How to form an LLC in Michigan

If you want to start your own business in Michigan, a limited liability company (LLC) is one option. A Michigan LLC offers a range of benefits, including limited liability protection, as you might assume from the name.

This guide will cover some helpful things to know about creating an LLC in the state of Michigan.

Key takeaways

• Forming a Michigan LLC involves multiple steps, including choosing a business name and filing the Articles of Organization.
• The filing fee for new Michigan LLCs is $50, but additional fees may be required for expedited LLC formation.
• Block Advisors’ Business Formation service can simplify the entire process of setting up an LLC in Michigan.

What is an LLC?

LLC stands for “limited liability company.” It is a specific type of business entity structure. The defining characteristic of an LLC is limited liability protection. It generally protects its owners from personal responsibility regarding the company’s debts or liabilities. In other words, owners typically don’t have to worry about losing their personal assets if the LLC gets into trouble.

LLCs also benefit from being able to choose their taxation route. Many LLC owners opt to select pass-through taxation. LLCs who go this way don’t have to pay taxes directly on their profits. Instead, the profits and losses pass through to LLC members, who report them to the Internal Revenue Service (IRS) on their personal tax returns.

The LLC formation process is reasonably straightforward, especially compared to forming a C Corporation. However, it still involves filing certain documents, like Articles of Organization.

Benefits of forming an LLC in Michigan

Michigan business owners can enjoy various benefits by setting up an LLC. In addition to general LLC benefits, like limited liability protection and pass-through LLC taxes, other advantages are unique to the Great Lake State.

Michigan has relatively low filing fees when forming an LLC. You won’t have to pay high fees when submitting documents to the Michigan Secretary of State. Nor will you have to worry about a costly annual state tax to accompany your company’s annual report.

Michigan also has many helpful small business resources to aid new entrepreneurs with various aspects of LLC formation. Moreover, many of the state’s cities offer excellent conditions for starting a small business. Detroit, for instance, has among the highest opportunities in the United States for new retail business storefronts.

How to start a Michigan LLC

The process of LLC formation varies from state to state, so it’s important to be aware of the specific steps involved in setting up your Michigan LLC. This section covers a few important parts of the process. From picking an LLC name to filing your documents with the Michigan Secretary of State, keep reading to learn more about how to create an LLC in Michigan.

1. Choose your Michigan LLC name

A unique and attention-grabbing name can help your Michigan LLC succeed. However, certain naming rules must be considered during this part of LLC formation.

As in many other states, the Michigan Secretary of State lays out the relevant naming guidelines for small business owners to keep in mind:

• Must include either the phrase “limited liability company” or one of its associated abbreviations, such as LLC or L.L.C.
• Must be unique from any other existing business name in the state of Michigan
• Should not contain a word or phrase indicating it is organized for a purpose other than the one listed in the Articles of Organization
• Should not contain any terms or abbreviations that could be confused with a governmental agency, like the CIA, FBI, or Treasury
• Should not contain certain restricted words like “bank” or “lawyer” unless you have the relevant legal documents and licenses

You can search to confirm your desired name is available using the Business Entity Name search on the Michigan Department of Licensing and Regulatory Affairs website.

Do you already have the perfect LLC name but can’t register immediately for whatever reason? In this case, you can reserve your name by filling out an Application of Reservation of Name form and paying a name reservation filing fee.

2. File your LLC Articles of Organization

To make your Michigan LLC an official business entity, you must file Articles of Organization. This document contains basic information about the business.

Specifically, your Articles of Organization should include the following:

• LLC name
• Registered agent contact information
• LLC purpose
• LLC duration — in many cases, you can simply write that the duration is indefinite, but if you have a planned end date for your company, insert it here
• Contact info and signature of the person who started the LLC

Note that you may need to provide additional information depending on the specific nature of your LLC. A foreign LLC, for example, may have to give more details about its planned operations when filing the Articles of Organization and provide additional documents, like a Certificate of Authority.

Once the form is complete, you can submit it to the Michigan Corporations Division. You’ll also need to pay a filing fee to start an LLC. Subject to change, the standard state fee is $50. There is another optional fee for expedited service if you’re in a hurry.

3. Choose a Registered Agent service

Along with filing the Michigan Articles of Organization with the Secretary of State, you’ll also need to decide on a registered agent for your Michigan LLC. A registered agent is either an individual or a business officially designated to receive the service of process, legal documents, and tax papers on behalf of your Michigan business.

Also called a resident agent, this point of contact must generally be available at a registered office address during business hours. They also must fulfill other requirements, like being over 18 and a state resident or licensed to do business in Michigan.

Every LLC needs a registered agent, whether a single or multi-member LLC. Many entrepreneurs choose to hire a registered agent service. Business owners can rely on professional services to carry out the duties of a registered agent on their behalf.

4. Prepare an LLC Operating Agreement

Although this step is optional, it’s strongly recommended. Every LLC owner should consider creating an LLC operating agreement. This document sets out the rules and ways your Michigan LLC will operate.

Operating agreements generally include details regarding each LLC member’s contributions and obligations, distribution of profits and losses, procedures for if a member leaves or a new member needs to be added to the company, and so on. This document can help if any disputes or disagreements arise and may aid in safeguarding your personal assets and liability protection.

You don’t need to file your operating agreement with the Michigan Secretary of State. Instead, ensure all members agree and store it safely, ready for consultation.

5. Obtain an Employer Identification Number

Your Michigan LLC will also need an Employer Identification Number or EIN. Many people liken an EIN to a social security number issued by the IRS for your business. You can apply for an EIN online on the IRS website.

An EIN is vital to many common business actions, such as:

• Opening a business bank account
• Getting a business credit card
• Acquiring certain business licenses
• Paying various types of LLC tax
• Hiring employees

6. Maintain your Michigan LLC

After LLC formation is complete and all the relevant documents have been filed, you must maintain your Michigan LLC.

In Michigan, LLC owners are required to file an annual report. Along with this annual statement, you’ll need to pay a fee of $25 for a standard LLC or $75 for a professional limited liability company (PLLC).

A note on BOI reporting

As of January 2024, many small businesses must submit a Beneficial Ownership Information (BOI) report to the FinCEN (Financial Crimes Enforcement Network). This new requirement was implemented as part of the Corporate Transparency Act to prevent financial fraud in the U.S.

If your business was formed under state law by filing with a secretary of state or similar office, you likely must submit a BOI report. The report requires you to include information about your company, including its name, address, and beneficial owners. Qualifying small businesses must initially file the report one time. If company information changes in the future, a business may be required to file an updated report.

Companies have 90 days to submit their first report after being registered, which is reduced to 30 days starting in 2025. It’s critical to submit your report on time, as willful failure to file a BOI report may result in serious penalties, including fines and even imprisonment.

Get help forming your Michigan LLC

Setting up a Michigan LLC involves several steps, including filing forms, paying fees, and following guidelines to maintain your status. It’s important to note that laws vary from state to state. Be sure to do your homework when investigating if becoming an LLC is right for you and your company. It’s not a bad idea to consult an attorney who can help you evaluate all relevant aspects of your unique situation.

If navigating this journey alone sounds unpleasant, Block Advisors has your back. Our Business Formation service can help you form your LLC quickly – getting started takes less than ten minutes. Let us assist with your LLC filing process, from choosing a business name to filing your Articles of Organization. You can also rely on Block Advisors expertise to simplify other parts of your small business to-do list. From tax preparation to bookkeeping and payroll – we can help you save time and money as you grow your small business.

This article is for informational purposes only and should not be construed as legal advice. You may want to seek the advice of an attorney to evaluate all relevant considerations.

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FAQs

How much does it cost to start an LLC in Michigan?

You’ll have to pay a minimum filing fee of $50 to file your Articles of Organization and set up your LLC. Additional optional fees apply if you need expedited service.

How do I set up an LLC in Michigan?

First, choose a name for your LLC. You’ll also need to designate a registered agent, file Articles of Organization with the Secretary of State, and obtain an EIN  from the IRS.

Does Michigan require an operating agreement for LLCs?

No, state law in Michigan does not require you to have an LLC operating agreement. However, creating one is still recommended. It can prove useful when resolving disputes or dealing with tricky situations.

How do I form a single-member LLC in Michigan?

To form a single-member Michigan LLC, simply choose an available name for your business and then file the Articles of Organization. You’ll also need a registered agent for your company.

What is the difference between an LLC and a corporation?

LLCs and corporations are different types of business entities with different liability levels and taxation structures. LLCs benefit from lower maintenance requirements and can choose how they are taxed.

What taxes do I need to pay for a Michigan LLC?

It depends on the precise type of LLC you’re running and the type of work you do. You may have to pay various types of taxes, such as federal income, state, sales, etc.

How many members can a Michigan LLC have?

There’s no limit to the number of members a Michigan LLC can have – multimember LLCs are allowed. However, an LLC must have at least one member.

How long does it take for an LLC to be approved in Michigan?

Typically, online filing will take up to 10 business days to process your Articles of Organization. However, you can pay for expedited service and file your LLC on the same day.

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