How to Start an LLC in Michigan (Step-by-Step Guide)

Start an LLC In Michigan

If you’re considering forming a Michigan LLC, you’re making a smart choice for protecting your assets while enjoying flexibility in business operations.

To establish your LLC successfully, you must choose a unique business name, designate a registered agent, file Michigan Articles of Organization, and file an annual report.

The filing fee for your Articles of Organization is $50, and the approval process takes about ten business days.

This guide compiles all the information you need to start an LLC in Michigan today.

What Are the Steps to Start an LLC in Michigan?

To start an LLC in Michigan, you need to:

  • Step 1. Choose and search for a unique name
  • Step 2. Designate a registered agent in Michigan
  • Step 3. File Michigan LLC Articles of Organization
  • Step 4. Create an Operating Agreement
  • Step 5. Get an EIN from the IRS
  • Step 6. File annual reports

Let us dive more in-depth into these steps so I can show you how to get them:

Step 1: Choose a Unique Name for Your Michigan LLC

Choosing a name for your LLC in Michigan is an important task. This name will represent your business and help customers find you.

Start by brainstorming ideas that reflect your business. Make sure your name is memorable and unique. Avoid names that are too similar to existing businesses.

Use the Michigan LLC lookup tool to check if your name is available. After selecting an available name for your LLC, Michigan’s naming guidelines mandate that you include a designation indicating your business is a limited liability company.

You must incorporate “Limited Liability Company” or one of the following abbreviations into your official business name:

  • L.L.C.
  • LLC
  • L.C.
  • LC

If it’s a low-profit LLC, include “L3C” or “l3c.”

The state requires businesses providing professional services to create a professional service limited liability company (PLLC). The name must contain the words “Professional Limited Liability Company” or the abbreviation “P.L.L.C.,” “P.L.C.,” “PLLC,” or “PLC.”

If you’re considering a website, check that the matching domain name is available and free from trademark issues.

You can reserve your name to secure it while you finalize your plans. This keeps the name safe for six months after you file an Application for Reservation of Name with the Michigan Department of Licensing and Regulatory Affairs (LARA). This costs $25.

Also, consider using a trade name or DBA. This is a catchy name you can use for business without needing to change the formal name of your LLC.

You can do this by filing a Certificate of Assumed Name with the Michigan Department of Licensing and Regulatory Affairs and paying the $25 filing fee.

Make informed choices, and you’ll be on the right path to establishing your LLC!

Step 2: Choose a Registered or Resident Agent in Michigan

A registered agent is essential for your LLC in Michigan. This person or company is designated to receive important legal and tax documents for your business. In Michigan, this role is often called a “resident agent.”

Who Can Be a Registered Agent?

You have a few options for who can be your Registered Agent in Michigan:

  • You: You can act as your registered agent, but remember you must be available during business hours to receive documents.
  • A Family Member: A trusted family member can be your registered agent.
  • An LLC Formation Service: Professional services offer expertise in handling official correspondence and ensuring compliance with state regulations.
  • A Lawyer: A legal service firm can also serve as your registered agent, providing additional legal support if needed.

Requirements for Michigan Registered Agents

Michigan law requires registered agents to have a physical street address, not just a P.O. Box. The address must be where the agent can consistently receive legal documents and official mail during regular business hours.

Additionally, the registered agent must be at least 18 years old and available to accept service of process. This means they must be present to handle any legal notices or court documents delivered to the LLC.

Warning

Your registered agent’s name and address will be listed on public records for everyone to see. If you don’t have an address in Michigan or want more privacy, I recommend hiring a Registered Agent Service for your LLC.

What registered agents do I recommend for Michigan?

I highly recommend Northwest registered agent services for obvious reasons.

They offer a range of benefits that set them apart, including a free year of registered agent service, which helps you save (about $300) on initial costs.

You’ll receive a complimentary operating agreement essential for outlining your LLC’s internal structure. My favorite part? Northwest also allows you to use their office address for your LLC filing, keeping your address off public records and enhancing your privacy.

Their free email forwarding service ensures you stay on top of important correspondence, and their exceptional customer support is always available to assist you whenever needed.

When you hire Northwest registered agent to form your Michigan LLC, you’ll get a free year of Registered Agent service and pay just $39 + state fees today. To learn more, read my Northwest registered agent review.

Step 3: File LLC Articles of Organization

Filing the Articles of Organization is crucial in starting your LLC in Michigan. This document officially registers your business with the state.

To file your Articles of Organization in Michigan, follow these steps:

Step #1. Complete the Form: Obtain and complete the Articles of Organization form from the Michigan Division of Corporations. Businesses providing professional services must file for a PLLC using this form.

Here’s what you need to include:

  • LLC Name: Your chosen name must end with “LLC,” “LC,” or “limited liability company.” And P.L.L.C.”, “P.L.C.,” “PLLC,” or “PLC” for Professional Service Limited Liability Companies.
  • Business Purpose: Describe what your business will do, like “online retail” or “dog training.”
  • Business Address: Provide the street address where your LLC will operate.
  • Resident Agent: List the name and address of the person or company receiving legal documents for your LLC.
  • Management Structure: Indicate if members or managers will manage your LLC.
  • Duration: If your LLC isn’t designed to last forever, specify how long it will operate.
Note

Suppose you’re looking to register a foreign LLC in Michigan. In that case, you must apply for a Certificate of Authority to Transact Business in Michigan with the Department of Licensing and Regulatory Affairs (LARA) and obtain a certificate of good standing from the initial filing state.

Step #2: File Online, in person, or by Mail: You can file your Articles of Organization online through the Department of Licensing and Regulatory Affairs website or by mailing the completed form to:

MI Department of Licensing and Regulatory Affairs
Corporations, Securities & Commercial Licensing Bureau
Corporations Division
P.O. Box 30054
Lansing, MI 48909

You can file in person at:

2407 North Grand River Ave.
Lansing, MI 48906

Step #3: Pay the Filing Fee: The filing fee is $50. You can expedite the process by paying extra. You can pay $50 for 24-hour service, $100 for same-day service, $500 for two-hour service, or $1000 for it to be ready in one hour.

You can pay by credit card for online submissions or by card, check, or money order for mail or in-person submissions.

Once your articles are filed, the state will review and approve them. This process usually takes a few business days. After approval, your LLC is officially recognized, and you can start your business activities, obtain your EIN, open a bank account, etc.

Step 4: Prepare the Operating Agreement for Your Michigan LLC

An operating agreement is a crucial document for your Michigan LLC. While it’s not legally required, having one is highly recommended.

This internal document outlines how your LLC will operate and addresses important matters among members.

Here’s what it usually includes:

  • Member Contributions: Details about each member’s contributions, such as cash, property, or services.
  • Profit and Loss Distribution: How profits and losses are shared among members.
  • Bank Access: Members can access the LLC’s bank accounts.
  • Transfer of Interests: Procedures if a member wants to sell their share or passes away.
  • New Members: Guidelines for bringing in new members.
  • Record Keeping: Protocols for maintaining records and holding meetings.
  • Management Structure: Who has management authority and responsibilities?
  • Voting Rights: Define how decisions will be made. Will all members have equal votes?
  • Meeting Procedures: Outline how often meetings will occur and how members will be notified.
  • Amendment Process: Describe how changes can be made to the agreement in the future.

Having an operating agreement helps prevent conflicts. It lays out clear expectations, making it easier to handle disagreements if they arise.

Once you draft your agreement, please share it with all members for their input. After finalizing, ensure everyone signs it and retains a copy.

If you are working with an LLC formation company, check if they provide an operating agreement template. This can save you time and ensure you cover all necessary points.

When you hire Northwest registered agent to form your Michigan LLC, you’ll get a free year of Registered Agent service and pay just $39 + state fees today.

Step 5: Obtain EIN for Your MI LLC

An Employer Identification Number (EIN) is a Social Security number for your business. It is essential for your Michigan LLC because it helps with tax reporting and other legal requirements.

You will need an EIN to open a bank account, hire employees, file taxes, and apply for business licenses and permits.

How to Apply for an EIN:

  • Online: Visit the IRS website. This is the fastest way to get your EIN.
  • By Mail: Fill out Form SS-4 and send it to the IRS. This option takes longer.
  • By Fax: You can also fax the completed Form SS-4.
  • Phone: U.S. residents can call the IRS at 1-800-829-4933 to apply.

How Much Does It Cost To Get EIN?

Obtaining an EIN is free. However, some services charge $100 or more to help you with the entire process.

How Does it Take to Obtain my EIN?

  • Online: Get it immediately.
  • By Mail: Expect 4 to 6 weeks.
  • By Fax: Usually within 1-2 weeks.

Both U.S. residents and non-residents can apply for an EIN. However, the application process differs slightly: U.S. citizens and residents with an SSN or ITIN follow one procedure, while non-residents or foreigners without an SSN or ITIN follow a different process.

Step 6: File an Annual Statement and Report

Every Michigan LLC is required to file an Annual Statement each year. The bureau sends a pre-printed form to each company’s registered office 90 days before the due date. 

LLCs pay a $25 filing fee annually for the Annual Report. Budgeting for this cost is essential to ensure compliance.

All Michigan PLLCs are expected to file an annual report and statement. The filing fee is $75, and there is a late filing penalty fee of $50 if it is not filed by February 15.

Your Annual Report is due by February 15th each year. Understanding the timeline can help you plan.

If your LLC was approved between January 1 and September 30, your first report is due the following year. Your first report is due two years later if approved between October 1 and December 31.

You can file your annual report and statement online or by mail to PO Box 30768 Lansing, MI 48909. Annual statements may also be delivered in person to 2501 Woodlake Circle, Okemos, MI.

Opting for the online method is typically more manageable and more efficient. Ensure you have all the necessary information ready to complete the process smoothly.

Failure to file the annual statement will result in the company no longer being in good standing after two years, and the name becomes available to any other corporation, limited partnership, or limited liability company.

What are the Different Methods To Start a Michigan LLC?

To form an LLC in Michigan, you have three options: the DIY approach, the hands-off approach using an LLC formation service, or an attorney. Each method is unique and has its perks and drawbacks.

DIY LLC Formation in Michigan

Forming an LLC by yourself is a straightforward option. You will fill out and submit the Michigan Articles of Organization and pay the required filing fee.

All by yourself, no third party!

Pros:

  • Cost-Effective: You save money by not hiring anyone.
  • Control: You have complete oversight of each step.
  • Learning Opportunity: You gain knowledge about the process.

Cons:

  • Time-Consuming: It may take longer if you are unfamiliar with the process.
  • Complexity: You must ensure all forms are correctly filled out.
  • Privacy issue: If you serve as your registered agent, you risk having your address out there.
  • Lack of Guidance: You might miss the necessary steps.

Using a Professional/Online LLC Formation Services

Many online services can help you form your LLC. These platforms guide you through the entire process, handling most paperwork.

Pros:

  • Convenient: They manage the filing, saving you time.
  • User-Friendly: Most platforms have easy-to-understand instructions.
  • Support Available: Many offer customer service for questions.
  • Privacy benefits: Most services allow you to use their address for free, so your address doesn’t get compromised

Cons:

  • Costs: You’ll pay a service fee.
  • Variable Quality: Some services may not be as reliable as others.

Hiring an Attorney

Working with an attorney is another option for forming your LLC. This method ensures you have professional legal guidance throughout the process.

Pros:

  • Expertise: An attorney knows the legal requirements and can avoid pitfalls.
  • Customization: Your LLC can be tailored to your specific business needs.
  • Support with Complex Situations: Ideal for businesses with unique circumstances.

Cons:

  • Higher Costs: Legal fees can be expensive.
  • Dependence on Others: You may rely heavily on the attorney’s schedule.
  • Potential Delays: The process may take longer due to attorney workloads.

What is The Cheapest Alternative Way to Form an LLC in Michigan?

If you want to start an LLC in Michigan on a budget, the most affordable option is to do it online. By filing the Articles of Organization directly with the Michigan Department of Licensing and Regulatory Affairs, you can keep your costs between $50 – $150, depending on your needs.

This DIY approach helps you avoid the extra fees of hiring a service or lawyer, saving you money for other business expenses.

However, while DIY is cost-effective, it requires some effort. You’ll need to understand all the forms and regulations, and missing a detail could delay your application or create problems later.

Consider using a registered agent if you prefer not to handle everything yourself.

They can make the process smoother by ensuring you receive important documents and helping you stay compliant with state requirements. Although this adds a bit to the cost, it can provide valuable support and peace of mind.

Looking to save time? Consider hiring a company to form your Michigan LLC: Northwest ($39 + state fee). You also get a free registered service – saving $300 in formation costs.

Who Provides the Best LLC Services in Michigan?

There are a myriad of Michigan LLC services from which to choose. Choosing the wrong one can affect your Michigan LLC formation timeline—I know this from my experience using a few and researching a dozen over the years.

Here are some top-rated options you should consider:

Best Michigan LLC ServiceGoogle RatingLLC Formation CostRegistered Agent Fee
Northwest Registered Agent4.7/5$39Free for 1 year
Doola4.6/5$0 (plus state fees)$297/year
Tailor Brands4.4/5$0 (plus state fees)$199/year
ZenBusinessN/A$0 (plus state fees)$199/year

Besides, the fact that other services bill you for their registered agent in the first year, and Northwest offers it for free, is a HUGE plus for me.

Northwest Registered Agent stands out as the best for Michigan LLC formation due to its commitment to transparency, customer service, and privacy. Using their address helps protect your personal information, making them a reliable choice.

You benefit from their no upsell policy, excellent compliance, and privacy features. They make the process smooth and ensure you receive the support you need.

How Much Does It Cost To Form an LLC in Michigan?

Forming an LLC in Michigan involves several costs. The main expense is the $50 filing fee for your Articles of Organization.

Here are the primary costs you can expect:

ItemCost
New LLC Filing Fee (Articles of Organization)$50
Expedited Filing Service (optional)$50 – $1000
Name Reservation Fee$25
Trade Name Registration$25
LLC Formation Service Fee$39 (via Northwest)
Registered Agent Fee$0 (via Northwest)
EINFree (if DIY)
Annual Report and Statement$25 – $75
Total Estimated Cost$100 – $1200

When forming a new company in MI, budgeting about $100-$1200 for the first year is ideal. Then, if you want to go further, you can get other bells and whistles like a virtual mailbox, custom website, trademark services, premium EIN services, etc.

That said, the most significant (and essential) expense for every Michigan business owner is filing the Articles of Organization, which costs $50.

Pros and Cons of Forming an LLC in Michigan

Michigan LLC Pros

  • Cheap formation fee
  • Limited liability protection
  • Pass-through taxation
  • Flexible management structure
  • Unlimited LLC members
  • Choice of tax treatment
  • Fewer compliance requirements

Michigan LLC Cons

  • Annual renewal fees
  • Self-employment taxes
  • Increased scrutiny from creditors

6 Important Things To Do After Forming Your Michigan LLC

After forming your LLC in Michigan, several essential steps must be taken to ensure your business is set up for success. These steps will help you stay compliant with state regulations and establish a solid foundation for your operations.

1. Research the Best Licenses and Permits for Your Business

Michigan doesn’t have a state-level general business license.

Find out what licenses and permits your business requires. Laws vary by industry and location, so do thorough research.

Many businesses need a local or state LLC license to operate legally. It’s essential to search for the relevant state licenses and check your county and city websites for specific requirements.

Additionally, you might need to register with the state for various tax purposes. For instance, you must register to collect state sales tax if your business sells goods. This can be done through Michigan Treasury Online.

Ensure you apply for the necessary permits and pay any required fees. This will help you avoid fines or legal issues later on.

2. Create Business Accounts for Your LLC

Opening a separate bank account for your LLC is essential for keeping your business finances organized and distinct from your funds. This separation simplifies your accounting and helps safeguard your assets by clearly distinguishing between personal and business transactions.

When choosing a bank, look for one that offers business-friendly services, such as waived fees, free online banking, and other features that can benefit your business. To open the account, be prepared to provide your EIN and a copy of your Articles of Organization.

A dedicated business account streamlines your financial management and simplifies tax preparation.

Having all your business transactions in one place lets you easily track your income and expenses, ensuring everything is well-organized and accessible when tax season rolls around.

3. Understanding Michigan Tax Requirements and Managing Your Taxes

Knowing your tax obligations is necessary for a smooth operation. Michigan has specific tax requirements, including:

  • State Income Tax: Your LLC may need to file a state income tax return.
  • Sales and Use Tax: You must collect sales tax and file returns to sell products.

Keep records of all your income and expenses. This documentation will make tax filing more manageable and help you organize your finances.

Tip

Consider consulting with an accountant for tailored advice and to optimize your tax strategy. They can help ensure you meet all requirements and take advantage of available tax benefits.

4. File Your Annual Report

In Michigan, all LLCs must file an Annual Report. This report keeps your business details updated with the state and is usually due by February 15 each year.

The filing fee is $25 for LLCs and $75 for PLLCs. You can file your annual report and statement online or by mail.

If your LLC was approved between January 1 and September 30, your first report is due the following year. Your first report is due two years later if approved between October 1 and December 31.

Failure to file the annual statement will result in the company no longer being in good standing after two years, and the name becomes available to any other corporation, limited partnership, or limited liability company.

5. Get Business Insurance for Your LLC

Just as you wouldn’t leave your home without coverage, your LLC also needs the right business insurance to guard against potential risks and liabilities. Insurance protects your company’s assets and ensures financial stability in case of unforeseen issues or legal claims.

Your insurance needs will vary based on your business operations.

For example, general liability insurance covers risks such as slip-and-fall accidents or property damage if your LLC operates from a physical storefront.

Conversely, if you run your business as a consultant and work remotely, you might only need professional liability insurance to cover potential service errors or omissions.

Certain industries may require you to carry specific types of insurance or meet minimum coverage requirements to operate legally. For many businesses, general liability insurance is often adequate.

However, you must obtain workers’ compensation insurance if employees work 35 hours weekly.

Assessing your business needs helps you choose the appropriate coverage to protect your LLC.

Tip

Consult with an insurance agent to tailor your coverage. This investment can save you from significant out-of-pocket expenses in case of a claim.

6. Setup Your Business Online Presence (optional)

In today’s digital age, online presence can significantly benefit your business. Start by creating a professional website. This platform allows you to showcase your services and connect with customers.

Consider using social media to engage your audience. Platforms like Facebook, Instagram, and LinkedIn can enhance your visibility.

Michigan LLC vs. S Corp vs. Partnerships vs. Sole Proprietorship vs. Corporations

When starting a business in Michigan, you have several structures, each with unique features.

Here’s a breakdown:

Sole Proprietorship

A Michigan sole proprietorship is the most straightforward way to start a business. Imagine you’re running a lemonade stand on your own. You make all the decisions and keep all the profits.

However, there’s no legal separation between you and your business. If your lemonade stand faces financial trouble or legal issues, your assets, like your car or home, could be at risk.

It’s easy to set up and manage, but it does leave you personally responsible for any business debts.

Partnership

A Michigan partnership involves teaming up with one or more people to run a business together.

Think of it as joining forces with a friend to open a café. You share the profits and responsibilities, and you both make business decisions.

However, like a sole proprietorship, each partner is personally liable for any business debts or legal issues. If the business encounters financial trouble, your assets could be at risk, too.

Partnerships are relatively easy to set up but require clear agreements between partners to avoid conflicts.

LLC (Limited Liability Company)

An LLC offers a blend of flexibility and protection.

Picture it as a protective umbrella over your lemonade stand. This structure separates your assets from your business, so if your LLC faces legal issues or debts, your personal belongings are generally safe.

LLCs are more formal than sole proprietorships or partnerships but offer management and tax treatment flexibility. They are ideal for small—to medium-sized businesses that want liability protection without the complexity of a corporation.

S-Corporation

An S Corporation is a more structured business form.

Think of it as a business where owners are shareholders, much like a small-scale company with multiple investors. It protects liability and allows profits to pass through to your tax return, avoiding double taxation.

This means you report the income and losses on your tax return, which can be beneficial for tax purposes. However, S Corps have stricter operational requirements and formalities compared to LLCs.

Corporation

A Michigan corporation is the most complex structure, suitable for larger businesses aiming for significant growth. Imagine a big company with many shareholders. A corporation offers robust liability protection and is a separate legal entity from its owners, meaning your assets are protected.

Corporations can raise capital more efficiently by issuing stock and can offer employee benefits.

However, they come with extensive regulatory requirements, formalities, and paperwork, making them more suitable for businesses with significant resources and expansion plans.

Looking to save time? Consider hiring a company to form your Michigan LLC: Northwest ($39 + state fee). You also get a free registered service – saving $300 in formation costs.

My Final Thoughts: Forming an LLC in Michigan

Starting an LLC in Michigan is an exciting step toward bringing your business idea to life. Although it might seem like many steps initially, breaking them down makes the process more manageable and ensures you cover all the essential bases.

To start an LLC in Michigan, you should follow these steps:

  • Choose a name for your LLC.
  • Select a registered agent.
  • File the Articles of Organization with the state.
  • Create an Operating Agreement.
  • Obtain an EIN (Employer Identification Number).
  • File an Annual Report and Statement

The filing fee for the Articles of Organization is $50.

After forming your LLC, prepare for annual reports, which cost $25 – 75 yearly.

Forming an LLC protects your liability and can enhance your credibility. A well-structured LLC can also improve your chances of securing funding.

By following these steps and keeping track of costs, you can successfully establish your LLC in Michigan. This choice can be a strong foundation for your business journey.

Learn More About Starting an LLC in Michigan

If you need additional help to start an LLC in Michigan, check out these valuable resources:

Frequently Asked Questions

How long does it take to get a Michigan LLC, and can it be expedited?

The time it takes to process your LLC registration in Michigan can vary, but it generally takes about ten business days. You can expedite this process for an additional fee, which reduces the processing time.

What if I already have an LLC in a different state from Michigan?

You can register as a foreign LLC if you have an LLC in another state and want to operate in Michigan. This process requires filing specific forms and paying fees to the state of Michigan.

Can You Form an LLC For Free in Michigan?

Unfortunately, you cannot form an LLC for free in Michigan. There are fees associated with filing your Articles of Organization, which are necessary for creating your LLC.

Can I form an LLC in Michigan without a lawyer?

Yes, you can form an LLC in Michigan without hiring a lawyer. The process is straightforward, and many people handle it on their own. However, having an agent with an address in Michigan would be best.

What is the process for registering an LLC in Michigan online?

To register online, visit the Northwest Registered Agent website. They provide a step-by-step LLC filing procedure to help you complete your registration quickly.

Can I change my registered agent in Michigan?

Yes, you can change your registered agent in Michigan. You must file the appropriate paperwork with the state to update your LLC’s records.

How do I change my Michigan LLC’s name?

To change the name of your LLC, you must file an amendment with the Michigan Department of Licensing and Regulatory Affairs, complete the required forms, and pay a fee.

How do I renew my Michigan LLC?

In Michigan, you do not need to renew your LLC annually. However, you must file an annual report and pay the associated fee to keep your LLC in good standing.

How do I dissolve an LLC in Michigan?

You must file Articles of Dissolution with the state to dissolve your LLC. This process ensures that your LLC is officially closed and no longer liable for taxes.

How do I add a member to a Michigan LLC?

To add a member, you must typically update your operating agreement and file any necessary forms with the state. Ensure all members agree to the changes.

How do I add a DBA to an LLC in Michigan?

To add a “Doing Business As” (DBA) name, you must file a Certificate of Assumed Name with the state. This allows your LLC to operate under a different name.

Can a minor own an LLC in Michigan?

Minors can technically own an LLC in Michigan, but legal limitations exist. For legal purposes, it is advisable to have an adult listed as a member or manager.

What is the Cost of the Michigan Annual Report?

The annual report fee in Michigan is $25 for LLCs and $75 for PLLCs. This fee must be paid to keep your LLC in good standing.

Does LLC expire in Michigan?

An LLC does not expire in Michigan if you file annual reports and pay the required fees. If you fail to do so, it may be dissolved.

Can a non-resident open an LLC in Michigan?

Yes, a non-resident can open an LLC in Michigan. You do not need to be a resident of Michigan to form an LLC there.

Can I buy a house or car with my LLC in Michigan?

Yes, your LLC can buy property like a house or a car in Michigan. However, ensure these purchases align with your LLC’s business purpose.

Can you have multiple businesses under one LLC in Michigan?

You can operate multiple businesses under one LLC in Michigan. However, it is wise to keep clear records for each business for legal and tax purposes.

Is Michigan an excellent state in which to form an LLC? Is it worth it?

Michigan has a favorable business environment with reasonable fees. However, whether it is the right state for you depends on your specific business needs.

Can one person form an LLC in Michigan?

Yes, one person can form an LLC in Michigan. A single-member LLC is a common choice for individual entrepreneurs.

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