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by Mike Vestil 

How Much Does Starting An LLC In Michigan Cost?

Starting a business in Michigan can be tricky. Being informed about LLCs' legal and financial aspects can help make the process smoother.

In this guide, I'll go through all the steps of starting an LLC in Michigan, helping you understand the legal and financial requirements and the various costs you'll need to be aware of.

The Cost Of Starting An LLC In Michigan

It's easy to get the proper permission and receive a Certificate of Authority with Form 760. Plus, registering in this great state only costs $50!

Starting An LLC In Michigan: Lara’s Form 760

If you plan to do business outside the State of Michigan, you need Form 760, the "Application for Certificate of Authority." This form permits the Michigan Department of Licensing and Regulatory Affairs (LARA) for your company to conduct business outside the state's boundaries. The application must be filed with LARA before any transactions can occur outside the state.

The Requirements For Obtaining Form 760

To obtain a Certificate of Authority, your company must meet specific requirements set by LARA. First, all LLCs must have at least one member who resides in the State of Michigan. Additionally, all LLCs must have a registered agent in the State of Michigan and be available during regular business hours. Finally, all LLCs must file an annual report with LARA every year on or before April 15th or face penalties and possible dissolution.

Filing Your Application And Paying Fees

Once you've met all these requirements, you can file your application with LARA and pay any applicable fees. Once your application is approved, you'll receive a Certificate of Authority from LARA that authorizes your company to conduct business outside the state's boundaries. The application fee for filing Form 760 is just $50—a small price to pay for being able to do business outside the State of Michigan.

Steps To Starting An LLC In Michigan

Here are the main steps to consider.

File With The State Of Michigan

The first thing you must do when starting a Michigan LLC is to file the Articles of Organization with the Michigan Department of Licensing and Regulatory Affairs (LARA). This document includes detailed information about your business, including its name, purpose, registered agent, registered office address, and members/managers. Once filed, you will receive confirmation that LARA has created your LLC.

Obtain Required Licenses & Permits

Depending on the type of business you are starting, you may need to obtain additional licenses or permits from either federal, state, or local authorities before you can begin operating legally in Michigan. Some examples include food service establishments needing to obtain Food Service Establishment Licenses from their local health departments, retailers needing Sales Tax Licenses from the Department of Treasury, and motor vehicle dealers needing Dealer Registration Certificates from LARA’s Corporations Division. Be sure to do research ahead of time so that you know which licenses & permits apply to your venture!

Register For Taxes

You will need to register for taxes with both federal authorities (IRS) and state authorities (Michigan Department of Treasury). This registration process involves obtaining Employer Identification Numbers (EINs) from both agencies as well as applying for numerous tax accounts, including corporate income tax accounts (Michigan Corporate Income Tax Account), sales tax accounts (Michigan Sales Tax Account) & withholding tax accounts (Michigan Withholding Tax Account). Once complete, these registrations will allow you to file taxes each year with both agencies correctly and accurately.

Maintaining Compliance

After officially forming your LLC in Michigan, you must comply with all applicable laws and regulations. Essentially businesses are required to file a yearly statement each February 15th; failure to do so could result in late fees or penalties from the state government. As such, it’s essential to stay informed about annual filing requirements and due dates.

The Benefits Of Starting An LLC In Michigan

Michigan offers several benefits to those who set up LLCs within its boundaries. Below are some of the most attractive features that make starting and running an LLC in Michigan more attractive than setting up a business elsewhere:

  • Tax Advantages: Because the state does not impose any corporate or personal income taxes on LLCs, you’ll find that your profits will be higher with less taxation. Additionally, no franchise or capital gains tax is imposed on businesses operating as LLCs in Michigan.
  • Easy Formation Process: All it takes to form a new LLC is filing Articles of Organization with the state and paying associated fees, which are pretty low compared to other states. This makes it easy for entrepreneurs to establish their businesses to start earning profits immediately and quickly.
  • Protection From Personal Liability: If you're running a small business as an individual entrepreneur, you may be personally liable for any debts or obligations incurred by your company; however, forming your business as an LLC provides protection from such liabilities and allows you to focus more on growing your business rather than worrying about potential litigation due to unpaid debts or other financial issues.
  • Flexible Management Structure: An LLC has the flexibility to choose between different types of management structures depending on what works best for the company at any given time; this means that if needed, you can switch between member-managed and manager-managed configurations at any point during the life cycle of your business.

Choosing The Perfect Business Name For Your Michigan LLC

Depending on your chosen name, additional steps may need to be taken before your name is approved by the Michigan Department of Licensing & Regulatory Affairs (LARA). When selecting your company’s moniker, here’s what you need to consider.

Including “LLC” Or One Of Its Abbreviations

When choosing a business name, make sure it clearly states that you are an LLC. This will help avoid confusion with other businesses and prevent potential legal issues. The most common way of doing this is by including “LLC,” “L.L.C.,” or “Limited Liability Company” somewhere in your name. For example, if someone wanted to call their business “ABC Services,” they could include one of these terms and instead call it “ABC Services LLC” or “ABC Services Limited Liability Company.”

Avoiding Words That Could Be Mistaken For Government Agencies

The State of Michigan has regulations against using certain words in business names, such as a bank, attorney, and university, as they could be mistaken for governmental agencies and require additional qualifications before being approved by LARA. Check their list of restricted words before settling on a choice so your application isn't delayed due to oversights.

Before naming your LLC in Michigan, check it against LARA's search portal first to see if it is available. Doing this beforehand will save time, frustration, and potentially money if you have already incorporated your business with a chosen name, only to find out later that someone else has already claimed it.

What You Need To Know Before Registering Your LLC

Before registering your LLC in Michigan, you must decide how your company will be managed. Specifically, will it be manager-managed or member-managed? 

A manager-managed LLC allows non-owner members to make decisions on behalf of the company, while a member-managed structure requires unanimous consent from all members when making decisions. However, don’t let this decision stop you from getting started - you can always change it later.

Another important step is researching potential names for your company by using the State of Michigan Business Entity Search Tool and considering Trademark laws if applicable. Next, when completing Form 700 (Articles of Organization), you must include information about your business, such as its name & address; its registered agent; the management structure; purpose; dissolution date (if applicable); filing fee; and signature(s) of the organizer(s).

Why You Should Draft An Operating Agreement For Your Michigan LLC

An operating agreement is a legal document that outlines the internal governance of a limited liability company (LLC). It defines the rules and regulations for running a business, including provisions for capital contributions, management roles, voting rights, profit distributions, and more. In addition to providing structure for your organization, this document protects against any future legal problems arising from member disputes or lawsuits from third parties.

In the state of Michigan, there are no statutory requirements for forming or maintaining an LLC. However, drafting an operating agreement is strongly recommended because it reduces potential conflicts among members by clearly outlining expectations and procedures from day one. It helps protect each member's interests while establishing authority within the company and providing legal protection against future issues. Additionally, this document can help you avoid expensive litigation costs if a conflict arises between members or third parties outside your organization.

Obtaining Your Federal Employee Identification Number (EIN) In Michigan

An EIN is a nine-digit number assigned by the Internal Revenue Service and is used for many things, such as filing taxes, opening bank accounts, and hiring employees. Applying for an EIN is free, so don't worry about any extra fees! Here are the steps to follow.

Step 1: Determine Whether You Need A New EIN Or Not

If you are converting your existing business from a sole proprietorship to an LLC, you must apply for a new EIN. The old one won’t work with the latest business structure. However, suppose you are simply registering your existing sole proprietorship as an LLC with the state of Michigan without making any other changes. In that case, you can use the same EIN issued to the sole proprietorship.

Step 2: Apply For An EIN Online

The easiest way to get an EIN is by applying online through the IRS website. Once you use it online, you will receive your EIN instantly via email – no waiting period necessary! All that’s required is filling out some basic information about yourself and your business.

If you prefer not to apply online, you can send a paper copy of Form SS-4 along with all the information needed to fill it out. You can find this form on their website or request it directly from their office in Detroit. Ensure all the information provided is correct and complete before submitting it; otherwise, it could delay processing times by up to four weeks.

LLC Naming Requirements

Before you can begin your LLC, some critical steps must be taken to ensure you’re on the right track. That includes filing to reserve an LLC name for up to 6 months, registering a DBA, and ordering Certificates of Good Standing from the Department of Licensing and Regulatory Affairs.

Filing For An LLC Name Reservation

The first step in starting your LLC in Michigan is filing for an LLC name reservation. This allows you to reserve your desired company name for up to 6 months, giving you plenty of time to complete all the paperwork necessary for filing an LLC with the state. The filing fee is only $25 and can be done online or via mail. After that, you will receive your reservation confirmation and can begin using the reserved name on official documents immediately.

Registering A DBA

You may also consider registering a “Doing Business As” (DBA) registration with the state. A DBA is another name used by a company that may better reflect its services or products than its legal name. This gives customers more information when they look up your business online and helps create more transparency between companies and customers. The cost of registering a DBA in Michigan is also just $25, making it an affordable way to increase brand visibility and recognition.

There are several advantages when you obtain a Certificate of Assumed Name (a.k.a. DBA). First and foremost, this helps protect your assets from liability because the alternate name on the certificate will be used when conducting business instead of your name or the legal name of your corporation or LLC. This creates an extra layer of protection should any financial or legal issues arise regarding your business operations. It also allows customers and clients to identify what products or services they purchase from you quickly. Finally, having an alternate name associated with your business gives it more credibility and makes it appear more established than it actually may be.

Obtaining a Certificate of Assumed Name costs $10 each time; however, this fee increases if multiple locations or products are associated with different offices/products within one county ($25) or other counties ($50). An annual filing fee is also associated with obtaining the certificate, which varies depending on how many years the certificate is valid (1 year = $10 plus $5 for each additional year). Once all applicable fees have been paid, and the application has been reviewed by state officials and approved, you will receive your official Certificate of Assumed Name in the mail.

Ordering Certificates Of Good Standing

It’s also essential to order Certificates of Good Standing from the Department of Licensing and Regulatory Affairs (LARA). These certificates confirm that your business has complied with all applicable laws and regulations, including taxes, licenses, fees, etc., and serve as proof that the business entity has met all nice the business entity has met all requirements after the issue date but can be renewed easily online if needed. The cost per certificate is just $25, making them very affordable for new businesses in Michigan looking for official documentation regarding their status as registered entities within the state.

How To Verify A Company Name In Michigan

Before you start filing your business, ensuring that the desired name is still up for grabs is essential. The Michigan Limited Liability Company Act of 1993 has been updated over the years and offers insight into how LLCs should be created and function within this state's borders.

Here are the steps to verifying a company name.

  • Search the Michigan Department of Licensing and Regulatory Affairs website: The first step in verifying a company name in Michigan is to visit the Michigan Department of Licensing and Regulatory Affairs website (LARA). On this site, you can search for existing businesses by either their assumed or legal names. To do so, input your desired business name into LARA’s search bar and click “Search." If there are no results for that particular name, then it’s safe to assume it isn’t already taken.
  • Search the Michigan Corporation Database: If your initial search on the LARA website yields any results, your desired company name might already be taken. It would be best if you also searched the Michigan Corporation Database (MCDB) to double-check this information. This database will provide detailed information about companies registered with the state and those who have applied for registration but haven't yet been approved by LARA. You can also use MCDB to look up trademarks associated with specific names.
  • Register Your Business Name: Once you've verified that your desired company name isn't already taken through both LARA and MCDB searches, you can register your business' official title with LARA. This will ensure that no one else can write a similar business under that same name while also providing legal protection against trademark infringement. It's important to note that all business names must comply with state and federal laws; if yours violates either of these laws, then it won't be approved by LARA

Tips For Starting An LLC In Michigan

Here are a few others things to consider when running a Michigan business.

How To Keep Your LLC In Michigan Up-to-Date And In Good Standing

For those LLC owners in Michigan, it’s essential to stay on top of your responsibilities and ensure that your business remains compliant year after year. This means filing an annual report by February 15th, having a registered agent on record, and requesting or restoring your Good Standing Certificate.

Let’s dive in depth at what it takes to remain in good standing.

Filing Fees For Annual Statements

The fees associated with filing annual statements vary depending on your LLC type. 

A standard LLC is typically used for businesses that do not require special licensing or regulations. In contrast, a professional LLC is often used in law, medicine, architecture, engineering, and more industries. Each type of LLC has different filing fees associated with its annual statement. 

Standard LLCs will pay $25 for their first yearly statement. However, professional LLCs should expect to shell out double that amount ($75). If you file any past-due accounts, you’ll also need to pay a $50 fee and request another certificate at just ten bucks! Ensure these costs don't catch you off guard - staying organized is critical when maintaining your LLC.

Registered Agent Services

Another cost associated with running an LLC is hiring a registered agent service. A registered agent is responsible for accepting legal documents on behalf of the company (such as tax forms or lawsuit notifications). While plenty of free services are available online, it's best to use a reputable third-party provider specializing in this field - they'll be better equipped if any issues arise. And while registered agents will charge around $100 per year, they may even offer discounts if you're willing to sign up for multiple years.

Good Standing Certificates

Finally, ensure your business remains in good standing by requesting (or restoring) your Good Standing Certificate from Michigan each year. This document is essential since most banks will require proof of a good place before making significant financial decisions about your business! The fee for this certificate is usually only a few bucks - about $10 or so - and can be done online or through a regular mail application.

Conclusion

Starting an LLC in Michigan can be a lengthy process, but with the proper preparation and diligence, it can be an exciting experience. From selecting your business name to the moment of your first business transaction, the above steps can help you realize the costs involved in LLC formation and how to stay in good standing with the state. With this knowledge, you can be confident that you are on your way to creating a successful business.

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About the author 

Mike Vestil

Mike Vestil is an author, investor, and speaker known for building a business from zero to $1.5 million in 12 months while traveling the world.

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