Setting Up an LLC in Michigan: Everything You Need to Know
The statute is available for any Michigan resident who wants to establish an LLC, or limited liability company, within the state. 3 min read
2. Choosing an LLC Name
Setting up an LLC in Michigan under State Statute 450-4104 allows entrepreneurs to gain credibility and operate in a business-friendly state. The statute is available for any Michigan resident who wants to establish an LLC, or limited liability company, within the state.
Similar to other states, Michigan has a few requirements for LLCs that are specific to the state. To create an LLC in Michigan, you need to file the appropriate forms and register with the Michigan Department of Licensing and Regulatory Affairs, Bureau of Commercial Services. There are also fees and naming requirements that must be met.
As you set out to establish your LLC, have the following information available to assist in filling out forms:
- Name of LLC
- Effective formation date
- Purpose of LLC
- Planned duration of the company
- Name and address of registered agent
- Name and signature of organizer
- Name and phone number of contact person
Advantages of Forming an LLC
An LLC combines the strongest aspects of a sole proprietorship, partnership, and corporation into a legally recognized business entity. LLCs are similar to sole proprietorships and partnerships in that they are easy to operate and manage. Owners aren't required to keep records of meetings or hold regular stockholder meetings. In order to keep your LLC in good standing in Michigan, you simply have to file your annual statement with the Corporations Division, pay company taxes, and renew your business license.
LLCs also have the advantage of not being taxed twice. Earnings from the LLC are included in your personal tax return as a “pass-through” entity. An LLC is similar to a corporation because it allows owners to have protection from personal liability. The LLC is considered a separate legal entity that can maintain its own assets instead of being dependent on the owner to hold the assets for the company. In the case of legal action against your LLC, the only potential losses are to the business assets, not to your personal assets, such as your car, house, or savings.
The combination of easy management, no double taxation, and protection from personal liability makes LLCs a smart and desirable choice for small business owners.
Choosing an LLC Name
Before you even begin to file paperwork with the State of Michigan, you must take an important step in establishing your LLC: choosing a business name. The name of your company must be unique and available. Michigan law requires that customers must be able to differentiate your company's name from other businesses operating in the state. When you have chosen a name you want for your LLC that fits the requirements below, check the Michigan LLC Name Database or call the Corporations Division at 517-241-6470 to see if it is available.
LLCs in Michigan are required to include a designator at the end of their name, such as "LLC," "L.L.C.," "LC," "L.C.," or "Limited Liability Company." Certain words aren't allowed in the name of an LLC because they could cause people to confuse your company with a state or federal agency, like the Secret Service, FBI, or Treasury.
If you include a restricted word like "bank," "university," or "attorney," you will be required to fill out additional forms and will likely need to have a licensed person, such as a lawyer or doctor, involved with your LLC. You can get more information about choosing a name for your LLC by contacting the Michigan Department of Licensing and Regulatory Affairs.
After you have selected a name that fits the requirements, file an application with the Michigan Department of Licensing and Regulatory Affairs' Bureau of Commercial Service, which allows you to reserve the name for six months. The application costs $25 and can be completed online or through the mail.
You should also check to see if the web domain is available. Reserve your desired domain, even if you don't plan on creating a website right away. Your web address doesn't have to match the exact LLC name you file with the state. You should also secure a professional email address that reflects your company's name. Google's G-Suite offers professional email systems to small business owners.
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