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Start an LLC in Minnesotta

If you’re looking for a reliable DIY guide for starting an LLC in Minnesota, look no further. Below you’ll find all the information you need to launch your business and handle any associated costs. Follow each step carefully and your LLC will be established and ready to hit the ground running.

That said, the process can be complex, with various filings and costs, so if at any point you need help, you can hire an affordable LLC service – they’ll take care of the paperwork so you can spend more time growing your business.

While LegalZoom and IncFile are by far the most well known and widely-used, a lesser-known LLC service called Northwest delivers incredible customer experiences and overall value. They strike a balance between IncFile and LegalZoom by offering premium services for roughly the same price.

Whether you decide to hire a service or go it alone, follow these steps and your LLC will be prepared to start raking in profits right away.

 

Step 1: Name Your LLC

What’s in a name? Quite a bit, actually. Your business name is your Michigan LLC’s identity, its personality, its reputation. Find a name that sticks in customers’ minds – while conveying your brand qualities – and you’ve struck gold. A unique, memorable name can draw in new customers and keep existing ones coming back.

Your LLC name is going to appear everywhere: business cards, marketing collateral, websites, legal contracts, bank accounts, invoices, directories, and much more. So be sure that it conveys your product, service, brand, and values.

While you can (and should) be creative with your business name, there are certain state requirements that it must follow.

According to Michigan law, your LLC name must include the words “limited liability company,” or the abbreviation “L.L.C.,” “L.C.,” “LLC,” or “LC” and not include the words “corporation” or “incorporated,” the abbreviations “corp.” or “inc.,” or any of the state’s restricted words. On top of that, your name shouldn’t suggest a business purpose other than the one you state on your Articles of Organization.

And you could follow all of these rules carefully, but your name won’t be valid if it’s already in use. It must be distinguishable from every other business name reserved or registered with the Department of Licensing and Regulatory Affairs (LARA). When attempting to distinguish a name, making changes to the following components will NOT be effective:

  • Punctuation and special characters
  • Capitalization and spacing
  • Articles (“a,” “an,” and “the”)
  • Conjunctions (like “and,” “but,” and “or”)
  • Business type designators like LLC, Ltd., Inc., or Corp.

You must add, remove, rearrange, or otherwise alter the name’s key words to make it distinguishable.

For Example

Consider this: your friend Fanny wants to open a flower shop in Lansing, Michigan. The name she wants, Flowers by Fanny, LLC is already in use. So she comes up with a new one: Fanny’s Florals and Design, LLC. This name is similar to the original but includes new words, distinguishing it in the Department of Licensing and Regulatory Affairs’ records.

Determine the Name is Available

Of course, you will only need to make distinguishable changes if your name is already taken. Don’t make the mistake of ordering business cards, creating advertisements, and using a name on documents like the Articles of Organization without first confirming it’s available. Use the Department of Licensing and Regulatory Affairs’ Business Entity Search to see if there’s an existing business using your desired name.

Maybe you pegged a distinguishable name right away, or maybe it took some modifications, but either way, once you have a unique name, you can lock it down by filing a name reservation.

Optional: Name Reservation

You may have fallen in love with a particular name, but still have some preparation and paperwork to sort out before starting your LLC, and you’re worried that someone will swipe it in the meantime. To calm your nerves, you can reserve that name in Michigan for a total of 180 days.

Think about Fanny. After making her name distinguishable, she’s ready to make it official, but if she’s waiting on some paperwork to start her LLC, she can place a hold by filing an Application for Reservation of Name and paying a $25 fee either online or mailing a hard copy to:

Michigan Department of Licensing and Regulatory Affairs

Corporations, Securities & Commercial Licensing Bureau 

Corporations Division 

P.O. Box 30054

 Lansing, MI 48909

You can also deliver your completed form in person at 2501 Woodlake Circle, Okemos, MI. Standard processing time for hard copy submissions is 3-5 business days, but if you need to claim your name right away, you have four expedited service options for various additional fees:

  • 24 hours – $50
  • Same Day – $100
  • Two hours – $500
  • One hour – $1,000

When requesting an expedited processing option, you must include an expedited service form.

 

Step 2: Choose a Resident Agent

Fanny’s LLC is quickly taking shape, and if it’s going to operate in Michigan, she’ll need a go-between for state and legal communications. This is called the resident agent.

A resident agent is a key component of your budding LLC, handling all of its sensitive communication with the state so you don’t have to. But maintaining an agent isn’t just a convenience, it’s required. According to Michigan Statute 450.4207, “each domestic limited liability company and foreign limited liability company authorized to transact business in this state shall have and continuously maintain […] a registered office that may, but need not be, the same as its place of business [and] a resident agent.” And it goes on to define a resident agent as “an agent of the company upon whom any process, notice, or demand required or permitted by law to be served upon the company may be served.”

Taxes, lawsuits, maintenance requirements, and more – the resident agent takes care of it all. If you had to do this yourself, it would pile additional tasks onto your already-full plate. Plus, your agent makes your business available to receive documents even when you’re out of town or away from the office. This is especially important if your physical office is outside Michigan.

Now for the practical application, the “how-to.” Fortunately, declaring a resident agent is easy. All you need to do is list the agent’s name and address on your Articles of Organization and that information will become part of your LLC’s public record.

You have two options for who can serve as a resident agent: an individual or a company.

Individual as Resident Agent

You may think that an individual resident agent would need specialized training or experience, but this isn’t the case. Anyone can serve as your resident agent, as long as they are a Michigan resident and have a physical address in the state. You can even serve as your own LLC’s agent, provided you meet these requirements.

Third parties like attorneys, accountants, or consultants can be good options, but friends and family are valid choices too. You can even appoint yourself, provided you meet these requirements and don’t mind the additional responsibilities.

Resident Agent Service

It can be a lot easier, though, to use an LLC formation service like IncFile or Northwest Registered Agent, so we highly recommend it. Not only will they take care of business formation requirements, but they’ll also include a free resident agent service. Or, if you’d rather start your Michigan LLC on your own, you can use a national resident agent service to cover your agent duties.

During the life of your LLC you may, at some point, need to change your resident agent. Perhaps you want to switch from an individual to a professional service, or maybe your existing resident agent resigns. Either way, you’ll want to make the change as soon as possible because operating without an agent on file can lead to administrative dissolution.

 

Step 3: File the Formation Documents with the State

This is where the LLC formation process kicks into high gear. Let’s check back in with Fanny.

She’s reserved her unique business name, designated a resident agent, and she’s ready to get her LLC off the ground. It’s time for Fanny to take on the most important LLC document: the Articles of Organization. This filing creates a record for Fanny’s Florals and Design, LLC with the Michigan Department of Licensure and Regulatory Affairs, giving it authorization to commence business in the state.

You can file your Articles of Organization online, by mail, or in person, so whether you prefer the expediency of electronic filings or the tactile reliability of a paper form, there’s an option for you. Each of these methods comes with a $50 filing fee.

Online Filing

Complete the digital form found on LARA’s online filing system. You can complete the entire process, including payment and expedited requests, through the filing portal.

Mail

Download and complete the paper form, then mail it – with your payment – to:

 Michigan Department of Licensing and Regulatory Affairs

Corporations, Securities & Commercial Licensing Bureau 

Corporations Division 

P.O. Box 30054

 Lansing, MI 48909

In Person

If you feel like going out for a drive, hand-deliver your form as part of your weekly errands at 2501 Woodlake Circle Okemos, MI.

No matter which route you take, the standard processing time is 3-5 business days. In a hurry? You have four different expedited processing options with varying turnaround times and additional fees:

  • 24 hours – $50
  • Same Day – $100
  • Two hours – $500
  • One hour – $1,000

When filing online, you can choose an expedited option by checking the appropriate box, but if you’re submitting a hard copy, you will need to include an Expedited Service Request.

 

Step 4: Create an Operating Agreement

The operating agreement is the framework that holds up an LLC, the vital underpinning that establishes processes for its procedures, activities, and conduct. Essentially, it serves as your company’s bylaws.

Your LLC is not technically required to adopt an operating agreement in Michigan. There’s no state law that mandates it. But that doesn’t mean it’s in your best interest to go without one. Creating an operating agreement doesn’t just entrench your LLC’s procedures, but it protects your assets in legal disputes and legitimizes your company in front of banks, courts, government agencies, and more, so we strongly recommend having one.

Let’s say our friend Fanny sells a percentage of her company to two other owners. Her operating agreement could stipulate how the LLC’s assets would be distributed among them in the case of dissolution. But if she decides to maintain sole ownership, the agreement could be used in court as evidence that the LLC’s assets are separate from her personal ones. These are just two examples, but the operating agreement governs everything from member duties to tax structure.

If you’ve decided to draft an agreement, there are two ways to go about it:

  1. Write it yourself. Don’t be intimidated by this option. There are plenty of free online templates that serve as helpful guides. You can create an effective document from most of the templates out there, but we recommend this one, courtesy of Northwest Registered Agent. It’s got everything you need to draft a solid agreement.
  2. Hire an attorney. If you want to be absolutely sure that you don’t miss any important details, an attorney can write or review the agreement for you, ensuring that it complies with state law, includes all necessary information, and avoids the state’s default laws.

What are default laws?

Each state has its own set of generic, baseline laws for how LLCs should operate. These laws, however, only govern matters not included in your operating agreement. Take dissolution, for example. If your LLC ever dissolves, your operating agreement would determine what happens to its remaining assets and debts. But if you fail to include it in the agreement, the state will make that decision for you.

Because default laws are broad and not tailored to your specific business, they often aren’t in your LLC’s best interest, so it’s best to avoid them by being as comprehensive as possible in your agreement.

 

Step 5: Get an EIN

There’s simply no way to avoid taxes. In fact, it’s illegal to try, so don’t do it.

Federally, LLCs are classified as “pass-through” entities, businesses that don’t file corporate tax returns, but whose owners include income and losses on their individual returns. Still, there are certain circumstances that require LLCs to pay federal taxes, like classifying as a corporation or partnership, hiring employees, or selling merchandise. So, in Fanny’s case, if she plans on hiring additional florists and selling bouquets, she will need to apply for an EIN.

The Employer Identification Number (EIN) is a nine-digit number that the IRS will use to identify your company’s tax accounts, so if you pay any business taxes, it’s extremely important to have one. Click the “Do I need an EIN?” link on this page to see if you fall into this category. If so, apply for an EIN one of three ways:

Online

Need to get this done quick? File online – it’s by far the most efficient method. You can only complete the process between 7 a.m. and 10 p.m. EST, Monday through Friday, but you’ll receive your number immediately upon finishing the digital form. Keep in mind that you will need to provide a valid individual taxpayer number (like a Social Security Number) as part of the process.

Fax

You might prefer the feel and security of a paper form. In this case, download Form SS-4, complete it, and fax it to (855) 641-6935. You will receive your EIN within four business days.

Mail

Or, there’s always trusty postal mail. However, this is the slowest option, as processing typically takes around four weeks. If that doesn’t deter you, fill out Form SS-4 and send it to:

Internal Revenue Service Operation

Attn: EIN Operation

Cincinnati, OH 45999

Okay, so you’ve filed the Articles of Organization, designated a resident agent, adopted an operating agreement, and filed for an EIN. Time to start doing business, right? Sorry, there are a couple of additional steps you may need to take first. But don’t worry, you’re almost there!

 

Step 6: Taxes, Licensing & Income Reporting

For all intents and purposes, most LLCs will be official after completing all the prior steps. Still, it’s important for business owners like Fanny to keep looking ahead, as there are certain maintenance requirements to keep a Michigan LLC running smoothly and in good standing with the state.

Before you start doing business, create a plan for the following potential LLC requirements:

Taxes

Federal Taxes

As mentioned earlier, LLCs are almost always classified as “pass-through” entities, which means that they don’t pay income taxes directly to the federal government. That responsibility falls instead on the owners, who must include business income and losses on their personal 1040 tax returns and/or Schedule C. LLCs are flexible with tax structure, so you can choose to have yours taxed like a corporation instead. In this case, it would need to file a separate corporate tax return.

State Taxes

Like federal income taxes, Michigan’s income taxes pass through to LLC owners’ personal returns (unless the LLC is classified as a corporation for tax purposes). And you won’t have to worry about paying a “franchise” or “privilege” tax either, because Michigan doesn’t require them.

Additional Taxes

This doesn’t mean, however, that your LLC won’t have any state taxes. Do you hire employees? If so, your LLC will owe a Withholding Tax and Unemployment Tax. Do you sell any merchandise? Then your LLC will be responsible for a Sales Tax and/or Use Tax. Register for any of these taxes through the Department of Labor and Economic Opportunity either online or by mail. You should submit this form at least six weeks before starting your business.

Plus, depending on your LLC’s location, it may owe a local tax to its city, municipality, or county. Consult your local government’s website to find out.

Licensing

The Articles of Organization may have already made your business legitimate, but your LLC might still need to obtain a license before doing business. This all depends, however, on the type of business you run.

Our friend Fanny, for example, may need to obtain a Nursery Stock Dealer & Grower License from the Department of Agriculture before opening her flower shop’s doors. And if she wanted to serve pastries to her customers, she would need a Food Service License too. If you’re unsure whether your LLC will need any particular licenses, use the Michigan license search or alphabetical license listing.

Certain cities and counties require their own specific licenses on top of any state ones, so you should also check with your local government.

Reporting

Once you’ve taken all the steps to start your LLC, you’ll be off and running, making deals and growing the company. But when you’re rolling along and things are moving 100 miles per hour, don’t forget that Michigan requires all of its businesses to submit one important recurring filing: the Annual Statement.

Mark it on your calendar, your planner, or in your phone – your LLC will need to file an Annual Statement and pay the requisite $25 fee by February 15. The state will send your resident agent a form 90 before the deadline so you have plenty of time to complete it.

When you’ve finished the form, mail or hand-deliver it to the addresses listed in the Articles of Organization section. And don’t forget! If you fail to file on time, your LLC will lose its good standing with the state. Fail to file for two years and your business name will become available for public use.

And we’ve come to the end. It’s a long process, and not always easy, but the reward is well worth it. If you’ve made it this far, congratulations! Your Michigan LLC is ready for takeoff. So go ahead and start with that big sale, promotional campaign, or business deal. Maybe you’ll see Fanny out there in the business world, selling her beautiful floral creations.

 

Need Help Creating Your LLC?

If you even skimmed this guide to look over the steps, you likely got a sense of how many moving parts there are when starting an LLC. Can you do it all yourself? Absolutely. We have complete confidence in you.

But if you’d rather hand it off to someone else and not have to worry about it again, we recommend using an LLC formation service. This way, you can go about your other business responsibilities with the confidence that everything will be submitted correctly and punctually.

Plus, an LLC formation service can handle maintenance items like Annual Reports, so you can take them off your to-do list. And on top of that, many services also provide a resident agent.

Sound good? Whether you know that you’ll need an LLC service or you’re just exploring your options, take a look at IncFile and Northwest Registered Agent. These are two of the top services available. And you can take our word for it because we’ve done a whole lot of research on the topic.

 

Compare the Top LLC Services

Since you may be new to the LLC formation process, you might also be unfamiliar with IncFile and Northwest. As a reference point, they provide very similar services to the industry giant, LegalZoom. Check out our comparison guides for more information:

IncFile vs LegalZoom or Northwest Registered Agent vs LegalZoom