Create an LLC

How to start an LLC in Michigan 

Are you a business owner looking to start an LLC in Michigan? Read through our comprehensive, step-by-step guide to learn how to register efficiently and correctly.

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One of the most important decisions entrepreneurs will make before launching their new business is choosing a business structure they wish to operate as. While there are many structures available, such as doing business (DBA) as a sole proprietorship, partnerships, and corporations, a popular choice amongst many new small business owners is opting for an LLC formation. 

LLC is an abbreviation for limited liability company. A limited liability company provides business owners with protection from personal liability for business debts and liabilities. In other words, your LLC is viewed as a separate business entity from your personal assets (1). This means that should your business be sued by a third-party, or suffer financial losses, you are legally protected from paying out of pocket or forfeiting your assets as collateral. Ultimately this liability protection is what makes LLCs a popular choice amongst business owners. Therefore, if you are thinking of launching a Michigan business and have decided that you want to start an LLC, keep reading for more information on how to do so.  

Michigan LLC fee breakdown

If you want to form a Michigan LLC entrepreneurs will be required to pay certain state fees in order to do so. Rest assured that LLC formation in Michigan is affordable and straight forward. Here is what filing fees you can expect to pay: 

Filing your articles of organization 

Regardless of whether you are a domestic LLC or foreign LLC you will be required to pay $50.00 when filing your articles of organization. This guarantees that your legal documents will be processed within one business day. However, you will need to file your documents in person during regular business hours (2). That said, if you are on time, you are able to pay additional fees for expedited services. Here is a closer look at the fee breakdown for this:

Same day processing service: $100 

Two-hour processing service: $500 

One-hour processing service: $1000 

On the other hand, if you are unable to file your documents in person, you may be waiting between 5 and 10 business days for all mail-in Michigan articles of organization applications. 

Registered agent service 

A resident agent is a business or individual that accepts legal documents on behalf of your business in the event that you are sued, and a lawsuit is brought against your Michigan limited liability company. A Michigan registered agent must be available during normal business hours to receive service of process for all legal documents. 

By doing so, you can ensure that you are receiving important information without it being lost or overlooked. It also provides you with a level of privacy. You can either opt to use a professional service firm or a Michigan resident with a proven address within the state. 

Furthermore, these fees will vary depending on who you choose for your registered agent service. 

Trade name registration 

One of the most important decisions you will make as a business owner is your business name. In Michigan, your LLC name can either be an assumed name or “doing business as.” You will need to file a certificate of assumed name, online with LARA which costs $25.00. 

LLC tax

Single-member LLCS and multi-member LLCs with employees are required to apply for an employer identification number with the internal revenue service (IRS) so they can identify your income tax each year for your business that is separate from your personal tax returns. You may also need to apply for a sales tax with the Michigan Department of Treasury. If you plan on operating as a corporation's division, you may be required to pay extra tax which will vary depending on your business.  

Application for reservation of name 

To ensure that no other businesses operate under the same name as yours, LLC owners are able to reserve their chosen name for a filing fee. This fee is only $25.00 and is highly recommended that you do so while your documents are being filed and processed. You can easily conduct a name search online using the business entity search that is offered through a Michigan state government database to ensure your chosen name is available for you to use. Furthermore, once you submit your application for reservation of name form with the Michigan Department of Licensing and Regulatory Affairs you will also need to pay another $25.00 fee. 

Business license 

All LLC owners will need to purchase a business license and you will be required to comply with your local, state, and federal regulations for the type of business you run. For Michigan requirements, you can find your regulation and licensing requirements on the department of licensing website or commercial licensing bureau. On the other hand, for federal requirements, make sure to take a look at the U.S. Small Business Administration website for more information. Generally speaking, these licenses will cost you anywhere between $100 to $200 a year on average. 

Annual statement fee 

All limited liability companies operating in the state of Michigan are required by state law to file an annual report with the Secretary of State office by February 15th each year. An annual report provides the government with updated information such as your address, the names of your members, who your registered agent is etc. Filing your report on time is key to ensuring your LLC is in good standing with the government as it ensures that you are able to continue to transact business and receive protection that your business structure offers you. If you miss this deadline, you can face fees from the government of $50.00. 

The filing fees for your limited liability company statement are $25.00.

The filing fees for your professional limited liability company (PLLC) are $75.00.

Now that you have a better understanding of the fees associated with starting an LLC in Michigan let’s take a closer look at the step-by-step process business owners are required to complete to legally launch their limited liability company. Here is a more in depth breakdown below: 

1. Name your Michigan LLC

Remember, the first thing you will want to do is choose a business name for your LLC. You want this name to reflect who you are as a brand, and what type of business you are going to be offering consumers. Once you have selected a name, you can check the availability online using the Michigan government database before going ahead to reserve the name while your papers are being processed by the Secretary State Office. This provides you with assurance knowing that no one else is able to operate under your name in the meantime before it officially becomes your name. 

2. Choose a registered agent in Michigan

As we said, your registered agent is an individual or business that agrees to receive legal documents on behalf of your business in the event that you are sued by a third-party. It provides your business with a level of privacy as well as ensures that you receive all legal documents without them getting lost in the mail. 

Therefore, to be a registered agent, the business or individual must be available during business hours as all documents are delivered in person to this location. Additionally, they must have a valid address within the state of Michigan in order to accept service on your behalf. Keep in mind that individuals must be over the age of 18 as well in order to legally accept service for your limited liability company. In other words, if you do not have anyone you know personally who is willing to take on this responsibility, paying a business is a safer option for you. 

3. File Michigan articles of organization

Your articles of organization are an official document that you are required to file with the state government. In the state of Michigan, you will be required to provide the following information within your document: 

  • Business name 
  • The purpose of your business 
  • How long your limited liability company has been in business 
  • The full name, contact information, and address of your registered agent
  • The full name, address, and contact information of all members/ owners of your limited liability company. 

You can either file your articles of organization in person at: 

2501 Woodlake Circle 

Okemos, MI 48864 

Or you are able to mail in your articles of organization to: 

Michigan Department of Licensing and Regulatory Affairs, 

Corporations, Securities & Commercial Licensing Bureau 

Corporations Division 

P.O. Box 30054

Lansing, MI 48864 

Just keep in mind that it will take a long time for you to have your documents processed should you file through the mail. Therefore, if you are on a time limit, we suggest going in person to have your documents processed. 

4. Receive a certificate of formation from Michigan

Once you have filed your documents, you will then need to receive a certificate of formation from the Michigan government. This certification is a legal document that authorizes your business to operate within the state. Therefore, once you receive it you will be able to begin your business activities. You will receive this certification once your articles of organization have been reviewed and approved by the Michigan state government. 

5. Create a Michigan operating agreement

Furthermore, if you are planning on having multiple members or owners in your business, then you will need to create an operating agreement. An operating agreement is used by limited liability companies that outlines who has decision making powers, what the roles of each owner are, and how assets will be allocated to each member. 

6. Get an EIN number

Moreover, you will then need to apply for an employment identification number (EIN). This is essentially a social security number for your business. It allows you to file taxes for your business that are separate from your personal assets and makes accounting more organized and efficient. 

7. Get Michigan business licenses and permits

Depending on the type of business you plan on operating and the location of your business property, you may be required to apply for business licenses and permits. Therefore, it is important that you check online with your local, state, and federal government websites for more information on what regulations your business will be required to follow. This will ensure that you do not face any legal fees and lawsuits later down the road. 

8. Open a business bank account for your Michigan LLC

Finally, once you have completed the steps listed above, you can then open up a business bank account for your Michigan LLC. Having a separate account for your business will keep your business assets separate from your personal assets for liability protection. In addition, keeping your money separate will also provide you with a more organized bookkeeping system. 

Lastly, as a business, you can also apply for a credit card for your business which allows you to build up a credit score. This will come in handy for businesses who may wish to expand their operations in the future. By having a good credit score you will have a better chance of being approved for loans in the future. 

As you can see, forming an LLC is highly straightforward in Michigan. By following our listed instructions above, you can not only stay organized during this process, and streamline your duties. That way, you can begin operating your business as soon as possible. 

Frequently asked questions:

Do you still have questions about forming an LLC in Michigan, take a look through some of the most frequently asked questions we get for more information. 

How much does it cost to start an LLC in Michigan?

To form an LLC in Michigan, business owners will need to pay $50.00 to file their articles of organization. There are also additional fees for name reservations, annual fees, and taxes that you will need to pay each year. Therefore, depending on your type of business, your cost will vary. Nonetheless, forming an LLC in the state of Michigan is highly affordable and easy to do. 

How long does it take to form an LLC in Michigan?

Generally speaking, it will take business owners an average of 10 to 15 business days to legally form an LLC in the state. With that said, it may take longer if you do not have the required information and documentation organized. Therefore, we suggest following our step-by-step process listed above so you can expedite your process from start to finish. 

What are the benefits of an LLC in Michigan?

The benefits of starting a limited liability company in Michigan include: 

  • Separating and limiting your personal and business debts and liabilities to protect your personal assets in the event that your business is sued or goes bankrupt. 
  • It is a low cost to officially form your LLC with a minimum of $50 to file your legal documents. 
  • The filing process for LLCs is highly simple.
  • Filing your taxes is easy and you may be eligible for tax advantages.

How is a Michigan LLC taxed?

If you opt to form a c-corporation or s-corporation you will be required to pay a flat rate corporate tax of 6%. You may also need to pay employment tax if you have other people working for your business. In addition, you may also be required to pay a sales tax depending on the type of business you are planning on operating. 

What are the types of LLCs in Michigan?

In the state of Michigan there are numerous types of limited liability companies. These include (3): 

  • Domestic limited liability companies 
  • Professional service limited liability companies 
  • Foreign limited liability companies 
    Resources: 
  1. Investopedia Retrieved From: https://www.investopedia.com/terms/l/llc.asp 
  2. Simplify LLC Retrieved From: https://www.simplifyllc.com/llc-costs/michigan/ 
  3. Michigan State Government LARA Bureau List Retrieved From: https://www.michigan.gov/lara/bureau-list/cscl/corps/limited-liability-co 
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