How to Start an LLC in Michigan
How to Form an LLC in Michigan
Forming an LLC in Michigan is an effective means of starting your business while protecting your personal assets. This guide takes you through the steps needed to form an LLC in Michigan and establish your business successfully.
Key Benefits
Personal Asset Protection
An LLC or 'limited liability company' is an American business form that gives the owners some legal protection by not holding them personally responsible for the legal obligations or debts of the company.
Tax Flexibility
LLCs offer pass-through taxation by default, meaning business income passes through to your personal tax return, avoiding double taxation while providing options for how you're taxed.
Management Freedom
Michigan LLCs provide flexibility in management structure, allowing you to choose between member-managed or manager-managed operations to suit your business needs.
Formation Process
Select a Unique Name for Your Michigan LLC
Selecting a name for your Michigan LLC is important to make your company unique and prevent confusion with other businesses. Your LLC name should be distinctive and also has specific requirements.
- Required Words: Your LLC name should contain the words "Limited Liability Company" or its shortened form, i.e., "LLC," "L.L.C.," "Ltd.," or "Co."
- Prohibited Words: Do not use words like "Agency," "Board," "Bureau," "Commission," "Department," or "Municipal."
- Government Association: The name must not be that of a government agency (e.g., "FBI," "State Department," etc.).
- Domain Name: Make sure to check domain name availability in case you're going to develop a website in the future.
To check your LLC name availability, you may utilize the Michigan Business Entity Search tool and see if the name is available or not.
Choose a Michigan Resident Agent
Each LLC in Michigan must appoint a Resident Agent, who receives the business's legal notices, government mail, and tax notifications on its behalf.
Agent Requirements
You may appoint yourself, provided that you have a physical address in Michigan, another member of your LLC, or a professional Registered Agent service. A professional Resident Agent service guarantees timely delivery of critical documents, and they are accessible during normal business hours.
Professional Services
We highly recommend that you hire a professional Resident Agent service. Utilizing a professional service is convenient and guarantees compliance with state regulations. Many business owners prefer this option for the privacy and reliability it offers.
Recommended Registered Agent Services
ZenBusiness
ZenBusiness is renowned for its quick, efficient LLC registration services. You can quickly create your LLC, and their Resident Agent service guarantees that all required paperwork is taken care of, keeping your LLC in compliance with Michigan's regulations. Their Resident Agent service costs $199 annually.
- Easy LLC registration process
- Worry-free legal notice management and compliance
- Virtual dashboard for simple document handling
Cons: No nonprofit LLC formation available.
Northwest Registered Agent
Northwest Registered Agent is an upgraded service and highly regarded for its world-class customer support. They have a safe online interface to handle your LLC's documents, and having a physical address in Michigan also makes them a good option to be your Resident Agent. Their premium registered agent yearly price is $125.
- Excellent customer support
- Robust emphasis on data security
- A+ Better Business Bureau rating
Cons: Higher initial registration fees.
File Your LLC Formation Documents
In order to actually create your LLC in Michigan, you'll have to file your Articles of Organization with the Michigan Department of Licensing and Regulatory Affairs (LARA). You may file either online or through the mail.
Filing Fee
The Articles of Organization filing fee is $50. Expedited processing is available at an added cost.
Processing Times
Online filings take approximately 10 business days to process. Mailed applications have processing time comparable to but slightly longer than regular filing.
Filing Options
- Online Filing: Quick way, processing normally done within 10 business days.
- Mail Filing: You can send your Articles of Organization to:
Michigan Department of Licensing and Regulatory Affairs (LARA)
Corporations, Securities & Commercial Licensing Bureau
P.O. Box 30054, Lansing, MI 48909
Expedited Filing
Expedited processing options are available for faster filing time:
- 1-day processing: $50 additional cost.
- Same-day processing: $100 additional cost.
- Two-hour processing: $500 fee.
- One-hour processing: $1000 fee.
Other Matters After Creating Your LLC
After your LLC is registered, there are a few more things to do to keep your business in order and fully protected:
- Create an Operating Agreement: While not strictly mandatory in Michigan, having an Operating Agreement is a prudent move. It outlines the inner workings, ownership, and responsibilities of LLC members and can prevent potential disputes.
- Keep Business and Personal Finances Separate: Open a separate business bank account to keep your personal finances separate from your LLC's finances. This is important to keep liability protection intact.
- Get Business Insurance: Even if your LLC is small, it is a good idea to get business insurance to cover against possible lawsuits or other risks. Workers' compensation insurance is required if you have employees.
- Hire an Accountant: A certified accountant will assist in making sure your LLC remains compliant with tax laws, handles finances, and prevents costly errors.
After Formation
Once your LLC is established, take these important steps to maintain good standing and protect your business:
Create an Operating Agreement
While not strictly mandatory in Michigan, having an Operating Agreement is a prudent move. It outlines the inner workings, ownership, and responsibilities of LLC members and can prevent potential disputes. This document will clarify the ownership structure and management of your LLC and will avoid many conflicts among members.
Keep Business and Personal Finances Separate
Open a separate business bank account to keep your personal finances separate from your LLC's finances. This is important to keep liability protection intact. If you don't maintain this separation, courts may "pierce the corporate veil" and hold you personally liable for business debts.
Get Business Insurance
Even if your LLC is small, it is a good idea to get business insurance to cover against possible lawsuits or other risks. Workers' compensation insurance is required if you have employees. This provides an additional layer of protection beyond the LLC structure itself.
Hire an Accountant
A certified accountant will assist in making sure your LLC remains compliant with tax laws, handles finances, and prevents costly errors. Having one also takes the burden of bookkeeping and payroll off your shoulders. You can concentrate on the other sides of expanding your business.
FAQs
How much does it cost to create an LLC in Michigan?
The standard filing fee to file your Articles of Organization in Michigan is $50. There are expedited processing options for extra fees, ranging from $50 for 1-day processing to $1000 for one-hour processing.
Do I require a Trade Name (DBA) for my LLC?
Most LLCs in Michigan do not require a "Doing Business As" (DBA) name. If you want to do business under a name other than your LLC's registered name, you will have to file a DBA with LARA.
How long does it take to receive processing of the Articles of Organization?
Online filings take approximately 10 business days to process. If you require faster service, expedited services are available, from 1-day processing ($50) to same-day processing ($100), or even as quickly as 1 or 2 hours for an additional fee.
Can I be my own Resident Agent in Michigan?
Yes, you can be your own Resident Agent in Michigan if you have a physical street address in the state and are present during normal business hours to accept legal and tax notices.
Is an EIN required for my LLC?
Yes, if your LLC plans to hire employees or open a business bank account, you'll need to obtain an Employer Identification Number (EIN) from the IRS. This is a free service and can be done online.
Do I have to file annual reports in Michigan?
Yes, Michigan does require LLCs to file an annual statement with LARA. The cost of filing is $25. It's a good idea to file this report annually to maintain your LLC in good standing.
Do I require an Operating Agreement in Michigan?
While Michigan does not have any legal requirement for an Operating Agreement, it is recommended. This agreement will clarify the ownership structure and management of your LLC and will avoid many conflicts among members.
Ready to Start Your Michigan LLC?
Take the first step toward establishing your business with the protection and benefits of an LLC structure. Following these steps and maintaining compliance with Michigan's LLC laws, you can effectively establish and maintain your LLC and provide your business with the protection it deserves to prosper.
Get Started Today