Key Takeaways

  • A Michigan LLC offers liability protection, pass-through taxation, and management flexibility — making it a popular choice for new businesses.
  • Before forming your LLC, research your business name, reserve it if needed, and confirm domain availability.
  • Filing Articles of Organization with the Michigan Department of Licensing and Regulatory Affairs (LARA) officially creates your LLC.
  • Drafting an Operating Agreement, while optional, is critical for defining member roles, decision-making processes, and profit distribution.
  • Additional steps include obtaining an EIN, registering for state tax accounts, and meeting ongoing compliance requirements such as annual reports.
  • Consider professional licenses, permits, and zoning approvals, which are often required before starting business operations in Michigan.
  • Foreign entities planning to operate in Michigan must file a Certificate of Authority with the state.

Creating an LLC in MI entails filing an articles of organization and paying the necessary fee. The articles of organization is a simple document you complete that contains basic information about your LLC. If you wish to start a company in the state, you can create your LLC without hassle.

The LLC creation process falls under the governance of Michigan authorities, and it applies to residents who wish to apply for a business in MI. The federal government does not regulate LLCs, with the exception of the IRS when it comes to taxation. Before creating your LLC in MI, you should conduct research to ensure that your LLC is suited for your business endeavors.

Under MI law, the LLC name should contain such designators as “LLC” or “Limited Liability Company.” You must also keep in mind certain restricted words:

  • Attorney
  • Bank
  • University

The aforementioned words require additional paperwork and licensure to use the names. Outright prohibited words include:

  • Secret Service
  • FBI
  • Treasury

Your LLC name should be separate from other business entities already on file with Michigan authorities. You may check for name availabilities via the MI state database. You may also reserve your intended name on a six-month basis by submitting a reservation application to state officials.

Your reservation form can be filed via email or mail, and you must pay a filing fee of $25. You should also check your name to see if you can reserve a domain name as well. You should get a domain name even if you do not intend to establish an online presence.

LLC Creation Process

First, you must create your LLC through the filing of your articles of organization and submit it to state authorities. The articles should include the following information:

  • LLC address and name
  • Business purpose
  • Address and name of registered agent
  • LLC duration (if any)

In MI, your LLC would fall under member-managed by default, unless you note in Article V that your LLC would be manager-managed. Member-managed means that an LLC is governed directly by members, while a manager-managed LLC is operated by managers that are appointed by members.

All MI LLCs must have a registered agent. A registered agent is a business entity or individual that accepts legal paperwork on behalf of your organization. The registered agent may be the following:

  • MI resident
  • MI corporation
  • Foreign corporation that’s authorized to conduct business in MI
  • MI LLC

Moreover, the registered needs have a physical address in the state. Your LLC could be banned from doing business in MI if you do not appoint a registered agent.

Additional Steps After Filing Your Articles of Organization

Once your Articles of Organization are filed with the Michigan Department of Licensing and Regulatory Affairs (LARA) and your Michigan LLC is officially recognized, several important steps remain to ensure your business is legally compliant and ready to operate:

  1. Obtain Required Licenses and Permits
    • Certain industries — such as healthcare, finance, construction, or food service — require specific state or local licenses before operations can begin.
    • Check with the Michigan Business One Stop portal and local municipal offices for applicable permits and zoning approvals.
  2. Register for State Taxes
    • If your business sells taxable goods or services, you must register for a sales tax license with the Michigan Department of Treasury.
    • If you hire employees, register for unemployment insurance tax and withholding tax accounts.
  3. File a Certificate of Assumed Name (if applicable)
    • If your LLC operates under a name different from its legal name, file a Certificate of Assumed Name (DBA) with LARA. This is common when branding differs from the registered entity name.
  4. Understand Ongoing Filing Obligations
    • Michigan LLCs must file an Annual Statement each year by February 15, including current business details and registered agent information.
    • The filing fee is typically $25, and failure to file can result in penalties or administrative dissolution.
  5. Foreign LLC Registration
    • If your business was formed in another state but plans to operate in Michigan, you must file a Certificate of Authority before conducting business in the state.

Operating Agreement

An operating agreement is not mandatory in MI, but you should draft one to establish a cohesive management structure within your LLC. An operating agreement should include such parameters as:

  • Rules and operating procedures of the business
  • Compensation plans
  • Member roles and duties

Also, operating agreements do not need to be filed with MI officials.

Best Practices for Structuring Your Michigan LLC

While not legally required, a well-crafted operating agreement strengthens your LLC’s foundation. Consider including these provisions:

  • Ownership Structure: Clearly define each member’s ownership percentage and capital contribution.
  • Management Roles: Detail whether your LLC will be member-managed (all members involved in decisions) or manager-managed (appointed managers make operational choices).
  • Voting Procedures: Outline how decisions will be made, including voting thresholds for major business actions.
  • Profit Distribution: Specify how profits and losses will be allocated and distributed among members.
  • Exit Strategies: Include procedures for adding new members, removing existing ones, and handling dissolution or buyouts.

Updating the operating agreement periodically as the company grows ensures it continues to reflect the LLC’s structure and goals.

Employer Identification Number

An employer identification number is what the IRS uses to label your business and tax it accordingly. It is a unique nine-digit number that’s similar to a Social Security number. If you choose to get a sole-member LLC, you only need to get an EIN if you intend to hire employees. Further, you also need one if you intend to have your LLC taxed as a corporation as opposed to a sole proprietorship.

You also need an EIN for the following reason:

  • To submit state and federal taxes
  • To start a business bank account

You may get an EIN online from the IRS for free.

In certain cases, you may need to collect sales taxes. For instance, you may need to collect sales taxes if you are selling goods. To collect sales taxes, you must be registered via the Michigan Department of Treasury. All business transactions subject to taxation falls under the regulation of the Michigan Business Tax.

You must register for the Unemployment Insurance Tax via the Michigan Unemployment Insurance Agency. If you retain MI employees, you need to register for the Employment Withholding Tax through the online Michigan Treasury.

Maintaining Compliance and Good Standing

After forming your Michigan LLC and securing an EIN, ongoing compliance is essential to maintain your company’s legal protections and benefits:

  • Annual Statement Filing: Michigan LLCs must file an annual report with LARA each year. This filing keeps your business information current with the state and costs $25.
  • Business Licenses and Renewals: Regularly review state and local licensing requirements to avoid fines or suspension.
  • Registered Agent Updates: Any changes to your registered agent must be filed promptly with LARA.
  • Record-Keeping: Maintain organized records of meetings, contracts, tax filings, and financial statements.
  • Operating Agreement Updates: Review and update your agreement as membership or management structures change.

Staying proactive with compliance obligations not only helps your Michigan LLC avoid penalties but also strengthens its credibility with banks, investors, and clients.

Frequently Asked Questions

  1. How much does it cost to start a Michigan LLC?
    Filing Articles of Organization with LARA costs $50. Additional costs may include name reservation fees, business licenses, and optional services like legal assistance.
  2. How long does it take to form a Michigan LLC?
    Online filings are typically processed within 7–10 business days, while mail filings can take longer. Expedited processing is available for an additional fee.
  3. Do I need an operating agreement for a Michigan LLC?
    While not required by law, an operating agreement is highly recommended to define member roles, responsibilities, and profit-sharing.
  4. Can a foreign LLC operate in Michigan?
    Yes. Out-of-state LLCs must file a Certificate of Authority with LARA before conducting business in Michigan.
  5. What happens if I don’t file my annual statement?
    Failure to file by the February 15 deadline can result in late fees, loss of good standing, or even administrative dissolution of your LLC.

To know more on creating your LLC in MI, submit your legal inquiry to our UpCounsel marketplace. UpCounsel’s attorneys will give you a helping hand when creating a business in MI, including all the maintenance procedures you need to be aware of to keep your business in good-standing. In addition, they can give you sound advice on the right tax structure for your LLC.