Whether you’re just starting a new organization, or are looking to switch business entities, forming a limited liability company (LLC), can be both exciting and daunting. However, we’re here to help!
If you're looking to start an LLC in Michigan, this post provides a step-by-step guide to the process, from gathering necessary documents to filing with the Michigan Department of Licensing and Regulatory Affairs (LARA).
In this post, we will cover:
Let’s get started:
Why Start An LLC?
If you’re a startup, a small business, or an entrepreneur, opening an LLC in Michigan is often the best legal structure for you. Here’s why:
What Do You Need To Do Before Creating Your LLC?
Before starting an LLC in Michigan, you need to know if your business name is available. Your business name is essential, because it helps you establish brand recognition and identity. You don’t need to include that in everyday conversation, but it’s a requirement when filing out any legal documents.
Your business name must include either “Limited Liability Company,” “LLC,” “L.L.C.,” “LC,” or “L.C.” as part of your name. It cannot include “State Department,” “CIA,” “FBI,” “Treasury,” or anything else related to a government entity.
Before applying for an LLC license, check if another Michigan business uses that name. If they are, you may risk infringing on their existing trademark. Check the Trademark Electronic Search System (TESS) database first.Also, read up on the Michigan Limited Liability Company Act of 1993 (amended in 2002). It describes how to form and operate LLCs in Michigan, and should answer any questions you may have about the legalities of running your business.
How To Start LLCs In Michigan
Here’s the step-by-step process for forming your Michigan LLC:
Reserve Your Organization’s Name
After confirming with TESS and Michigan’s Secretary of State that your business name is available, fill out the Application for Reservation of Name paperwork. This reserves your name for six months, while you’re getting everything else you need to form your LLC. The application comes with a $25 fee ($75 for professional LLC annual statements), which you can pay by credit card, check, or money order to the State of Michigan. Here’s where you can file:
File Your Articles Of Organization
The articles of organization are the legal documents that provide the basic information about your LLC. While they may sound intimidating, they’re actually pretty straightforward. To prepare your articles of organization, you need the following:
Double-check this document before submitting it to the Secretary of State. Inaccurate information could lead to legal issues.
Select Your Registered Agent
Did you get stumped when we included “registered agent” in the list above? If so, don’t worry!
Your LLC’s registered agent is the person nominated to handle your organization's required legal, tax, and government correspondence. Typically, you’ll designate one of your LLC members or partners as your registered agent. However, before anyone volunteers, it’s important to note that registered agents must have a physical registered address (not a P.O. Box), which will become public record upon receiving your LLC license. For added privacy, most startups and small businesses opt to use a commercial entity as their registered agent.
Get Your Certificate From The State Of Michigan
Once you complete your articles of organization and select your registered agent, the state of Michigan will give you a certificate that confirms your LLC’s existence. You’ll need this certificate when obtaining your business bank account, an Employer Identification Number (EIN), and other required business licenses.
Establish Your Operating Agreement
An operating agreement defines the rules and regulations you agree to follow when you run your business. Think of it as your organization’s constitution. Even if you’re a single-member LLC, this agreement is beneficial. If your company has a legal or financial dispute without an operating agreement, it will be left up to the courts to decide what to do, which may not be in your LLC’s best interest.
Operating agreements define:
Getting Your EIN
Your EIN identifies your LLC for tax purposes. It’s a nine-digit number that the IRS assigns you, and you can get it online or by mail. Your EIN will help you when:
Finding Any Other Required Forms
In general, these are the main steps you must follow to obtain your LLC license. In some cases, you may be required to fill out additional forms or will need to update them as your business grows, evolves, or during membership transfers. LARA has compiled a complete list of any form your LLC should ever need.
Opening An LLC In Michigan: What To Do Next
Congratulations on forming your LLC! Now that you’re officially up and running, here’s how to maintain good standing with the state of Michigan:
Getting A Certificate Of Good Standing
As a new LLC, you’re in good standing as long as you do the following:
Filing Your LLC’s Annual Report
As we mentioned earlier, your annual report is due every year by February 15th. If you form your LLC after September 30, you are not required to file an annual report the following year. In other words, if you form your LLC in November 2022, you’re not required to file your annual report until February 15, 2024. Standard LLCs are required to pay a $25 fee, while professional LLC annual statements are $75.
How Much Does It Cost To Start LLCs In Michigan?
Forming an LLC in Michigan is affordable. The filing fee for creating one is $50, or $75, when you include the cost of reserving your business name. After that, you’re only responsible for submitting an annual report, which is an additional $25 each year.
If you wish to expedite the filing process, you can spend an extra:
Got any more questions on how to start an LLC in Michigan? We’ve got answers!
Yes. Your LLC and business licenses are required to run your business legally.
In order to pay yourself from an LLC, simply transfer a portion of your business’ cash reserve from your business account to your personal one. If you’re dividing between multiple partners, transfer the agreed-upon amounts into each individual account.
Conclusion: How To Start An LLC In Michigan
Starting an LLC can be an intimidating process, and it varies from state to state. The requirements for filing a Florida LLC are slightly different than forming an LLC in California. By following the steps defined in this article, you’re well on your way to obtaining an LLC license in Michigan and ready to run a successful business!
Are you ready to make your business an even greater success? Check out The Lazy Man’s Guide to Living The Good Life, and learn how to maximize your potential.