How to start an LLC in Michigan
Getting a new business started can feel intimidating. The first concrete step that you will want to take is to form your business as a legal entity – sole proprietorship, corporation, or LLC. For many entrepreneurs, an LLC makes the most sense, as it’s relatively simple to set up (compared to a corporation), but still provides excellent liability protection.
If you live in Michigan, this guide will help show you how to start an LLC in Michigan. The process will be handled by the Michigan Department of Licensing and Regulatory Affairs. The primary document that needs to be submitted is the Articles of Organization, and the cost for this is $50.
You can complete the application process online, or through the mail. The guide below will show you step-by-step what you should do to start a limited liability company in Michigan.
Consider utilizing an LLC formation service
To save time and hassle, many entrepreneurs choose to use the services of a professional LLC formation company. These companies help expedite the process, while also cutting down on mistakes.
There are many business formation services out there, but two of the best are Northwest Registered Agent and ZenBusiness. Both of these companies provide excellent service, while also keeping costs low (ZenBusiness starts at just $49).
If you use one of these services, they will walk you through the process, ensuring that every step is handled correctly. If you choose to do it on your own, follow the steps laid out below in this guide.
Name your new company
First, you must select a name for your new company. You should find a name that suits the business well, and ideally one that is memorable and recognizable. In addition, the name must meet certain requirements set out by the state of Michigan.
The main requirement is that the name must be unique. This means that the name you select must be distinguishable from other businesses already registered in Michigan. You can conduct a name search online to confirm if a name is taken or not. Additionally, the business name must contain the phrase “limited liability company”, or one of the abbreviations such as “LLC” or “L.L.C.”
There are other requirements, as well. The name cannot contain certain terms that would cause it to be confused with a government agency. And if the business wishes to use a term from a protected industry (like “banking”, “lawyer”, “doctor”), they will need to obtain special permission first.
Using an Assumed Name in Michigan
While you are thinking about the name for your new company, it’s worthwhile to consider that in Michigan, you can use what is called an “assumed name” or “doing business as (DBA)” name. In other states, this is called a trade name.
This is essentially a second name for your company, that is separate from the official LLC name. You must complete a bit of paperwork to register a DBA (see the link above), but once registered, you can legally do business under that name. This gives businesses more flexibility and means that your main LLC name doesn’t necessarily need to be the primary name you do business under.
Appoint a Resident Agent
All Michigan LLCs must have what is called a Resident Agent (in most states, this is called a Registered Agent). This is an individual or company that is appointed by the business owner. Their main responsibility is to be the public-facing point of contact for the business. Mostly, this means receiving important documents, a notice of a lawsuit, etc. on behalf of the company.
The requirements for who can be a Resident Agent for your company are simple. It either needs to be a resident of Michigan (including yourself, or an employee), or a company licensed to do businesses in Michigan.
So, you can either be your own Registered Agent (although this will make your mailing address public record), or you can use a professional Registered Agent service. Northwest Registered Agent and ZenBusiness are both good options for Resident Agent services in Michigan. Using a service offers the advantage of protecting your personal privacy, while also ensuring that no important documents get lost or overlooked.
Create an LLC operating agreement
Note: This step is optional, but recommended.
An operating agreement is not required for LLCs in Michigan, but it’s still strongly recommended. This is a document that establishes the business structure and ownership rights of the company, as well as its operating procedures. It is an “internal document”, which means it’s simply kept on file with the company itself (you don’t need to submit it to any government agency). This is why it’s an optional step.
Operating agreements are particularly important for any company that has multiple owners involved. It can help reduce the chance of future ownership disputes.
You can create an operating agreement with the help of a service like ZenBusiness, or you can hire a local attorney to help.
File LLC Articles of Organization
To form an LLC as a business entity, the business owner must file the Michigan LLC Articles of Organization with the Michigan Corporations Division. This can be accomplished by mail, or online. The filing fee is $50, which goes directly to the state of Michigan (and is payable to the Michigan Department of Licensing and Regulatory Affairs, if you’re paying by check). This is the primary step in forming an LLC in Michigan.
To file online
Use the Corporations Division Online Filing System (LARA) to file form 700 – Articles of Organization for Domestic Limited Liability Company. The filing cost is $50, payable by credit card.
To file by mail
Fill out this form and mail it, along with a $50 check or money order, to:
Michigan Department of Licensing and Regulatory Affairs
Corporations, Securities & Commercial Licensing Bureau — Corporations Division
P.O. Box 30054
Lansing, MI 48909
Once submitted, you will need to wait for Michigan to process your documents. This can take as little as a few business days, but up to several weeks. If you need it quicker, there are optional expedited services available:
$50 extra for 24-hour service
$100 for same-day service
$500 for 2-hour service
$1000 for 1-hour service
Online applications will typically be processed quicker than mail applications.
Apply for an EIN
An EIN is another application that you will need to complete. EIN stands for Employer Identification Number, and it’s a tax ID – essentially like a social security number for your business. It is issued by the Internal Revenue Service (IRS) and is used to complete tax forms. It’s also a federal requirement to hire employees, so most businesses will definitely need an EIN.
The good news is that EINs are simple to get and free. Simply fill out this application on the IRS website to obtain your EIN. Once you have it, you will be able to hire employees, open business bank accounts, etc.
Apply for business licenses & permits
Once your LLC is formed as a legal entity, you will likely still need to obtain additional permits and/or licenses, in order to operate legally. Most businesses will, at a minimum, need a local business license in the city or county where they plan to operate (for example, businesses in Detroit will need a Detroit business license.
Businesses in some industries will require specific state business licenses. Some businesses do not, but you can see a full list of requirements here. Likewise, federal permits may be required for certain businesses.
There are a wide variety of other permits and licenses that certain businesses may need. For example, a restaurant will need food handling permits, and a liquor license. A doctor’s office will need special medical permits, and staff members will need professional licenses.
This is also a good time to check in with state and local requirements for employers. You may need to register for payroll tax accounts, worker’s comp, and other state programs.
Keep your business in good standing
Long after your business is formed, there are various compliance tasks that you need to stay on top of. This is true on the state level, federal level, and even local city/county level. The specific requirements do vary, depending on the type of business, its industry, and the location. But the bottom line is this: Business owners need to set aside time to stay ahead of all the compliance and reporting requirements for their companies.
Here are just a few of the potential requirements that your business may have:
Michigan Annual Statement (annual report) – due yearly
Michigan state tax returns with the Michigan Department of Treasury
Michigan sales tax returns
Michigan employer taxes/payroll taxes
Federal income taxes and business taxes
Federal employer/payroll taxes
Federal quarterly taxes
Local tax returns (city/county)
Annual permit and business license renewals
Ongoing Resident Agent requirement (you must always have a Resident Agent for the life of the company)
This list is not complete, but simply a selection of some of the most common requirements. It’s a good idea to thoroughly research all the requirements that your business may face, and stay on top of things from day one.
Some tax forms and reminders of due dates will be sent to the Registered Office (the office of the resident agent) for your company, or to the professional service tasked with handling correspondence. Other requirements may not issue reminders, so some research on your own will be needed.
That’s all you need to know about starting a Michigan limited liability company! Once you complete these steps, your Michigan LLC will be well on its way to becoming the company you’ve always dreamed of running.
Open a business checking account
Before you begin operating, you will want to establish a business bank account for your new company. This can be done at almost any bank or credit union – you can use your existing bank, or find a new one that suits your needs.
Having a dedicated business bank account will allow you to keep personal and business finances completely separate. This is vital for accurate accounting, and also helpful for reducing liability risk for your personal assets.