Michigan S Corporation Formation Attorneys & Lawyers
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Michigan S Corporation Formation Lawyers
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Why use UpCounsel to form an S Corporation in Michigan
Starting an S Corporation in Michigan with a business startup attorney on UpCounsel is easy, informative, and cost-effective. In just three simple steps, our S Corporation attorneys will help you protect your business and personal assets, and help you organize your business for state and federal compliance for an S Corporation.
When forming an S Corporation in Michigan with UpCounsel, the attorney you choose to help you will conduct a business name search for your Michigan S Corporation and assist you in preparing your S Corporation Operating Agreement, along with providing other legal services based on your needs. Once your Articles of Incorporation have been prepared and successfully filed with the Michigan Department of Licensing and Regulatory Affairs Bureau of Commercial Service, your Michigan S Corporation has been formed and begins its existence as a corporate entity.
However, a corporation does not register as an S Corporation with the Department of Licensing and Regulatory Affairs Bureau of Commercial Service. It registers as a corporation with the state and then may file for S Corporation status with the IRS. S Corporation status is a taxation category which provides income tax advantages to small businesses.
Choosing a Company Name for Your S Corporation
One of the first steps in the process of forming your S Corporation is to choose your business name.
The business name that you choose must contain the word "Incorporated", "Corporation", "Company", or "Limited", or an abbreviation. It must be distinguishable (not the same as or deceptively similar to) the name of an S Corp or foreign S Corporation reserved or registered.
Your S Corporation name may contain the name of one or more members.
By using UpCounsel, you can choose several business names in order of preference. Your attorney of choice can then conduct a name check for your Michigan S Corp before filing to see which names are available. Once you have chosen an available name, your chosen S Corporation attorney can help you properly register your name with the State of Michigan.
Requirements for Forming a Michigan S Corporation
Articles of Incorporation: When forming an S Corporation in Michigan, the Articles of Incorporation must be filed following NRS Chapter 86 with the Michigan Department of State Division of Corporations. Michigan state law requires that certain information be included in your Articles of Incorporation when forming your Michigan S Corporation.
This information must include:
- The S-Corp's name and address.
- The purpose of the S Corporations.
- The name and address of the registered agent for service of process on the S Corporation.
- The number of shares the corporation is authorized to issue (if there is more than one class or series of shares, state the relative rights, preferences, and limitations of the shares of each class).
- The name and address of each incorporator.
Additionally, a Michigan S Corporation formation generally requires inclusion and/or consideration of the following:
S Corporation Qualification Requirements: For a corporation to qualify as a S Corporation for tax purposes, it must meet the following requirements:
- Must be a domestic corporation.
- Have only allowable shareholders including individual, certain trusts, and estates; and may not include partnerships, corporations or non-resident shareholders.
- Have only one class of stock
- Have no more than 100 shareholders
- Not be an ineligible corporation (i.e. certain financial institutions, insurance companies, and domestic international sales corporations).
Additionally, a Michigan S Corporation formation generally requires inclusion and/or consideration of the following:
S Corporation Operating Agreement: Although the S Corporation Operating Agreement is not required with the Articles of Incorporation, it is a good idea for every S Corporation with more than one member to have one. The Articles of Incorporation may contain restrictions or prohibitions on the power of the members to adopt, amend, or repeal an operating agreement. Michigan recognizes operating agreements as governing documents.
Membership: A S Corporation must have one or more members.
Eligibility Requirements: A natural person or an entity.
Procedure for Membership: The member may acquire an interest in the S Corporation directly from the S Corporation at the time of formation and, after formation, at the time provided in and upon compliance with the Articles of Incorporation or the operating agreement or, if not provided, only upon the vote of a majority in interest of the S Corporation members, excluding the vote of the person acquiring the membership interest, and only when the person becomes a party to the S-Corp's operating agreement.
Business Licenses: Business licenses and/or permits are required for most S-Corp's offering specific professional services. Contact the Michigan State Corporations Commission for specific licenses.
Resident Agent needed for a Michigan S Corporation
UpCounsel attorneys can also provide your business with a registered agent in Michigan. Every Michigan S Corporation must have a registered agent in Michigan, which is the person or office designated to receive official state correspondence and notice if the company is "served" with a lawsuit. A Michigan resident, corporation, or a foreign corporation that has the authority to transact business in Michigan may act as a registered agent, as long as they have a physical street address in Michigan.
Michigan Department of Licensing and Regulatory Affairs Bureau of Commercial Service
Once you create an S Corporation in Michigan, the Michigan Department of Licensing and Regulatory Affairs Bureau of Commercial Service will require that certain recurring responsibilities and duties be fulfilled. The most important of these are explained below.
For further information, contact the Michigan Department of Licensing and Regulatory Affairs Bureau of Commercial Service.
Recurring Responsibilities and Duties for Michigan S Corporations
Annual Report: Each S Corporation shall provide an annual report to the Michigan Department of Licensing and Regulatory Affairs Bureau of Commercial Services regarding its financial condition to each of its members. This must be filed every year by May 15. The filing fee for the annual report is $25.
Records: Each Michigan S Corporation must keep the following records open to inspection at its office:
- A current list of the full name and last known business or residence address of each member and of each holder of an economic interest in the S Corporation set forth in alphabetical order, together with the contribution and the share in profits and losses of each member and holder of an economic interest.
- If the S Corporation is manager-managed, you will need a current list including the full name and business or residence address of each manager.
- A copy of the Articles of Incorporation and all amendments thereto, together with any powers of attorney pursuant to which the Articles of Incorporation or any amendments thereto were executed.
- Copies of the S-Corp's federal, state, and local income tax or information returns and reports, if any, for the six most recent taxable years
- A copy of the S-Corp's Operating Agreement, if in writing, and any amendments thereto, together with any powers of attorney pursuant to which any written operating agreement or any amendments thereto were executed.
- Copies of the S-Corp's financial statements, if any, for the six most recent fiscal years.
- The books and records of internal affairs as they relate to the S Corporation for at least the current and past four fiscal years.
- A signed "Incorporator's Statement" showing the names and addresses of the initial directors who will serve on the board until the first annual meeting of shareholders.
Filing Fees for a Michigan S Corporation
Filing of the Articles of Incorporation must be made with the Michigan Department of Licensing and Regulatory Affairs Bureau of Commercial Services in which the S Corporation was organized, along with the appropriate state filing fee. The filing fee is based on the number of authorized shares plus a $10 fee. There is a $50 fee for the first 60,000 shares; $100 for up to 1 million shares.
Taxes for a Michigan S Corporation
A Michigan S Corporation is a special type of corporation created through an IRS tax election. An eligible corporation can avoid double taxation (once to the corporation and again to the shareholders) by a corporation with a Subchapter S designation by the IRS. A corporation must file a Form 2553 to elect "S" status within two months and 15 days after the beginning of the tax year.
Owners of the S Corporation report business losses or profits on their personal tax returns, and therefore the business itself is not taxed. Each shareholder is responsible for paying taxes on their pro rata share of the S corporation's items of income, deductions, and credits (through a Schedule K-1 form).
Michigan state law follows federal law for income tax purposes. Therefore if a corporation is classified as an association taxable as a S Corporation for federal income tax purposes, so will it be taxable as a corporation for state tax purposes.
Federal Income Tax: An S Corporation does not pay federal income tax.
Michigan State Income Tax: Michigan S Corporations are however taxable under state law. Michigan imposes the Single Business Tax rather than an income tax.
Federal Tax Identification Number: Your corporation will need to obtain a federal tax identification number, which is also known as an Employment Identification Number (EIN). You do not need to get a new EIN after the corporation choose to become a S Corporation. An EIN is similar to an individual's social security number. You will need an EIN for your S Corporation as long as there is one member, even if the S Corporation does not have employees. For certain tax filing requirements the attorney you choose on UpCounsel can help prepare your Federal Tax ID Application, if you have not done so already.
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