Form LLC in Michigan: Everything You Need to Know
The first step in forming your LLC in Michigan is to choose its name. Your name should be suited to the type of business and easily searchable for customers. 5 min read
2. Check Your Name with the Michigan Name Database
3. Create an Operating Agreement (Optional)
4. Choose a Registered Agent
5. Create and File Your Articles of Organization
6. Obtain an Employer Identification Number (EIN)
7. Michigan State Tax Requirements
8. Check to See if You Will Need Business Licences or Permits
9. Workers Compensation Insurance
10. Remember to File Annual Statements
11. Next Steps
Starting a business can be exciting and rewarding, but can also be complicated and nerve wracking. Your first order of business will be to decide on an entity type. Common entity types include, sole proprietorships, partnerships, corporations, DBAs and limited liability companies (LLCs). An LLC is a legal form that is considered to exist separate from its members, protecting them from total financial exposure by limiting liability to the amount of the financial contribution made by each. The members own and manage the company unless otherwise provided for in the LLC’s Articles of Organization.
Interested in forming an LLC in the State of Michigan? Here’s a look at the steps you’ll be taking. Remember, though, that it is always a good idea to consult with an attorney before starting the LLC formation process.
Choose Your Company’s Name
The first step in forming your LLC in Michigan is to choose its name. Your name should be suited to the type of business and easily searchable for customers. It must be distinguishable from those of other businesses in the state and must contain the words "Limited Liability Company," "LLC", or "L.L.C." There are also words that you are prohibited from using, such as “Secret Service,” “F.B.I.,” etc. Also, an LLC’s name cannot contain words like “corporation” or “incorporated,” or their abbreviations. Other words, such as “Doctor,” “Attorney,” and “Engineer” can be used only where appropriate and require the filing of additional paperwork with the state.
Check Your Name with the Michigan Name Database
To find out if your business name is available, check the Michigan Name Database. You can reserve your name by filing an Application for Reservation of Name with the Michigan Department of Licensing and Regulatory Affairs Bureau of Commercial Services. The fee to reserve a name is $25. You can file via email or postal mail.
Create an Operating Agreement (Optional)
An operating agreement is used to describe how your LLC is going to be run. While the state does not require an operating agreement to form an LLC, having one is is always recommended. When you have an operating agreement in place, the roles, duties, and responsibilities of every individual involved with your LLC are clearly known and can be referenced, thus decreasing the possibility of confusion and costly mistakes.
Choose a Registered Agent
Every LLC in Michigan must have a registered agent who is willing to accept service on behalf of your LLC in the event that the LLC is sued or legal process on the LLC is required. The registered agent must be a Michigan resident with a physical street address in the state, a corporation registered in Michigan, or a foreign corporation authorized to conduct business in the state.
Create and File Your Articles of Organization
Your Articles of Organization is a document created by your LLC that must contain the following information:
The full name and address of your LLC;
Your purpose for doing business;
Contact information for the registered agent;
Whether your LLC is set up for a specific duration or as a perpetual business; and,
Whether LLC will be run by its members or by managers.
Your LLC is formed by with the filing of your Articles of Organization (form CSCL/CD-700). The fee to file is $50. You can file by email or postal mail with the Michigan Department of Licensing and Regulatory Affairs Bureau of Commercial Services. Processing time is typically seven to ten days. You can opt for expedited processing for an additional fee (same day - $100, two hours - $500, one hour - $1,000.) Expedited processing may be requested in person or by mail.
Note: Foreign businesses wishing to do business in the state must file an Application for Certificate of Authority to Transact Business in Michigan. The business must be in good standing and maintain a registered agent within the state.
Obtain an Employer Identification Number (EIN)
If you are going to be taxed as a corporation, or if you have more than one individual named in your LLC, you will need to obtain an Employer Identification Number (EIN) from the IRS, regardless of whether or not your LLC will have employees. Your EIN identifies your business to the government for all tax purposes. You can apply for your EIN online. There is no application fee.
Michigan State Tax Requirements
LLCs selling a product in Michigan must register for state sale tax, again through Michigan Treasury Online.
Check to See if You Will Need Business Licences or Permits
You will likely need to obtain one or more local business licenses or permits for your LLC. Contact the county clerk's office and/or local chamber of commerce in all counties where you intend to do business to find out which licences and permits, if any, your business will need.
Additionally, many types of businesses will mandate that you obtain a federal license or permit. Common business activities requiring a federal license or permit include, among others, the selling alcohol or firearms, commercial fishing, mining and drilling, nuclear energy, and radio or television broadcasting. You can find out more by visiting the U.S. Small Business Administration’s website.
Workers Compensation Insurance
Almost all LLCs are required to carry worker’s compensation insurance. Under Michigan’s Workers' Disability Compensation Act, employers must provide a way of ensuring that benefits are paid to workers who are injured on the job. Most employers accomplish this by purchasing private insurance coverage, joining a group fund, or obtaining self-insured status. More information on workers compensation insurance in Michigan and be found here.
Remember to File Annual Statements
All LLCs in Michigan are required to file an annual statement with the Department of Licensing and Regulatory Affairs. This statement updates the state’s records for your LLC. Filing is required whether there are any changes to report or not. The department sends out a pre-printed form to the office of the LLC’s registered agent 90 days before the due date of February 15. You must file your report every year by February 15, unless your LLC was established after September 30. In such a case, you do not have to file your first statement until one year following February 15. The fee to file an annual statement for an LLC in Michigan is $25. There is no penalty charged for missing the February 15 deadline, but your LLC will be dissolved for failure to file within two years of the deadline.
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