How to Form an LLC in Michigan in 7 Steps
Forming a limited liability company (LLC) in Michigan involves choosing a unique business name, appointing a registered agent to handle legal documents, filing articles of organization, obtaining an EIN, and setting up necessary business and tax accounts.
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Ready to start your new business in Michigan? How exciting! Many Michigan small businesses choose limited liability companies (LLCs) because the business structure offers entrepreneurs both limits on personal liability and tax benefits. Let’s look at what you’ll need to know to start your Michigan LLC.
Steps to Form an LLC in Michigan
Name Your LLC
It will come as no surprise: if you want to start an LLC, you need a business name.
When you register your Michigan business as an LLC, choose a unique business name. No other Michigan LLC can have the same business name. To check whether your preferred name is available, do a name search on the business entity database maintained by the Michigan Department of Licensing and Regulatory Affairs (LARA).
The business name you choose must follow state guidelines. In Michigan, under MCLS §450.4204, an LLC name cannot include words or phrases that:
- Imply the LLC is a corporation (it cannot include “corporation,” “corp.,” “incorporated,” or “inc.”)
- Indicate the LLC is associated with a government agency
- Suggest the LLC’s purpose is other than those included in the articles of organization
- Indicate that the LLC is a professional organization like a law firm or a doctor’s office without meeting additional criteria
- State that the LLC is a bank unless it meets specific criteria
- Are restricted by Michigan Law
The name you choose must include the terms “limited liability company,” “LLC,” or “LC.” If it is a low-profit LLC, then it must include the terms “low-profit limited liability company,” “L3C,” or “l3c.”
You will also want to check whether another business has trademarked your preferred business name. Your business could be sued for infringement if the trademark holder believes your use of the word has damaged its business. A quick check of the trademark database maintained by the U.S. Patent and Trademark Office (USPTO) should tell you whether your name is under trademark protection.
Reserving Your Name
Have you picked your business name but aren’t yet ready to file? If so, you’re in luck! You can file online, by mail, or in person with LARA for a six-month name reservation. Under MCLS §450.4205 no other business is allowed to register that name during that time. LARA charges a $25 fee for name reservations.
Get a Resident Agent
Under MCLS §450.4207, each Michigan LLC must appoint a resident agent (often called a registered agent in other states) to file its registration paperwork. The registered agent maintains a registered office and is responsible for accepting government notices and service of process on behalf of the LLC. The registered agent must have a physical street address in Michigan and available during typical business hours.
You can name yourself or someone else with your LLC as your registered agent. Or you can contract with a registered agent service that will accept documents and service of process on your behalf, keep your LLC compliant, pay franchise tax, and maintain your privacy.
File Your Articles of Organization
The next step to form your Michigan LLC is to complete the articles of organization with your LLC information. Under MCLS §450.4203, your LLC must include the following in the articles of organization:
- The LLC’s name
- The LLC’s purpose
- The name and address of the resident agent
- The name, signature, and phone number of the LLC’s organizer
- Whether the LLC is being formed for a specified time or will be perpetual
- If applicable, a statement that managers will manage the LLC (that it is manager-managed vs. member-managed)
You may then file the articles of organization online, in person, or by mail to the Michigan Department of Licensing and Regulatory Affairs (LARA). The fee is $50 to file the articles of organization.
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Draft an Operating Agreement
Michigan state law does not require LLCs to draft an operating agreement, but it is a good idea. Like corporate bylaws, an operating agreement allows you to set out the relationships between the LLC’s owners, who will manage it, and how the owners will receive compensation.
Most LLC operating agreements contain the following information:
- The names of the business owners (usually referred to as "members") and the ownership structure
- How to distribute the company’s profits and losses among the members
- Whether its owners will manage the LLC or delegate operational decisions to managers
- How much capital was contributed by each owner, their ownership share, and voting rights
- Procedures for adding or removing members from the LLC
- Procedures for dissolution
Since there is no standard format for drafting an LLC operating agreement, you can feel free to address any other necessary issues. Unlike your articles of organization, you do not file your LLC’s operating agreement with the state, and its terms are available to the public.
Get an EIN
All LLCs with more than a single member should apply with the Internal Revenue Service (IRS) for an Employer Identification Number (EIN). Your EIN is the IRS’s unique number to track your LLC for tax purposes, just like a Social Security number for your personal taxes. You can get a free EIN in minutes by applying on the IRS website.
An EIN allows your new business to:
- Open a business bank account
- Get a credit card
- Hire employees
- Apply for licenses
If you are operating a single-member LLC without employees, you are usually required to file with the IRS using your Social Security Number, so you do not need an EIN. However, if you do hire employees, you will need an EIN.
Set Up Business and Tax Accounts
When you start a business in Michigan, you must register for tax and business accounts to operate your business. Check the Michigan Department of Treasury’s webpage for more information on the state’s business taxes.
You should also check the Small Business Administration (SBA) website’s list of business activities that require federal licenses.
Check For Additional Federal or State Requirements
Check state and federal websites to determine if there are any specific rules for your business. For example, some LLCs may have to file a Beneficial Ownership Information Report (BOIR) with FinCEN. Under current law, LLCs created in the United States are “domestic reporting companies” and are exempt from the BOIR requirement.
However, laws may change, so stay up to date with state and federal requirements.
Business and Tax Requirements in Michigan
It is essential to stay on top of the LLC tax obligations and business requirements that apply to your startup or small business.
State Business Tax
If you set up your LLC for pass-through taxation, the LLC can avoid paying any state income taxes. Any profits from the company are taxable income earned by the owners on their tax returns. However, if you set up your LLC as a corporation for tax purposes, the LLC must pay a 6% state corporate tax.
State Employer Tax
If your LLC is an employer, consult the Michigan Department of Treasury for more information on withholding taxes and other employer requirements. You must register for an unemployment insurance account with the Department of Labor and Economic Opportunity.
Sales and Use Taxes
If you sell items in Michigan and the state considers you a seller, you must charge sales tax. The state of Michigan has both a 6% sales and 6% use tax. Visit the Michigan Department of Treasury for more information on what your LLC tax obligation may include.
Business Licenses and Permits
Your LLC’s licensing obligations to the state and federal government depend on your type of business and the location of your operations. It is always a good idea to check with city and county officials to ensure that your business has all the necessary licenses when forming an LLC.
Registration in Other States
If you plan to use your Michigan LLC to do business in other states, you will have to follow those other states’ requirements. You will register as a foreign LLC in that state. Usually, this will involve checking your LLC’s name in that state, filing documents similar to the formation documents you used to register in Michigan, and paying any fees. Consult the Secretary of State’s offices where your LLC will be operating.
Annual Requirements in Michigan
Michigan has specific annual filing requirements. Michigan requires all LLCs to file an annual statement (commonly referred to as an annual report) with LARA by February 15. The fee is $25. If you form your business after September 30, you will not need to file the annual statement on the following February 15, but you must file one for the next year.
Fortunately, the state will mail a pre-printed form to your resident agent 90 days before it is due each year. If you fail to file, the LLC will no longer be in good standing, you will lose your limited liability protection, and the name will become available for another business to use.
FAQs About Michigan LLC Formation
The filing fee for a Michigan LLC is $50.
It depends on what kind of business you’re starting.
- Single-member LLC. If you are operating the business with only one member, similar to a sole proprietorship, then your LLC is a single-member LLC.
- Multi-member LLC. If you have multiple LLC owners, similar to a partnership, it is a multi-member LLC.
- Professional Limited Liability Company. A PLLC is a limited liability company owned and operated by licensed professionals legally authorized to provide a professional service. In Michigan, this can include architects, attorneys, clergy, dentists, doctors of divinity, medical doctors, veterinarians, and others that meet the criteria. Professional service LLC (PLLC) members must be licensed to provide the services the company offers.
In Michigan, the initial document to set up your LLC is the articles of organization. Once the articles of organization are filed with LARA and accepted, the Secretary of State authorizes your LLC. You may need to show a copy of your articles of organization when opening a business bank account or applying for a business license or permit. To order a copy from the Secretary of State, you submit a certification and copy request online or by mail to LARA.
A certificate of good standing issued by the Michigan Secretary of State’s office proves your LLC exists in Michigan and conforms with tax and reporting requirements. You may need this when applying for a bank loan or for authority to do business in another state as a foreign LLC. You can request a certificate of good standing from the Michigan Secretary of State. The fee for the certificate is $10 when requested online or by mail.
To set up an LLC in Michigan, you need the following:
- An acceptable business name
- A Michigan resident agent and office address
- Completed articles of organization
- Payment of a $50 filing fee
The state will notify you when your LLC is accepted.
LLCs offer business owners protection from liability for their company’s obligations, tax advantages, and fewer requirements to maintain the business entity.
LLC owners are not liable for the debts and obligations of their business entity because the LLC is an independent entity. That allows you to manage your business without worrying you will lose your cars, house, or other personal assets if the company goes broke or has a lawsuit against it.
Additionally, LLCs have the option of pass-through taxation, where the business does not pay any tax on its profits. Instead, the owners declare any of the company’s income or losses on their personal income tax returns. This is different from a corporation subject to "double taxation." There, income is taxed when the business earns it and again when it is distributed to shareholders as dividends.
Finally, LLCs have fewer reporting and record-keeping requirements than corporations making LLCs easy to manage and keep compliant with state regulations.
To keep your LLC compliant with the Michigan Secretary of State, file an annual statement. The filing fee for this report is $25. The statement is due by February 15. However, if you form your business after September 30, you do not need to file the annual statement on the following February 15, but you file one for the next year.
No. The LLC files the articles of organization with the state when forming the company. They include crucial information like the LLC’s name, purpose, and the names of its owners. The articles of organization is a public record, whereas your operating agreement is an internal business document.
An operating agreement is a company document detailing the LLC’s management structure, addressing issues such as how the LLC will handle profits and losses, management disputes, and stakeholder votes. An LLC is not required to have an operating agreement in Michigan, but it is good to draft one when forming an LLC.
Yes. A Michigan LLC can conduct operations under an assumed name, trade name, or name different from its registered name if registered with LARA. When an LLC operates under a different name, it is often called a DBA ("doing business as"), an assumed name, or a fictitious name. There are many reasons for "doing business as" under a DBA. These include when a company wants to start a new line of business or sell a product under a different name.
If you are registering a Michigan DBA, you will first need to perform a search to ensure that another Michigan business has not already registered it. Once you know your business name is available, file a Certificate of Assumed Name with LARA and a $25 filing fee.
Depending on the type of business you plan to do with your LLC, you may also need to acquire special business licenses or permits from the federal, state, and local governments. The State of Michigan has an online license search where you can look up any requirements for your type of business. You can reach out to your county clerk and city or municipality clerk for information on local permits. You should also check the Small Business Administration (SBA) website’s list of business activities that require federal licenses.
Yes. LARA has an online filing system where you can submit articles of organization to form your LLC.
In most states, you file LLC and business formations with the Secretary of State’s office. However, in Michigan, LLCs are formed through the Department of Licensing and Regulatory Affairs (LARA).
To submit to LARA in person, visit:
Department of Licensing and Regulatory Affairs
2407 N Grand River Ave
Lansing, MI 48906
To submit to LARA by mail, address your filing, with payment included, to:
Michigan Department of Licensing and Regulatory Affairs
Corporations Securities & Commercial Licensing Bureau
Corporations Division
P.O. Box 30054
Lansing, MI 48909
Your Michigan LLC must always have a registered agent, which is called a resident agent in Michigan. Your registered agent could be a person who lives in Michigan, a Michigan state corporation or LLC, or a foreign corporation or LLC that is allowed to do business in Michigan, as long as any of those have the same business office as your LLC’s registered office. A registered agent service will have the same address as your LLC, which could be an advantageous way to satisfy this requirement.
Yes. Although you can serve as your own registered agent, busy entrepreneurs often opt for registered agent service companies to set up and maintain their Michigan LLC. Among the many benefits of registered agents, they:
- Keep your business private. They are the point of contact with the Secretary of State’s office. Any legal documents, lawsuits, or service of process goes to them, not your business address.
- Keep your business compliant. To keep your LLC in good standing, you must comply with Michigan’s filing requirements, specifically the annual statements. If you miss an important deadline, the Secretary of State can initiate your LLC’s involuntary dissolution, thereby ending your business operations.
- Help with your business. You may need a copy of your articles of organization or certificate of good standing as you expand your business operations. They can handle this for you.
- Are always available. Registered agents must be open during regular business hours, Monday – Friday, to accept service of process. Depending on your business operations and travel, you may not always be at your registered office.
A domestic LLC is one formed under Michigan law and is authorized to do business in Michigan. A foreign LLC is an LLC formed under the laws of another state. To do business in Michigan, a foreign LLC must request and receive a certificate of authority from LARA.
If you want to do business in another state with your Michigan LLC:
- Contact the Secretary of State’s office for application requirements as a foreign LLC
- Furnish a Michigan certificate of good standing to show your LLC is current on filing and tax obligations
- Complete an application and pay the state registration fee
You may need to check name availability to see if you can use your Michigan LLC name in that state.
In Michigan, a foreign LLC is an LLC formed under another state or jurisdiction. To do business in Michigan, the foreign LLC must obtain a certificate of authority to transact business in Michigan from the Michigan Department of Licensing and Regulatory Affairs (LARA). Failure to file for a certificate may lead to a company paying penalties or fines.
The application for a certificate of authority will require that your LLC list the specific business activities it plans to undertake in Michigan. The application will also need the foreign LLC to name a resident agent to receive documents on behalf of the LLC. Finally, there is a $50 fee to apply for a certificate of authority.
There are four scenarios that will cause a dissolution of a Michigan LLC:
- All the members agree to the dissolution
- The articles of organization specify a date for dissolution, and that date occurs
- The articles of organization or operating agreement specify a certain event that will trigger dissolution, and that event occurs
- A judge enters a decree of judicial dissolution
If the LLC is dissolved by the members’ unanimous vote or due to an event that triggers dissolution, you must file a certificate of dissolution with LARA. Within 60 days of that filing, you will need to request a tax clearance from the Michigan Department of Treasury. Make sure to settle all tax accounts and business obligations before filing the certificate of dissolution.
No. Michigan does not allow for anonymous LLCs, meaning the members’ names do not appear on the articles of organization. You can only form an anonymous LLC in Delaware, Nevada, New Mexico, and Wyoming.
Disclaimer: The information presented here does not constitute legal advice or representation. It is general and educational in nature, may not reflect all recent legal developments, and may not apply to your unique facts and circumstances. Consider consulting with a qualified business attorney if you have legal questions.
How to Start an LLC in Other U.S. States
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