Here are the basic steps you’ll need to take to start a limited liability company (LLC) in Michigan.
A limited indebtedness company ( LLC for short ) is a way to legally structure a clientele. It combines the circumscribed liability of a pot with the flexibility and lack of formalities provided by a partnership or sole proprietorship. Any occupation owner who seeks to limit his or her personal indebtedness for business debts and lawsuits should consider forming an LLC .
here are the steps to start an LLC in Michigan :
1. Choose a Name for Your Michigan LLC
Your LLC ‘s name must be distinguishable from the names of other occupation entities already on file with the Michigan Department of Licensing and Regulatory Affairs. You can check names for handiness by searching the Michigan occupation database. You can reserve a name for six months by filing an application for Reservation of Name with the Michigan Department of Licensing and Regulatory Affairs. You can mail the application or file on-line. The filing fee is $ 25.
Reading: How to Start an LLC in Michigan
Under Michigan law, an LLC name must contain the words :
- Limited Liability Company
- L.L.C., or
Using an Assumed Name
You do n’t have to use your LLC ‘s official legal appoint registered in your Articles of Organization when you do business out in the real populace. rather, you can use an assumed name, besides called a fabricated clientele name, “ DBA ” ( shortstop for doing commercial enterprise as ), or trade wind appoint. To do thus in Michigan, you must register your assume name with the Michigan Department of Licensing and Regulatory Affairs. You register by chain mail by filing a Certificate of Assumed Name. The charge fee is $ 25. The registration is good for five years. For more on read business names, see Nolo ‘s article How to Register a Business diagnose .
2. Appoint a Registered Agent
Every Michigan LLC must have an agent for service of action in the state. This is an individual or occupation entity that agrees to accept legal papers on the LLC ‘s behalf person sues the company. A record agentive role may be a Michigan house physician, a Michigan pot, a alien corporation with a security of assurance to transact business in Michigan, a Michigan LLC, or a foreign LLC authorized to transact clientele in Michigan. The registered agentive role must have a physical street address in Michigan .
3. File Articles of Organization
You can create a Michigan LLC by filing Articles of Organization with the Michigan Department of Licensing and Regulatory Affairs. The articles must include :
- the LLC’s name
- the LLC’s purpose
- whether the LLC’s duration will be perpetual or for a specified period
- the name and address of the LLC’s registered agent
- the effective date of filing the Articles if later than the date of filing, and
- signature and phone number of the LLC’s organizer.
The articles may be filed by mail or on-line. The file fee is $ 50 .
4. Prepare an Operating Agreement
An LLC function agreement is not required by the express of Michigan, but it is highly recommended. The agreement is an inner document that establishes how you will run your LLC. It sets out the rights and responsibilities of the members and managers, including how you will manage the LLC. It can besides help preserve your circumscribed indebtedness by showing that your LLC is truly a separate business entity. In the absence of an operate agreement, state LLC law will govern how your LLC operates .
5. Get an EIN & Comply With Other Tax & Regulatory Requirements
extra tax and regulative requirements may apply to your LLC. These may include the pursuit :
EIN: If your LLC has more than one member, it must have an IRS Employer Identification Number ( EIN ), even if it has no employees. If you form a uninominal LLC, you need an EIN only if your company will have employees or you elect to have it taxed as a corporation alternatively of a sole proprietorship ( neglect entity ). You may obtain an EIN by completing an on-line application on the IRS web site. There is no file fee .
Business Licenses: Depending on its type of business and where it is located, your LLC may need early local and country commercial enterprise licenses. For local anesthetic licenses, hindrance with the clerk for the city or town where the LLC ‘s primary place of clientele is located ( or county if it is in an unincorporated sphere ). For state license data, match State License Search at the State of Michigan web site. For more information, see How to Get a Small Business License In Michigan .
Department of Treasury: If you have employees or will be selling goods and collecting sales tax, you ‘ll need to register with the Michigan Department of Treasury ( DOT ). You can register on-line using the DOT ‘s e-Registration application or by mail. For more data on submit LLC tax registration, check out Michigan LLC Annual Filing Requirements.
6. File Annual Statements
All LLCs doing business in Michigan must file an annual argument with the Department of Licensing and Regulatory Affairs. The report must be filed by February 15 after the class of formation or reservation. however, if you form your LLC after September 30, you do not need to file a affirmation the follow February. For case, if you form your business on November 1, 2020, your first gear annual argument will be due by February 15, 2022 .
The state mails a pre-printed annual statement, BCS/CD-2700, to the LLC ‘s house physician agent at the file position approximately three months anterior to the due date. You can file the report card on-line or by mail. The file tip is $ 25 .
The Pros and Cons of Forming an LLC
While LLCs are a popular choice for newfangled and minor businesses, the entity is not the best option for every enterprise. Before you form your LLC, consider the benefits and drawbacks of the entity .
One advantage of LLCs is that they are relatively simple to form and maintain. The entity provides the owners with express liability protection, pass-through tax, and flexibility in terms of management and profit-sharing. For more information, see Advantages of an LLC .
The downsides are that, compared to a sole proprietorship, you will face more paperwork and fees to start and manage an LLC. In addition, corporations are typically a better fit for businesses that want to attract investors and pursue tax deductions for employee benefits. To learn more, see Corporations and S Corporations vs. LLCs .
Should I form an LLC? If you are barely starting your business or have already been operating as a sole owner, you should consider forming an LLC. LLCs limit an owner ‘s personal liability for occupation debts and lawsuits and offer a lot of tractability when it comes to ownership, management, and taxation of the business. To learn more about LLCs and decide if it is the correctly clientele structure for you, see What is a circumscribed Liability Company ( LLC ) ?
How do I know if my LLC name is available? It is important to make sure that your LLC ‘s name is distinct from the names of other existing businesses on file with the Michigan Department of Licensing and Regulatory Affairs. You can conduct a name search for absolve on the Michigan Department of Licensing and Regulatory Affairs web site to make sure your proposed name is available .
How much does it cost to form an LLC in Michigan?
- The Michigan Department of Licensing and Regulatory Affairs charges $50 for regular service and $100 for priority rush filing.
- It will cost $25 to file a name reservation application if you wish to reserve your LLC name prior to filing the Articles of Organization.
Filing yourself is frequently the cheapest option, but completing all of the forms and filing them yourself can be complicated. Hiring a lawyer is another option, but will frequently cost you hundreds, if not thousands, of dollars in the process. Nolo ‘s Online LLC formation service can complete all of the paperwork and filings for you, with packages starting at just $ 49.00 .
Do I need an operating agreement for my Michigan LLC? Michigan does not require LLCs to have engage agreements, but it is highly recommended to have one. An operating agreement will help protect your limited indebtedness condition, prevent fiscal and managerial misunderstandings, and ensure that you decide on the rules governing your business alternatively of state law by default option. For more information, see The LLC Operating Agreement .
Can I form a single-member LLC in Michigan? For most formation purposes, a Michigan single-member LLC is considered the like as a multi-member LLC. The steps to form a single-member LLC in Michigan are the lapp as those listed above.
Single-member LLCs do have extra tractability when it comes to filing a tax refund. To learn more, see Nolo ‘s article, How Single-Member LLCs Pay Federal Income Tax .
Can I form a professional LLC in Michigan? If you provide a license professional service in Michigan and want to form an LLC, you will be required to form a professional LLC ( PLLC ). Examples of professional services include architects, attorneys, dentists, certified populace accountants, and more. generally, if you provide a servicing that requires you to obtain a Michigan state license before drill, then you are a professional serve. Each member of the ship’s company must be licensed in order to form a PLLC. To learn more about forming a Michigan PLLC, see our article, How to Form a Professional LLC in Michigan .
How do I dissolve my LLC when I’m done? If you reach the charge where it is time to close your business and end all operations, then you will want to properly dissolve your LLC to limit your liability for lawsuits and politics fees. Learn about the steps you will need to take in How to Dissolve an LLC in Michigan .