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Start an LLC in MichiganStarting a business in Michigan can be an exciting time. Before selling your product or service though, the nuts and bolts of licenses, registrations, and taxes must be completed.

The guide below will show you the DIY process of forming an LLC in Michigan. However, you can also use an online LLC service handle the paperwork for you. We reviewed and ranked the 7 best available.

 

The Top 2 Worth Considering:

  • Northwest Registered Agent is a great option if you are looking for premium customer support.
  • IncFile is ideal if you are looking for the best pricing with excellent features.

 

Step 1: Name Your LLC

Selecting a name for your Michigan LLC is a first step, yet a very important one. A name that is unique and easy to remember is helpful in finding potential clients or retaining customers.

The name should indicate the product or service. It should also follow guidelines set forth by the state of Michigan.

The name of an LLC will likely appear on business cards and stationary, marketing materials, a website, legal contracts, business bank accounts, invoices and/or a building directory.

Michigan law requires that the business name includes the words/abbreviations “Limited Liability Company,” “LLC,” “L.L.C.,” “LC,” or “L.C.” It may not contain the words/abbreviations “corporation,” “incorporated,” “corp.,” or “inc.” In addition, the name may not contain any words or phrases that imply that the LLC is formed for any other reason except the purpose stated on the Articles of Organization. This includes words or phrases that imply an association with the government, a professional corporation, or bank. For a list of prohibited words, see the Corporation Division’s Restricted Words List.

The LLC’s name must be different than other names already registered. Distinguishing features include the following:

  • The name has a different order of letters or numbers from other names already in existence.
  • The name sounds the same but is spelled differently than other names.

*The addition or deletion of punctuation is not considered distinguishable.

For Example

Let’s imagine that someone is considering opening a flower shop in Lansing, Michigan. The name she is considering, Flowers by Fanny, LLC is already in use. Instead, she decides to legally name her business Fanny’s Florals, LLC.

Determine the Name is Available

Following the selection of a name but before filing the Articles of Organization, check to ensure that your name is unique on the Corporations Division Database of the Michigan Department of Licensing and Regulatory Affairs (LARA). Searching in other places, such as online, is also a good idea.

After you have determined that your chosen name is “distinguishable,” the name can be reserved in order that you have exclusive rights for 180 days.

Optional: Name Reservation

Sometimes a situation may arise where an individual wants a particular name but needs time to organize his/her company before filing paperwork to create an LLC. In this case, a name can be reserved for 180 days in the state of Michigan.

The downside is that it does cost $25 for the reservation and is not refundable. The reservation is renewable for the same fee and amount of time.  A Business Name Reservation Application can be filed either through hard copy or online.

Standard processing is between three and five business days. Expedited Service is also available, and the fees are as follows:

24 hours – $50

Same Day – $100

Two hours – $500

One hour – $1,000

Submit the reservation, using one of the following methods:

Online

Use the online form through the Department of Licensing and Regulatory Affairs.

Mail

To access a hard copy of the Business Name Reservation Application, click here. If requesting expedited service through the mail, an expedited service form must be included. Send to the following location:

Michigan Department of Licensing and Regulatory Affairs

Corporations, Securities & Commercial Licensing Bureau

Corporations Division

P.O. Box 30054

Lansing, MI 48909

In Person

To access a hard copy of the Business Name Reservation Application, click here. If requesting expedited service through the mail, an expedited service form must be included. Deliver to the following location:

2501 Woodlake Circle

Okemos, MI

 

Step 2: Choose a Resident Agent

Every LLC in Michigan is required to have a resident agent. This agent can be an individual or a company.

The role of the resident agent is that of a contact person between the LLC and the state. As stated on LARA’s website, “a resident agent is someone who is appointed by the company to receive any documents, notices, or demands served upon the company.”

Simply put, the process agent receives communications or documents from the state involving such things as taxes or lawsuits and communicates them to the LLC.

Some may wonder why a Michigan resident agent is necessary. The importance of the agent is to ensure that someone is always available to receive important documents even if the business owner leaves the office, goes on vacation, or is otherwise away. Also, having a resident agent is especially important if a physical office does not exist in Michigan.

The owner of the LLC can designate a resident agent on the Articles of Organization application.

Individual as Resident Agent

Most importantly, the individual must be a resident of the state of Michigan. An LLC cannot act as its own resident agent. However, a member or manager can act as the resident agent on behalf of the LLC.

Still, using a third party ensures that nothing falls through the cracks. The third party can be an accountant, an attorney, or even a friend. The agent must have a physical and mailing address in Michigan.

Resident Agent Service

If using a service, the resident agent must be a business or professional. We recommend either using an LLC formation service (like Incfile or Northwest Registered Agent) which gives you a free resident agent or ordering a resident agent service by yourself if you choose to DIY your Michigan LLC formation.

 

Step 3: File the Formation Documents with State

Let’s assume that fictional Fanny has selected both the name for her LLC and the resident agent. She is ready to complete the paperwork (called the Articles of Organization) that actually creates Fanny’s Florals, LLC in Michigan.

This step can be completed online, mailing a hard copy, or delivering in person. The filing cost is $50, and the processing time is three to five business days.

Expedited Service is available, and the fees are as follows:

24 hours – $50

Same Day – $100

Two hours – $500

One hour – $1,000

 

When you are ready, the document can be submitted using one of the following three methods.

Online

Use the online form through the Department of Licensing and Regulatory Affairs.

Mail

To access a hard copy of the Articles of Organization Application, click here. If requesting expedited service through the mail, an expedited service form must be included. Send to the following location:

Michigan Department of Licensing and Regulatory Affairs

Corporations, Securities & Commercial Licensing Bureau

Corporations Division

P.O. Box 30054

Lansing, MI 48909

In Person

To access a hard copy of the Business Name Reservation Application, click here. If requesting expedited service through the mail, an expedited service form must be included.Deliver to the following location:

2501 Woodlake Circle

Okemos, MI

 

Step 4: Create an Operating Agreement

An operating agreement in the state of Michigan is recommended though not required. The agreement is a contract that defines the operations of the LLC, includes terms and conditions, states the responsibilities of its members, and ensures legal protections of its members.

All owners of the LLC must be in agreement of the terms in the agreement and sign before a notary public.

The operating agreement is useful for both multi-member and single-owner LLCs. In both cases, the agreement provides protections.

For example, in the case of the multi-owner LLC, the terms can stipulate what should happen if a death or divorce occurs among one of its members. In the case of the single-owner LLC, the agreement could be used in court as evidence that the LLC is separate from the individual owner.

The operating agreement can be created in two ways. Some individuals may choose to write the agreement on their own, using an online template. In this case, forms are available that are specific to state. Be sure to use the correct multi-member or single-member form.

The alternative is hiring an attorney to create the document. The benefits of using an attorney are ensuring the document doesn’t exclude any important information, adheres to state law, and invalidates default provisions that may not be what you wish.

 

Step 5: Get an EIN

An EIN is an Employer Identification Number. Anyone who runs their business as a corporation or partnership must file for this 9-digit number in order to identify the tax accounts of a business. The number can be applied for in one of the following three ways:

Online

Applying online is the quickest method. The process can be completed between 7 a.m. and 10 p.m. EST, Monday through Friday. When the form is completed, the information will be immediately validated and a number issued while you are still online. In order to apply online, a valid individual taxpayer number, such as a Social Security number, is required.

Fax

Form SS-4 can be downloaded, completed and faxed to 855-641-6935, twenty-four hours, seven days per week. The EIN will be provided within four business days.

Mail

If either of the above methods are unavailable, Form SS-4 can be mailed, though processing will take approximately four weeks. The form can be mailed to the following address:

Internal Revenue Service Operation

Attn: EIN Operation

Cincinnati, OH 45999

Think you’re ready to open up shop now? Guess again!

 

Step 6: Taxes, Licensing & Income Reporting

Businesses like Fanny’s Florals, LLC may be official after completing the above steps, but it is important not to overlook a few critical details.

Taxes

On the federal level, most LLCs do not pay taxes directly to the government. Instead, they report income and losses on the owner’s personal 1040 tax returns. Schedule C is often used for reporting. Unless the LLC chooses to be taxed as a corporation, a single-member LLC is taxed as a Sole Proprietorship and a multi-member LLC is taxed as a Partnership.

Similarly, most LLCs will pay state tax on pass-through income via their personal income tax returns. The exception is if an election is made to tax the LLC as a corporation.

Unlike some states, Michigan does not require LLCs to pay a franchise or privilege tax.

If your LLC has employees, you will need to pay a withholding and unemployment tax. Businesses that sell merchandise will need to pay a sales and/or use tax. In order to register for any of the above taxes, you will need to register with the Michigan Unemployment Insurance Agency either online or through the mail. It is recommended that the form be submitted at least six weeks prior to opening the business.

Finally, an LLC may need to file and pay a local tax to a city, municipality, or county.

Licensing

Licenses and/or permits may be needed before a business can begin operations.

A professional license is required by a number of occupations, all of which are listed online, on the LARA Regulated/Licensed Professions page. Requirements and fees vary according to the license.

Licenses may also be required on the local level. Check the website of the local municipality where your LLC will be located.

Reporting

After an LLC is formed, an annual report must be filed with the state of Michigan by February 15 each year. If the LLC is formed after September 30, an annual report is not required for that calendar year. The filing fee is $25.

Like other documents necessary to LLC formation, the processing time is three to five days with expedited processing options available.

A form will be sent to the LLC’s resident agent approximately 90 days prior to the deadline. After completing, the form can be mailed to the following address:

Michigan Department of Licensing and Regulatory Affairs

Corporations, Securities & Commercial Licensing Bureau

Corporations Division

P.O. Box 30768

Lansing, MI  48909

It can also be delivered in person to the following address:

2501 Woodlake Circle

Okenos, MI

Another option is to file the report online up to 90 days prior to the deadline.

If annual reports are not filed, the LLC risks losing its good standing status, and its name will be available for use by another business entity.

When all of the mechanics of setting up an LLC in Michigan have been completed, someone like Fanny can get down to the business of setting up a website, creating a logo…or purchasing flowers!

 

Need Help Creating Your LLC?

We recommend LLC formation services because it allows you to knock off an important thing off your checklist so you can focus all your energy on actually starting a business.

Can you do it yourself? Absolutely.

However, a service that forms an LLC for you will help with ongoing maintenance and keep you notified of any requirements you should adhere to.

As we mentioned earlier, IncFile and Northwest Registered Agent are the top LLC services available. If you’re not familiar with them, as a point-of-reference many of our readers like to compare them to the most well known LLC service, LegalZoom.

IncFile vs LegalZoom or Northwest Registered Agent vs LegalZoom