Are you going to start your new business in Michigan? Would you like to make your business dealings and proceedings legally safe? A great way of keeping your business and personal assets safe is by forming an LLC in Michigan.
Not only will you gain credibility as a business in front of your clients and potential investors, but you will also rest assured that your personal assets remain risk-free. Want to learn more about how to form an LLC in Michigan?
If you go down the rabbit hole of internet search, you will end up wasting a lot of time and the information you obtain may not even be credible. To save your precious time and to make sure that you get your hands on authentic information, we are here with this comprehensive guide on forming a Michigan LLC.
Without further ado, let’s get started!
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Don’t have a lot of time on your hands and can’t read the entire review? To make it easier for you, we have put together this quick highlights section that will let you know what you have to do to get your LLC in Michigan up and running!
The basic steps for creating an LLC in Michigan are as follows:
- Naming Your LLC
- Choosing Your Registered Agent
- Filing the Articles of Organization
- Forming a Business Operating Agreement
- Getting the Federal Tax ID
- Submitting the Annual Report
There are two ways to form an LLC in Michigan – taking the DIY route or getting expert, professional help. Going the DIY-route will definitely save you money but you will end up wasting a lot of time wading through the legal paperwork.
A professional LLC incorporation company will take a load off your back and will ensure that your LLC formation paperwork is filed in an efficient and timely fashion. With so many professional LLC incorporation services available, it can get hard to select one that is perfect in all respects.
- ZenBusiness is the best overall choice with well-rounded packages full of useful packages and affordable prices. They have glowing reviews from their previous users and have a customer service that will definitely leave you wanting for nothing!
- IncFile is the only option for people who want professional services but can’t afford them. At IncFile, you will not only get your LLC formed free of cost, but you will also get free registered agent services for a whole year!
What is an LLC
Want to know what an LLC is and what benefits it offers? A Limited Liability Company is a business structure that combines the lack of formality and flexibility of sole proprietorship with the limited liability of a corporation.
If you want to limit your personal liability for lawsuits and personal debts, you should form an LLC for your company. For instance, if you run a car dealership and someone gets into a workplace accident, they can sue your dealership.
In such a case, if you have formed an LLC, only your company’s assets will be at risk – your personal belongings such as your home, your car, etc. will be safe and out of harm’s way.
Form an LLC in Michigan
To form your LLC in Michigan, you have to do three main things – choose a business name, appoint your registered agent, and file the Articles of Organization with the Department of Licensing and Regulatory Affairs in Michigan.
You can file the documents online, via traditional mail, or drop them in-person. However, the drop-in services are currently suspended due to the COVID-19 pandemic, so give the office a call before you visit to avoid any inconvenience.
The filing fee for the articles of the organization is $50 and is non-refundable. Once you file them with the state, your Michigan LLC will be officially created in a couple of days. Let’s take a look at the steps for LLC formation in Michigan in detail.
Naming Your Michigan LLC
Before you file the necessary documentation with the State of Michigan, you need to find a name for your LLC that is unique and is available for use in the State.
Choosing the name of your business LLC is one of the most important things that you will do when forming your LLC in Michigan. Your business name is your identity – it is the first thing that will leave either a good impression or a bad impression on your clients and investors. Therefore, you need to take your time and come up with a name that shows your company’s values and spread a good message.
- Name Availability Search. Once you have selected a name, you need to check whether it is available or not. To ensure that the name that you have chosen for your company is available, you have to go through the Michigan State Database.
If the name is not available, you are good to go! However, we suggest that you call the State Department and double-check because if you make a mistake and file with a name that is not free for use, your paperwork will be rejected.
You will not only have to go through the entire filing process again, but you will also waste money as the filing fee is non-refundable. Want to know a good tip? When you search for name availability, also check if the name is available as a web domain.
We live in a technological world and we can’t even imagine running a business without a successful online presence. Therefore, search if the web domain is available so that you don’t face any difficulties when you create the business’s website.
- Business Name Reservation. If you have selected a name, and you are not ready to file your paperwork, you are facing the risk that someone else will pick up the name you chose for your company and go ahead with it.
However, the State of Michigan gives the option to reserve the business name you selected. You can reserve the business name for a period of six months by filing an application and paying a reservation fee of $25.
- Using a DBA. If you don’t want to use the LLC name which is registered on your articles of organization, you can do so. You can use a fictitious name for your business by registering the assumed name with the Michigan Department of Licensing & Regulatory Affairs.
The filing fee for a DBA is $25 and you can use that name for 5 years before having to register again.
- Business Name Rules and Regulations. There are a few rules and regulations that you need to follow when naming your LLC. The name needs to have a proper designator at the end such as Limited Liability Corporation, LLC, L.L.C., etc. which shows that your company is an LLC.
You can’t use a designator that might insinuate that you are a different business entity such as a corporation by using words like Corp, Inc., etc. Moreover, terms that will confuse your company with a government agency such as CIA, FBI, State Department, etc. are not allowed.
To make sure that you follow all the guidelines perfectly, you should visit the website of the Michigan Department of Licensing & Regulatory Authority.
Choosing a Registered Agent in Michigan
Once you have searched and selected the perfect name for your LLC in Michigan, the next thing you should do is get a person or company to act as the registered agent for your LLC. The registered agent is the person who receives the legal documentation from the state on your behalf.
In Michigan, you are legally obligated to have a registered agent, otherwise, your LLC will lose the privilege to do business in the state. The registered agent needs to have a street address in the state and must be 18 years of age.
When it comes to selecting a registered agent, you have three main options. You can become your own registered agent and receive the legal documents yourself. Secondly, you can ask a friend, family member, or colleague to fill in and perform the duties of your LLC’s registered agent.
However, in both these options, there are two flaws. Firstly, the address and name of the registered agent become part of public records which means that the registered agent will have no privacy at all.
Secondly, the registered agent needs to be available in the office during normal working hours in case the state contacts you. This means that the person will not be able to go away for a holiday or even a short break during working days.
Lastly, as humans, it is likely that you or the person you chose as your registered agent will forget to go through the mail and miss important documentation or deadlines. This will have a negative effect on your LLC’s good standing with the state.
Therefore, the third option – hiring a professional registered agent – is the best one available. You won’t have to worry about lack of privacy, missing deadlines, or anything else because professional companies such as Northwest Registered Agent will take care of everything in a professional and efficient manner.
Filing the Articles of Organization for Your Michigan LLC
You will need to provide the following information for forming your Michigan LLC.
- LLC’s Name and Purpose. You will have to provide your LLC’s official name – we have mentioned all the requirements in detail above – along with the purpose of your LLC. If you don’t want to be very specific, you can simply state ‘for lawful purposes and you will be good to go.
- Time of Formation. You will have to mention the date you want your LLC to come into effect from, for example, right at the time of filing or a specific period of time after the filing.
You can delay the formation for up to 90 days. If you want to set an expiration date for your LLC, you can do so.
- Registered Agent’s Name and Address. The name of the registered agent you chose for your LLC as well as their street address in Michigan. Your registered agent will have to give their consent for this as well.
- Organizer’s Signature. The organizer is the person who is creating the articles of documents. It can be you, a member of your LLC, or a professional LLC formation service that you hired to create your LLC in Michigan.
Moreover, the state of Michigan needs personal information such as the name and contact info of the person who is preparing the documents as well.
- Additional Provisions. If you want to add any additional information, such as whether your LLC will be member-managed or manager-managed, etc., you can do so here. However, remember that any information that you put on the articles of the organization will become part of the public records.
You have the option to expedite the formation of your LLC. The expedited filing fees differ from $50 for a 24-hour turnaround time to a fee of $1000 for one-hour formation time. You can file the documents online or send them to the State via traditional mail.
Once your LLC is approved, the State will send you the stamped and approved articles of organization, You will also be assigned a unique Michigan LLC ID number by the state. However, this is different from the EIN, which we will discuss below.
Creating the Business Operating Agreement for Your LLC
The next step is to form a business operating agreement for your LLC. An operating agreement is an internal document that details how your LLC will run and function. It regulates the operations of the LLC, lists the rights and responsibilities of the managers, members, and officers of the LLC.
Moreover, it specifies the percentage of ownership of members in the LLC along with spelling out the distribution of the profits and losses and the payment of the taxes. It acts as a guide for your LLC’s work.
An operating agreement ensures that your Michigan LLC keeps running smoothly and that there is harmony among the LLC’s members. Moreover, it helps to resolve any internal disputes that may arise.
In case of a lawsuit, your operating agreement serves as proof that your LLC is being managed and operated properly as a separate legal entity. It is an internal document and you don’t have to send it to the state.
Getting an EIN for Your Michigan LLC
An EIN is a nine-digit number that the IRS assigns to your business so that the process of filing the taxes is streamlined. Basically, it is like a social security number for your LLC. An EIN is needed to hire employees, manage taxes, open business bank accounts, etc.
If you have an EIN for your sole proprietorship already, you will have to request a new one for your LLC. You can file for an EIN online or mail an application. We recommend that you apply online because you will get an EIN number as soon as you finish putting in the details, which takes approximately 20 minutes.
If you apply via fax, it will take almost 4 business days while the processing time for EIN via mail is 2 to 4 weeks, which is a lot. We suggest that you hire a professional to get your EIN number as it is a technical task, and if you make errors, it can have bad consequences in the long run.
Filing Annual Reports for Michigan LLC
All Michigan LLCs are legally obligated to file an annual report with the state. After the year of formation, you have to file the annual report by February 15 every year. However, if your LLC was formed after September 30th, you don’t have to file a report in February of the following.
Almost three months before the deadline, the State of Michigan will send out a pre-printed annual statement to the registered agent of your LLC. You can file this report online or via mail. The filing fee for the annual report is $25.
If you file the report online, it will be approved or sent back within a couple of hours for you to make the changes. If you send it via traditional mail, it will take 3 to 5 business days.
LLC in Michigan – Final Word
We all know that a successful business takes a lot of effort and hard work To ensure that all your hard work doesn’t go down the drain due to a legal predicament, we recommend that when you start your business, you should form an LLC as well.
This will make sure that no matter what happens in the business world, your personal belongings will remain safe and protected. If you don’t want to waste your time trying to navigate all the legal red tape, you should hire a professional LLC formation company.
- ZenBusiness is the best choice for entrepreneurs searching for high-class services at budget-friendly rates. You will get feature-full packages, excellent customer services, and quick turnaround times.
- IncFile is the perfect option for those new business owners who can’t spare a lot of money to hire professional LLC incorporation services. With IncFile’s free starter package, your LLC will be formed quickly and efficiently.
Here’s to you having a successful LLC in Michigan!