How to Start Michigan LLC as a Non-Resident (Clear Guide)

Michigan LLC non resident

If you want to start a business in Michigan as a non-resident, forming a Limited Liability Company (LLC) is a great option. It’s a popular choice for many business owners because of its flexibility. However, starting an LLC in Michigan as a non-resident can be daunting.

Thankfully, this guide will give you all the information you need to start.

Key Highlights: Michigan LLC as a Non-Resident

Starting a Michigan LLC as a non-resident involves meeting specific requirements, filing the necessary documents, and paying the required fees. Amongst all the services, I found Northwest registered agent the best for this.

My favorite part about forming an LLC in Michigan is that the state offers many benefits, including limited liability protection, tax benefits, and the ability to operate your business from anywhere.

Michigan LLC Non-Resident Requirements

If you are a non-resident planning to start an LLC in Michigan, you must meet several requirements.

I explained these requirements below:

Registered Agent

A registered agent is required for all LLCs in Michigan. As a non-resident, you must appoint a registered agent authorized to do business in Michigan.

A registered agent is responsible for receiving legal and tax documents for your LLC. They can also help with the entire process of your Michigan LLC formation for non-residents.

You can find registered agents through various online services or hire a Michigan-based attorney to act as your registered agent.

Certificate of Authority

If you are a non-resident and your LLC is registered in another state, you must obtain a Certificate of Authority to do business in Michigan.

This certificate authorizes your LLC to conduct business in Michigan and allows you to open a business bank account, hire employees, and enter into contracts in the state.

You can obtain a Certificate of Authority by applying with the Michigan Department of Licensing and Regulatory Affairs.

You can mail your application to the following address:

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

Tip

Starting a Michigan LLC as a foreigner is a breeze! You don’t need a physical presence in Michigan, residency in Michigan, a Social Security Number (SSN), a complex business plan, extensive financial documentation, state-specific professional licenses, or advanced tax knowledge to get started.

Employer Identification Number (EIN)

An EIN is a unique nine-digit number that identifies your LLC for tax purposes. As a non-resident, you must obtain an EIN from the Internal Revenue Service (IRS) to open a business bank account, hire employees, and file taxes in Michigan. You can apply for an EIN online through the IRS website.

Business Licenses and Permits

Depending on the nature of your business, you may need to obtain specific licenses and permits to operate legally in Michigan. Some standard licenses and permits include a Michigan Sales Tax License, a Michigan Business License, and a Michigan Professional License. You can obtain these licenses and permits from the Michigan Department of Licensing and Regulatory Affairs or the appropriate state agency.

Critical Note: Here’s What You Do Not Need Initially as a Non-resident Business Owner

Firstly, you do NOT need a physical presence in Michigan to start an LLC. You can begin an LLC from anywhere in the world. Michigan does not require non-resident business owners to be physically present.

Secondly, Michigan residency is NOT required to start an LLC. You can start an LLC in Michigan as a foreigner.

Thirdly, you do NOT need a Social Security Number (SSN) to start an LLC in Michigan. As a non-resident, you can use your Individual Taxpayer Identification Number (ITIN) to start an LLC.

Lastly, you do NOT need advanced tax knowledge to start an LLC in Michigan. However, it is recommended that you consult with a tax professional to ensure that you comply with Michigan tax laws.

Steps on How to Create an LLC in Michigan as a Non-resident

Step 1. Selecting Your Business Name (new or existing)

First, I would use the LLC lookup tool provided by the Michigan Department of Licensing and Regulatory Affairs to confirm the availability of my desired business name.

If the name is unavailable, I must choose a different one for my Michigan non-resident LLC.

Michigan Business Name Search

Ensure the name is available and meets the Michigan State Tax Commission requirements.

Step 2. Appointing a Michigan Registered Agent (I use Northwest)

You will need to appoint a registered agent for your Michigan non-resident LLC. As I highlighted earlier, a registered agent is a person or company authorized to receive legal documents for your business.

I opted for Northwest Registered Agent for this role because of its reputation for reliability and trustworthiness.

Read my Northwest Registered Agent Review here.

Northwest registration

Besides that, you can get started with them for as little as $39; they offer expert support and guidance, helping me understand legal requirements and ensuring I stay on track with compliance matters.

Step 3. Sign up For Northwest Registered Agent

To sign up for Northwest Registered Agent, visit their website and click the “LET’S GET YOU STARTED” button.

Choose your business entity as LLC and select Michigan (of course!) as your preferred state.

Northwest agent Michigan

Step 4. Enter Your New/Existing Company Details

After signing up, you must enter your new or existing company/business details. This includes your business name, address, and other essential information.

You can use Northwest Registered Agent’s address as your business address, eliminating the hassle of securing a separate US address for your company in Michigan.

LLC Company details Northwest

If unsure about your business purpose, toggle “Use Generic Business Purpose.”

Step 5. Enter The Management For Your LLC

You will also need to enter the management for your LLC. This includes the members or managers who will run your business. If your business is a one-person show, just stick with one member and use your name.

LLC management Northwest

Step 6. Fill in Your Contact Details

Next, fill in your contact details, including your email address, phone number, and other information.

LLC contact details Northwest
Note

You don’t need to scramble for a U.S. contact detail to create your Northwest account. Your local details will work just fine as your point of contact with Northwest.

Step 7. Setup Your Account with Northwest Registered Agent

After entering all your information, set up your account with Northwest Registered Agent using your email and preferred password. This will allow you to access their services and complete the following steps to form your Michigan LLC.

account set up Northwest

Step 8. Get Your Business Identity (optional)

You can opt to add the Northwest Business Identity option for your LLC.

It includes the following:

  • Domain name registration – 1 Free Year
  • Website – hosted by us, owned by you
  • Business email address
  • Business phone
Business Identity Northwest

Step 9. Getting Your Tax ID or EIN – optional

If you want your LLC’s tax ID (EIN), you can do so through Northwest Registered Agent. They will help you complete and submit the necessary forms to the IRS. It’s pretty easy to get this on your own, but if you’d like to include it in your order, that’s also great!

Just toggle on the “Tax ID” and select “Do NOT Have Social Security Number“.

Tax ID or EIN Northwest

Step 10. Checkout/Payment (Congratulations!)

Finally, check and make payment to complete the process of forming your Michigan LLC.

Once you’ve done this, congratulations! You can now open a Stripe account and start.

payment information Northwest

Enter your valid card information, then click Done!

Also read: Top 10 Registered Agent Services for Foreigners

As a non-resident, you may have additional tax reporting requirements, such as filing with the FINCEN or paying sales tax. Check with the Michigan State Tax Commission and the IRS for more information.

Additionally, if your LLC is a pass-through entity, you may need to pay Unemployment Insurance Tax.

Michigan LLC Non-resident Benefits

Forming an LLC in Michigan offers several benefits for non-resident business owners, including protecting assets, simplifying business operations, and reducing tax burden.

Here are some of the key benefits of forming a Michigan LLC as a non-resident:

Limited Liability Protection

One of the most significant benefits of forming an LLC in Michigan is the limited liability protection it provides. As a non-resident business owner, you are shielded from personal liability for business debts and obligations. This protection can help you protect your assets and avoid financial ruin if your business faces legal or economic challenges.

Pass-Through Taxation

Another benefit of forming an LLC in Michigan is pass-through taxation. Business profits and losses are reported on owners’ tax returns. As a non-resident business owner, this can help you avoid double taxation and reduce your tax burden.

Business Flexibility

Michigan allows flexibility in LLC management and operational structure. As a non-resident business owner, you can choose the management and operational structure that best suits your business needs. This flexibility can help you streamline your business operations and make it easier to run your business remotely.

Privacy Protection

Michigan does not require public disclosure of LLC members’ names in state filings. As a non-resident business owner, you can protect your privacy and keep your personal information confidential. This can help you avoid unwanted attention and protect your safety.

Ease of Formation and Maintenance

Forming an LLC in Michigan is straightforward and has manageable ongoing compliance requirements. As a non-resident business owner, you can quickly create and maintain your LLC without worrying about complex legal and regulatory requirements. This can help you save time and money and focus on growing your business.

Tip

With its simplified registration process and supportive regulatory environment, Michigan makes it easy for non-resident owners to establish and manage an LLC.

Access to Economic Incentives

Michigan provides various economic incentives, grants, and programs to support business growth. As a non-resident business owner, you can use these incentives and programs to help you grow your business. This can help you save money and access resources that can help you succeed.

Strong Legal Framework

Michigan offers a robust legal environment with clear laws and regulations protecting business owners’ interests. As a non-resident business owner, you can confidently operate your business knowing your rights and interests are protected. This can help you avoid legal challenges and focus on growing your business.

How Much Does it Cost in Total to Form an LLC in Michigan as a Foreigner?

The total cost of forming an LLC in Michigan as a non-resident includes the state filing fee, registered agent fee, and any additional services you choose.

The state filing fee is $50, and the registered agent fee is $125 per year. If you use Northwest Registered Agent, the initial cost to form your non-resident LLC is $98 (excluding an EIN/Tax ID). If you opt for an EIN, the total cost is $298, with the EIN service being a one-time fee.

Michigan LLC Taxation/Taxes for Non-US Residents – How Does it Work?

If you are a non-US resident who wants to start a Michigan LLC, it is essential to understand the taxation requirements. Michigan LLCs are pass-through entities, meaning the LLC does not pay taxes. Instead, the LLC’s profits and losses are passed on to the members, who then pay individual income tax on their earnings.

Under default filing status, LLC member income is subject to the 15.3% federal self-employment tax rate plus Michigan’s 4.25% individual income tax rate. However, as a non-US resident, you may be subject to additional tax requirements.

If your LLC has US-sourced income, you must pay tax. However, you do not need to pay tax if your income is sourced outside the United States.

To comply with the Michigan State taxation, you must estimate each member’s annual income in advance, calculate a total estimated tax, and split it into four quarterly payments due in January, April, June, and September. Late payments are penalized, so this will require some planning.

It is also important to note that Michigan has a sales tax of 6%, which may apply to your LLC’s sales. Additionally, there may be industry-specific taxes and unemployment insurance tax requirements to consider.

To maintain compliance with Michigan LLC taxation requirements, you must file an annual report with the Michigan Department of Licensing and Regulatory Affairs (LARA).

The annual report includes information about your LLC’s members, registered agents, and business activities. Failure to file the annual report can result in penalties and may lead to the dissolution of your LLC.

Disadvantage of Forming an LLC as a Non-resident in Michigan

Forming an LLC as a non-resident in Michigan can have some disadvantages you must consider before deciding.

Here are some of the disadvantages:

Difficulty in Managing the Business

As a non-resident, you may find managing your Michigan LLC from a distance challenging. You may need to travel frequently to Michigan to oversee the operations and ensure everything runs smoothly. This can be time-consuming and expensive, especially if you have other commitments.

Higher Costs

Forming an LLC as a non-resident in Michigan may be more expensive than forming one as a resident. You may need to hire a registered agent to represent your LLC in Michigan, which can add to the costs. Additionally, you may need to pay extra fees to file documents with the state.

Tax Implications

As a non-resident, you may face additional tax implications when forming an LLC in Michigan. You may need to pay state taxes on any income generated from your LLC in Michigan and federal taxes. You may also be subject to double taxation if your LLC is taxed as a corporation.

Legal Complications

Forming an LLC as a non-resident in Michigan can also lead to legal complications. You may need to comply with additional regulations and requirements, which can be confusing and time-consuming. Additionally, if you face any legal issues, it may be more challenging to resolve them from a distance.

What’s The Best Bank for Non-US-residents?

When starting a Michigan LLC as a non-resident, you may need to open a bank account in the US. Choosing the right bank can be a crucial decision affecting your business operations. You need a bank that provides excellent services, low fees, and easy access to your funds.

Mercury is my favorite bank for non-US residents. I have been using it for over five years, and I can confidently say it’s the best bank for non-US residents.

Mercury is an online bank that offers a business checking account with no monthly fees, minimum balance requirements, and transaction limits. It also provides a debit card, mobile banking, and ACH transfers.

In addition to Mercury, several other banks are worth considering. Wise is a popular choice for non-US residents due to its low fees and ability to hold multiple currencies. Relay and Bluevine are also worth mentioning, offering various services designed specifically for small businesses.

Frequently Asked Questions

Can a non-resident open an LLC in Michigan?

Yes, a non-resident can open an LLC in Michigan. The process is the same as for residents.

What are the steps for a non-resident to establish an LLC in Michigan?

The steps to establish an LLC in Michigan as a non-resident are the same for residents. You must choose a name for your LLC, appoint a registered agent, file articles of organization, and obtain necessary permits and licenses.

Can I use a registered agent for my Michigan LLC registration as a non-resident?

As a non-resident, you can register your Michigan LLC with a registered agent. The registered agent must have a Michigan street address and be responsible for legal correspondence.

What are the annual costs associated with maintaining a Michigan LLC for non-residents?

The annual costs of maintaining a Michigan LLC for non-residents include a $50 fee for filing an annual report. Other costs may vary depending on your specific business needs.

Is a physical presence required in Michigan to form an LLC as a non-resident?

No, a physical presence in Michigan is not required to form an LLC as a non-resident. The entire process can be completed online.

What’s the best method to open a Michigan LLC non-resident bank account?

The best way to open a Michigan LLC non-resident bank account may vary depending on your business needs. However, Mercury is a popular option for non-resident business owners.

What are the best states to form an LLC as a non-resident?

New Mexico, Wyoming, Delaware, and Nevada are often considered the best states to form an LLC as a non-resident due to their favorable tax laws and business-friendly regulations.

Can a non-resident Michigan LLC owner hire employees in the US?

Yes, a non-resident Michigan LLC owner can hire employees in the US. However, they must comply with all US employment laws and regulations.

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