How to Start an LLC in Michigan
How to start an LLC in Michigan in 6 easy steps
Step 1. Naming Your Michigan LLC
Naming your LLC is one of the most important steps in the business creation process. The name you choose must be unique and distinct from all other businesses in Michigan, in addition to following a few naming rules.
Legally Required Designation
In accordance with Michigan LLC regulations, the name of your business must contain the phrase “limited liability company” or one of the following abbreviations:
- LLC
- L.C.
Unique Name
As we mentioned above, the name you select for your LLC must be unique and not at risk of infringing on another business in the state. You can ensure that your LLC’s desired name is available by performing a search on the Michigan Department of Licensing and Regulatory affairs database.
If the name that you want is available, you can choose to file an Application for Reservation of Name with the Department of Licensing and Regulatory affairs. This document will hold your chosen name for up to 6 months ahead of filing to establish your LLC. It can be filed either online or mailed to the address on the form and carries a $25 filing fee. When filing online, you can also choose to pay an extra $50 for 24-hour expedited processing.
Additionally, while looking for an LLC name, you may want to perform an available domain name search. It is a good idea to purchase a matching domain name ahead of time regardless of when you want to set up a business website, as this will likely save you future stress.
Restricted Words
When choosing an LLC name, keep in mind that you are not able to include any words that run the risk of confusing your business with a government entity. This includes words like “IRS,” “Treasury,” or “State Department.”
You should also be aware that using words such as “dentist,” “attorney,” or “chiropractor” may require the presence of a properly licensed individual in your LLC, along with filing separate paperwork. Michigan does allow for the formation of professional LLCs, something you can read about here.
Using an Assumed Name
An assumed or DBA (doing business as) name is allowed to be used for your LLC in Michigan. This means you continue using the legally registered LLC name on all official documents but use a different registered name when interacting with the public.
If you would like to use a DBA name in Michigan, you will need to file a Certificate of Assumed Name with the Michigan Department of Licensing and Regulatory Affairs. This form can be mailed to the address on the form or delivered in person to the location listed on the document. There is a $25 filing fee, and the registration is valid for 5 years.
Step 2. Choose a Registered Agent
Every LLC operating in Michigan is required to obtain a registered agent who is responsible for receiving all legal documents, government communications, and tax documents for your LLC. Essentially, they act as a contact point between your business and state or federal agencies. They are also responsible for being the main contact in the event of a lawsuit against your LLC.
You can appoint any Michigan resident — including a member of your LLC or a business that is authorized to conduct operations in the state — as your registered agent. As long as your appointee has a valid Michigan street address and is available during regular business hours, they are eligible to be your registered agent.
Step 3. File Your Articles of Organization
To fully establish your LLC as a business in Michigan, you need to file Articles of Organization with the Michigan Department of Licensing and Regulatory Affairs. This document keeps the department updated on your business and provides essential organizational information. Below are some of the items that you may need to include:
- Your LLC’s name
- Your LLC’s purpose
- If your LLC’s duration is perpetual or not
- Your LLC’s registered agent name and address
- The effective date of your articles, if not immediate
- Your LLC’s organizer’s signature and phone number
You can file your Articles of Organization either online, in person, or through the mail. There is a $50 filing fee associated with the form. You can also choose to pay an extra $25 expedited 24-hour processing fee.
Online
To file your Articles of Organization online, you need to access the LARA Corporations Online Filing System. From there, you can choose the option for filing Articles of Organization for a limited liability company. Follow the directions on the form and fill in all the required information. Upon submittal, you will be prompted to pay the filing fee and any applicable expedited service fee that you choose.
By Mail
If you would like to file your Articles of Organization by mail, print out this form and complete it. Then, place it into a secure envelope with a check for the $50 filing fee made out to the State of Michigan and send the sealed envelope to the address below.
Michigan Department of Licensing and Regulatory Affairs
Corporations, Securities & Commercial Licensing Bureau — Corporations Division
P.O. Box 30054
Lansing, MI 48909
In Person
To file your Articles of Organization in person, print out and complete the form. Then, take your document and a valid form of payment to the address below.
Michigan Department of Licensing and Regulatory Affairs
2501 Woodlake Cir.
Okemos, MI 48864
Step 4. Create an Operating Agreement
An operating agreement is not required by LLCs in Michigan, but you may want to consider creating one regardless. An operating agreement sets clear guidelines for how your LLC is managed, the rights that members or managers have, and what to do in the case your LLC dissolves or experiences a lawsuit.
If you choose not to create an LLC operating agreement, Michigan LLC law will dictate how your LLC is to be managed in the event of dissolution, conflict, or lawsuit. This may not be in your best interest, so creating an operating agreement is a good idea to protect yourself and your assets.
For help creating an operating agreement, you can check out a template online or consult with an attorney and business advisor. Make sure if you are using a template that you change and tailor the template to your specific LLC and business needs.
Step 5. Get an EIN/Tax ID Number
After your LLC is established, you need to apply for a tax ID number, also known as an EIN (Employer Identification Number), through the IRS. Any LLC that has more than one member, or for any single-member LLC that wants to hire employees or chooses to be taxed as a corporation, is required to apply for an EIN.
Your EIN is used to identify your business to the IRS on all tax documents and necessary government filings; the number acts much like a social security number for your LLC. If you want to hire employees, file federal taxes, open business bank or credit accounts or apply for business funding, you need an EIN.
It is free to apply for your EIN with the IRS, and you can file the application online or by mailing it in. Keep in mind that if you are a foreign filer or do not have a social security number, you need to file for your EIN through the mail.
Online
The quickest and easiest way to apply for your EIN is online; you will receive your number once your application is completed. Visit the IRS website to apply for your EIN for free.
By Mail
You must fill out this form when applying for your LLC by mail. If you are a foreign filer or do not have a social security number, leave section 7b blank. Mail the completed form to the address below. You can follow up on any questions with the IRS at (267) 941-1099.
Internal Revenue Service
Attn: EIN Operation
Cincinnati, OH 45999
Step 6. Keeping Your LLC Running
There are several ongoing tasks to keep up with if you want your LLC to stay running smoothly even after it is established.
File Annual Reports
Every LLC that conducts business in Michigan must file an annual report with the Department of Licensing and Regulatory Affairs. The report is due by February 15th each year, but if your LLC was formed after September 30th, you can skip the first year’s filing deadline. For example, if your LLC was formed on October 8th, 2020, you wouldn’t need to file a report until February 15th, 2022.
The department will mail a pre-printed annual report statement to your LLC’s registered agent 3 months before the due date, and you can file the report online or through the mail. There is a $25 filing fee.
Separate Your Business Finances
Michigan does not require LLCs to open separate business bank accounts, but you should consider establishing one anyway. A business credit or debit account can keep your LLC’s finances separate from any personal ones; this helps establish the LLC as an independently operating business.
You most likely need to show your Articles of Organization, operating agreement, EIN, or other LLC documents to open a bank account for your LLC. Compare all your options before making a choice on which bank account to open, as different banks will have varying minimum required balances or credit spending limits; you want to be sure that you select something that is the best for your LLC’s needs.
Keep up With Federal and State Taxes
It is important to keep up with both federal and state taxes while running your LLC to avoid any major penalties or fines.
Federal Tax Requirements
There are several different tax structures you can choose from to use in your LLC that may meet different company needs; each tax structure comes with its own unique type of federal taxation. This article can help you gain an in-depth understanding of the differences between each type and help you decide which is best for you.
In general, most LLCs are taxed as sole proprietorships or partnerships. This means you will be expected to file Schedule C along with your individual income tax return to declare any income that you receive through your LLC. When using this tax structure, you should keep in mind that you most likely need to pay self-employment tax (at a rate of 15.3%), in addition to any income tax. You may also need to make quarterly estimated tax payments to avoid any IRS fines; the IRS website gives more details on this.
If you want, you can choose to have your LLC taxed as a corporation, like an S Corporation or a C Corporation. You will need to fill out IRS Form 8832 and IRS Form 2553 to declare this. After these have been processed, your LLC will be treated as a corporation and expected to file a separate corporate tax return with the IRS.
Michigan Business Taxes
Michigan does have a state business income tax, but you may not have to pay it depending on the way your LLC is structured and how much income you earn. If your LLC is taxed as a sole-proprietorship or a partnership, it is regarded as a pass-through entity.
In this case, you pay taxes to the state on your business income by declaring it on your individual state income tax return. For these types of LLCs that make over a certain threshold of income, you may be liable to pay the state business income tax. More information on this, including filing requirements, can be found here.
Additionally, if your LLC is taxed as an S or C corporation, you may be liable to pay state corporate income taxes. This tax also depends on your LLC meeting a certain income threshold before you are eligible to pay it. More information can be found through the Michigan Department of Treasury website.
Sales and Use Taxes
For LLCs that sell goods or services, you may be liable to pay sales and use taxes to the state. This tax is both registered for and paid through the Michigan Department of Treasury. More information on calculating and paying it can be found on their website.
State Employer Taxes
State employer taxes refer to both withholding tax and unemployment insurance taxes. You may be liable to pay these on both a federal and state level if your LLC has any employees. In Michigan, withholding taxes will be registered for and paid through the Department of Treasury, while the Department of Labor and Economic Opportunity handles unemployment insurance taxes.
Acquire Necessary Permits and Licenses
There is no general business license requirement for LLCs in Michigan, but you may be required to obtain permits and licenses for your business on a local level. You should check with your county or city’s Clerk’s Office to ensure that you have met all licensing requirements for your LLC.
If you are offering professional services through your business, you may also be required to meet additional state or national licensing requirements. You can perform a state license search through the Michigan state government website to determine if your LLC needs to obtain professional licensing or not.
On a federal level, you may be required to obtain certain permits and licenses for your LLC, depending on the type of business you are running and the services you are offering. For help determining whether you need to meet additional federal licensure requirements, you can use the directory on the US Small Business Administration’s website.
Michigan LLC Resources
Our complete list of resources below can guide you through every step in the Michigan LLC establishment process.
-
- Available LLC name search
- Reserve an LLC name
- Available domain name search
- Register a DBA name
- Articles of Organization online file
- Articles of Organization form
- Operating Agreement template
- IRS EIN online application
- Annual Report online file
- Michigan Business Income Tax information
- Michigan Corporate Income Tax information
- Michigan Department of Treasury
- Michigan Department of Labor and Economic Opportunity
- Michigan state license search
- S. Small Business Administration
Michigan LLC FAQs
The list of frequently asked questions below can help you get answers to some of your most burning Michigan LLC establishment questions.
In Michigan, it will cost you $50 to file your Articles of Organization, with an optional $25 expedited service fee. You may also want to pay $25 to reserve an LLC name ahead of time or $25 to register a DBA name for your business.
The cheapest way to start your LLC in Michigan is to file your Articles of Organization online, through the mail, or in person without reserving an LLC name first or registering a DBA name. If you don’t pay for any expedited service fees, it will only cost you $50 to get your business started.
The fastest way to start your LLC in Michigan is to simply file your Articles of Organization online. Doing this will get your LLC established within 7 business days. Filing by mail can take the longest, while filing in person may provide the same wait time as filing online. You can always pay for expedited servicing if you want your LLC established within 24 hours of your document filing.
How much your LLC pays in taxes depends on the individual tax structure you have set up. You may also need to pay state business income tax or corporate income tax, depending on your tax structure and income level. LLCs that have employees or that sell goods and services may be liable to pay additional state taxes.
Your LLC needs to file reports on an annual basis with the Department of Licensing and Regulatory Affairs. The report is due by February 15th each year, carries a $25 filing fee, and can be filed either online or through the mail.
If you are done conducting business under your LLC, you will need to file a Certificate of Dissolution with the Michigan Department of Licensing and Regulatory Affairs. There is a $10 filing fee for this form.
You will also need to consult with whichever operating agreement or LLC documentation you have laid out to fully shut down your business operations and tie up any loose ends.