Key Takeaways

  • A single-member LLC in Michigan is generally taxed as a sole proprietorship unless it elects corporate tax treatment.
  • Michigan requires annual statement filings and business tax compliance with the Department of Treasury.
  • LLCs with employees must register for and pay employer withholding and unemployment taxes.
  • Businesses selling taxable goods or services must collect and remit Michigan sales and use tax.
  • Filing requirements may vary based on business structure, elections, and activities conducted in or outside Michigan.

A single-member LLC Michigan can be formed under state laws, as long as the owner follows all requirements for the formation of a business. This type of limited liability company has one member who is shielded from personal liability for business debts and obligations.

Naming Your LLC

When forming a single-member LLC in the state of Michigan, the first step is coming up with a business name. The name you select must include one of the terms that identify this type of legal structure. Examples include a limited liability company and LLC. In Michigan, you must use a name that is unique from any other existing business in the state, including other business entity types like partnerships and corporations. Additionally, you cannot choose a name that could potentially mislead customers about what your business offers.

Preparing Articles of Organization

Before the state will recognize your LLC, you also need to draft the articles of organization. You can fill out the standard form found on the website of the Michigan Department of Licensing and Regulatory Affairs. Using this template is easier than writing your own articles of organization.

In the articles of organization, you must include some required information:

  • Name of the LLC.
  • A clause that states the LLC will engage in legal business activities.
  • The name and address of your registered agent.

The state of Michigan doesn't impose limits on how long a single-member LLC can operate. However, if the owner chooses to include a lifespan and end date of the LLC, both should be included in the articles of organization.

Michigan LLC Formation

To form an LLC in Michigan, you must have one owner, called a member. No age or residency requirements exist on a member of an LLC. In order to register the business, you must file the articles of organization with the Secretary of State's office.

In your articles of organization, you should include:

  • The name and address of each member.
  • The name of the business.
  • The address of the business.
  • The name and address of the assigned registered agent.

The state of Michigan recognizes LLCs with at least one organizer, called its member. Although it's recommended, you don't have to include the name of each member in your articles of organization.

How to File Taxes for LLC in Michigan

For tax purposes, a single-member LLC in Michigan is considered a disregarded entity by default. This means the LLC is not taxed separately, and all income and expenses are reported on the owner’s personal income tax return using Schedule C of IRS Form 1040.

However, single-member LLCs can also elect to be taxed as a C corporation or an S corporation by filing the appropriate IRS forms (Form 8832 or Form 2553). If this election is made, the LLC must comply with corporate income tax filing requirements at both federal and state levels.

Here are the main tax obligations and filing requirements for a Michigan single-member LLC:

1. Federal Tax Filing Options

  • Default Tax Status: Sole proprietorship (report income/loss on Schedule C).
  • C Corporation Election: File IRS Form 8832 and pay federal corporate income taxes.
  • S Corporation Election: File IRS Form 2553 (if eligible) and report income on Form 1120-S.

2. Michigan Business Tax Filing

  • Pass-Through LLCs (default status): Do not pay Michigan business taxes directly. Instead, the owner reports business income on their personal state return (Form MI-1040).
  • Corporation-Elected LLCs: Must pay Michigan Corporate Income Tax (CIT) at a flat 6% rate and file Form 4891.
  • Estimated quarterly payments may be required for corporations or LLCs with significant income.

3. Sales and Use Tax

If your LLC sells taxable goods or services in Michigan:

  • Register with Michigan Treasury Online (MTO) for a sales tax license.
  • File sales tax returns monthly or quarterly (depending on sales volume).
  • Use Form 5080 for monthly/quarterly returns and Form 5081 for annual reconciliation.

4. Employer Tax Obligations

If your LLC hires employees:

  • Withhold state income tax: Register for a withholding account via MTO.
  • Unemployment Insurance (UI): Register with the Unemployment Insurance Agency (UIA) via MiWAM.
  • File quarterly wage reports and remit taxes as required.

5. Annual Statement

  • Must be filed by February 15 each year with a $25 fee.
  • Late filing may result in penalties or administrative dissolution.

6. No Franchise Tax

Unlike other states, Michigan does not impose a franchise tax on LLCs.

7. Out-of-State Operations

If your LLC operates in other states (has a physical presence, employees, or sales activity), you may need to register as a foreign LLC and meet additional tax requirements in those states.

Registered Office & Agent

Each LLC registered in Michigan is required to appoint a registered agent who holds the authority to accept any legal documents on your company's behalf. This registered agent can be a business entity that is authorized to do business or registered in Michigan or a person residing in the state. In a single-member LLC, the single member often serves as the registered agent for the business. When including the required information about your LLC, you should include your office or home address.

To meet the state requirements, the registered agent must have a physical address in Michigan and be available during regular business hours at that address to receive any tax and legal documents for the LLC. Make sure to include either a home or business address as the office of the registered agent. It's not required for a single member of the LLC to serve as the registered agent. If you'd rather not, you can hire a company to provide this service for your business.

A registered agent can be:

  • A foreign entity.
  • A domestic entity.
  • An individual resident.

As long as the entity is registered to conduct business in the state or the individual resides in the state, they are authorized to serve as a registered agent. Although a single member can be the registered agent, the LLC itself can't serve as its own registered agent.

Michigan LLC Post-Filing Requirements

After forming an LLC, the member is required to file a report by February 15 each year. This deadline is several months earlier than the deadline in other states, which is April 15. In order to file the report, you must also pay a $25 filing fee. When reporting business profits and losses, you will need to include these numbers on your personal 1040 tax return form on Schedule C.

An LLC must also obtain a federal tax identification number, also called the employer identification number or EIN. The IRS assigns this number to the LLC. This number is like a social security number for a person. It is necessary for hiring employees or opening a business bank account.

Frequently Asked Questions

  1. Do I need an EIN for my single-member LLC in Michigan?
    Yes. Even for disregarded entities, the IRS requires an EIN if the LLC has employees or chooses corporate tax treatment.
  2. How do I pay Michigan corporate taxes if I elect C corp status?
    You must file Form 4891 and pay the 6% Corporate Income Tax, typically with quarterly estimated payments.
  3. What happens if I don’t file my annual statement on time?
    You may incur late fees and risk the LLC being dissolved by the state.
  4. Is sales tax required for service-based LLCs in Michigan?
    Only if your services are taxable under Michigan law. Many services are exempt, but check with the Michigan Department of Treasury for specifics.
  5. Can I change my LLC’s tax classification later?
    Yes, you can file IRS Form 8832 or 2553 to elect a different classification, such as S corporation or C corporation.

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