us today!
Forming an LLC is just the beginning of your Michigan business adventure. To navigate the waters ahead, consider these crucial steps:
Michigan’s vastness means that business requirements can vary from Detroit’s urban sprawl to the tranquility of the Upper Peninsula. Always consult your local municipality or county office to understand specific licensing needs.
Beyond local regulations, certain industries may need to liaise with Michigan’s Department of Licensing and Regulatory Affairs. This could pertain to environmental clearances, health permits, or industry-specific licenses.
If you’re in the business of selling goods, Michigan expects you to collect sales tax. Register for a Michigan Sales Tax License, ensuring you’re in line with the state’s tax regulations and can legally collect sales tax.
Mistakes happen. General liability insurance acts as a safeguard, protecting your LLC from potential legal claims stemming from accidents, injuries, or negligence.
Michigan’s diverse climate can be unpredictable. Safeguard your physical assets, like stores or offices, from potential risks — be it a Detroit snowstorm or an unexpected fire.
If your LLC hires employees, Michigan mandates worker’s compensation insurance, providing a safety net for workplace-related injuries or illnesses.
Conclusively, Michigan, with its vast resources, skilled workforce, and business-friendly environment, is a compelling destination for LLCs. By understanding and making use of the benefits and being proactive with the next steps, you’re setting up your Michigan LLC for immense success.
Why is Michigan such a hotspot for LLCs? The Wolverine State, with its supportive business environment and flexible regulatory structure, offers numerous advantages for budding entrepreneurs.
The primary benefit of an LLC is in its name: limited liability. This ensures that there’s a clear boundary between your personal assets and your business’s liabilities. So, your dream lakeside house in Traverse City is usually safe, even if your business encounters rough waters.
Michigan LLCs provide a conduit for profits and losses, meaning they flow through to the owners without being taxed at the company level. This prevents double taxation and can offer significant financial benefits.
Adding “LLC” to your business name isn’t just a formality. It signals commitment and professionalism to potential clients, partners, and investors.
With less bureaucratic red tape and more management freedom than corporations, Michigan’s LLC structure helps entrepreneurs focus on innovation and growth.
In the Wolverine State, with its legacy of industry and innovation, there’s an array of LLC structures catering to various business needs. As you venture into Michigan’s dynamic business landscape, it’s essential to select the LLC type that aligns with your goals and requirements.
Tailored for solo entrepreneurs, a single-member LLC strikes a balance between granting you the protection of limited liability and streamlining your tax procedures. Imagine steering your business ship single-handedly, but with the assurance that your personal treasures remain shielded from potential business turmoil.
Collaborative ventures shine under this model. A multi-member LLC paves the way for several individuals to jointly helm a business. By sharing roles, responsibilities, and the ebb and flow of profits and losses, it champions teamwork and mutual decision-making, ensuring every member’s voice is acknowledged.
A professional limited liability company (PLLC) is a business entity tailored for licensed professionals, such as doctors and lawyers. Its primary purpose is to provide liability protection, similar to a regular LLC, while also meeting professional licensing requirements. Note that a PLLC does not shield its members from personal malpractice claims. It can, however, protect the members from malpractice claims against the other members.
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The state fees for forming an LLC start at $50 to file your Articles of Organization. You may also pay additional fees, depending on whether you choose to reserve your business name or expedite the filing process. Note that filing fees change over time, so you should check the most recent fee schedule on the website of the Michigan Department of Licensing and Regulatory Affairs Corporations, Securities, and Commercial Licensing Bureau, Corporations Division.
Many new entrepreneurs choose LLC as their business entity. Compared to corporations, limited partnerships, and other formation types, LLCs offer enticing benefits, such as:
LLCs are typically considered “pass-through entities,” meaning they are not subject to corporate federal income taxes. Instead, the profits are passed through to the owners’ personal income, and the responsibility to pay federal income taxes falls only on each individual member (as opposed to being taxed on both levels, as is the case with corporations). This holds for all Michigan LLCs — unless you choose to file as a corporation (in which case, you will be required to pay Michigan’s corporate income tax). However, your limited liability company might be subject to other taxes, including:
For more information on specific taxes that you could be required to file for your Michigan LLC, visit the Business Tax Guide from the Michigan Department of Treasury.
Those who purchase any of our business formation plans get a free accounting consultation and tax assessment from our specialists to receive helpful resources and no-obligation recommendations around your bookkeeping, accounting, and tax needs.
Your Articles of Organization will typically be processed by the Michigan Department of Licensing and Regulatory Affairs within three to five business days if you file by mail. For an extra fee, however, you can have your documents expedited and processed in as little as an hour.
While an operating agreement is not required by Michigan state law, it is an internal document that you should keep on file for future reference.
When you get an EIN, you will be informed of the available tax classification options. Most LLCs elect the default tax status, which is to be taxed as a sole proprietorship (for a single-member LLC) or a partnership (for a multi-member LLC). For either of these options, the LLC is not taxed on federal income, but the LLC members pay income taxes on their portion of the profits on their individual tax returns.
You can also elect to have your LLC taxed as a C corporation or an S corporation. Although most new LLCs don’t choose these options, they do have advantages for certain companies. Be sure to review each option’s details to determine the best one for your business.
A Series LLC is a group of limited liability companies operating under one “parent” entity. While each entity under the parent is considered independent, entrepreneurs are often attracted to the business structure if they wish to create numerous companies to explore different avenues but not risk one’s success due to the liabilities of another. However, only a few states have adopted Series LLC laws — none of which are Michigan.
Although Michigan doesn’t require a general business license to operate, certain industries require specific licenses and permits. You’ll need to make sure your LLC has all the licenses and permits it’s required to have by law. Unfortunately, because licensing varies by industry and location and can occur on the federal, state, and local levels, there’s no central place to check to see if you have all the licenses and permits you need. You’ll have to do some research.
If you don’t have the time or inclination to do all this research, or if you just want the peace of mind to know that your business has all the licenses and permits it’s legally required to have, our business license report service can do the work for you.
Your LLC might be required to obtain an insurance policy, depending on the type of business and whether you have employees. The types of insurance range from professional liability insurance to unemployment and workers’ compensation insurance. You can find a list, along with industry requirements on the Michigan Department of Insurance and Financial Services website.
To change the name of your LLC in Michigan, you need to file a Certificate of Amendment that includes the reason you’re changing your Articles of Organization (in this case, you want to change the name of your LLC). You submit this form to the Michigan Department of Licensing and Regulatory Affairs’ Corporations, Securities, and Commercial Licensing Bureau. There is a filing fee to amend your Michigan LLC Articles of Organization.
In Michigan, an annual statement or (known as an annual report in other states) is a regular filing that your LLC must complete every year. This annual statement should be filed with the Michigan Secretary of State by Feb. 15.
We can help you with your annual statement in a couple of ways. Our annual report service will help you file your annual statement, and our Worry Free Compliance service not only helps with filing your annual statement, but also sends you other important compliance reminders and helps you with two amendment filings each year.
Before starting the dissolution process, the members of an LLC should vote to dissolve it. When you’re ready to dissolve, you should follow the protocols laid out in your operating agreement. You will also need to file a Michigan Certificate of Dissolution with LARA. For the subsequent steps, please refer to our Michigan business dissolution guide.
Disclaimer: The content on this page is for information purposes only and does not constitute legal, tax, or accounting advice. If you have specific questions about any of these topics, seek the counsel of a licensed professional.
Written by Team ZenBusiness
Michigan Business Resources
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