Creating an LLC in Michigan is convenient for domestic and foreign businesses. The state offers various benefits for any future or existing LLC owner.
However, there are some specific things one needs to consider when starting an LLC in Michigan that including state and federal forms and taxes. Furthermore, there are additional steps you must take after forming an LLC to keep your business running.
This article provides helpful information on how to start an LLC in Michigan, including organizing every documentation beforehand.
|LLC Filing Fee||$50||$95||$99||$150||$130.38|
|LLC Annual/Biennial Fee||$25 (every year)||$30 (every 2 years)||$0 (no fee and no information report)||$75 (every year)||$89.34 (every year)|
|Corporate Tax Rate||6.00%||4.90%||0%*||9.50%||5.60%|
|Nominal GDP per capita||$56,554||$61,760||$62,517||$74,052||$64, 773.08|
Before You Set Up An LLC In Michigan
Starting an LLC in Michigan has its privileges but comes with several conditions. For example, you must know that Michigan LLC owners have to:
- Prepare documentation: Future LLC owners must complete the legal forms that can be found on the official government site;
- Pay both federal and state taxes;
- Pay fees for filing articles.
Below, we will break down these conditions in detail and provide several tips on how to get the business going if you get your approval.
But, first, let’s see how much starting an LLC in Michigan costs.
How Much Does It Cost To Start An LLC In Michigan?
To start an LLC in Michigan, every owner has to pay a $50 fee to file an LLC’s Articles of Organization with the Michigan Department of Licensing and Regulatory Affairs.
However, additional mandatory costs must be paid to maintain the LLC. Below we go through all the costs required for keeping an LLC in Michigan.
- Michigan Annual Statement Fee – $25. This statement fee is also called an annual report that must be settled within the arranged time. Otherwise, they face penalty charges of $50 for failing to cover bills in time;
- Resident Agent Fee -$39/$99. Also, you can be your own Resident Agent. However, if you need help in managing the company’s workflow, you can hire a resident agent fee of $39 for the first year, and then $99;
- LLC Name Reservation – $25. To reserve your company’s name, you must file an Application for Reservation of name 6 months before you form your LLC;
- Cost to Form a Certified Document Copies – $16/$17. Order your certified documents from the Department of Licensing and Regulatory Affairs. If you receive less than 7 pages of paper, you’ll have to pay $16; if you have 7+ pages – $17;
- Certificate of Good Standing – $10. Again, order your certificate of good standing from the Department of Licensing and Regulatory Affairs because you’ll have to show it often to banks or other financial institutions;
- Business Permits and Licenses – The cost varies. Depending on your LLC’s geolocation and industry, you’ll have to pay a federal, local, or state license to run your business in Michigan.
In total, forming an LLC in Michigan costs $150 for the first year, including saving your name, money for copies of documents, resident agent fees, state fees, and other relevant documentation and expenses that come along.
Steps To Start An LLC In Michigan
There are five major steps to starting an LLC in Michigan.
- Picking a name;
- Finding a registered agent in Michigan;
- Filing Articles of Organization;
- Operating Agreement;
- Getting an EIN.
Now let’s break these steps into details to learn how to start an LLC in Michigan.
Pick A Name For Your LLC
Every LLC in Michigan must have a unique name – approved by the Michigan Department of Licensing and Regulatory Affairs. This is bound by law, so there are no exceptions.
Another law you must follow is adding any of the following words in the name:
- Limited Liability Company;
If you have a specific name in mind, go to the Michigan business database to see if that name is still available. If it is, you can apply for a Reservation of Name at the Michigan Department of Licensing and Regulatory Affairs to reserve the name. This reservation fee is only $25. (Form 540)
This is the best and safest option, plus you can file your application online and won’t have to deal with bureaucracy.
Find A Registered Agent In Michigan
A registered agent is the same as having an attorney. In Michigan, every Limited Liability Company must have a hired agent to prepare legal papers on the company’s behalf in case of legal prosecution. In other words, you have to hire an agent for the service of the process in the state.
So, your company can be represented by:
- A Michigan resident;
- A Michigan corporation;
- A Foreign corporation authorized to transact business in Michigan.
It’s up to you and your preferences to choose an agent type, but please remember that any registered agent must have a physical street address in Michigan.
|ZenBusiness – $49 + state fees to register your LLC (read review)|
|Incfile – $0 + $50 state fees to register your LLC (read review)|
Articles Of Organization
To start your LLC, you must file your Articles of Organization to the Michigan Department of Licensing and Regulatory Affairs. (Form 700)
Thus, this form must contain the following information:
- LLC’s name;
- LLC’s purpose;
- Specific period of the LLC;
- Name and address of the LLC’s registered agent;
- The effective date of filing the Articles if it is later than the date of filing;
- Signature and phone number of the LLC’s organizer.
The Michigan Department of Licensing and Regulatory Affairs charges $50 for filing. Also, you can complete this online or by mail.
Other Required Documents
There are a couple of documents you must arrange before you start your LLC, but they’re exclusions, or they apply only to specific businesses.
In other words, you might need to get local or state-specific licenses depending on the location.
Please contact the city clerk for further information to ensure you’re on the right track. As for state-wise, you can immediately check that at the official State of Michigan website. Just type State License Search, and you’d get what you need.
The second additional document applies to those businesses that plan on employing or selling their goods. In this case, you have to register at the Michigan Department of Treasury.
You will have to complete an e-Registration application online or send it by mail. Either way, please make sure you ticked all of the Michigan LLC Annual Filing Requirements.
The operating agreement isn’t obligatory, but it can be useful for your company. Namely, the Articles of Organization pose the purpose of the LLC, but it doesn’t specify the order of operation. However, the government doesn’t need this information, but you do for the following reasons:
- Boosts your security: If you face any financial problems with the bank regarding your spending with LLC income, or legal – you can offer your operating agreement to justify your actions;
- Stands as a Foundational Agreement: Very often members within an LLC take actions regarding their position that don’t comply with the initial agreement. Without a black-and-white document, you can’t prevent them, but with the operating agreement, you can always remind them;
- Enhances your legal liability status: The operating agreement is proof that the owner is a separate entity from the LLC;
- Dodges Michigan’s default laws: With the operating agreement, your LLC isn’t bound to Michigan’s default laws for LLCs.
Get An EIN
Additional tax and regulatory requirements may apply to your LLC. These may include the following:
Every LLC in Michigan must have an EIN or Employer Identification Number, regardless if you have one, none, or a team of employees under your wing. You must get an EIN as per Michigan’s Law.
However, if you get your EIN online, just send the application, and you won’t be charged.
The Forms You Need To Register An LLC In Michigan
To register your LLC, the following forms apply to any future LLC in Michigan:
- Reservation of name – Form 540. If you picked the name for your company, we suggest saving it while still available with this form;
- Articles of Organization – Form 700. Or, if your LLC offers professional services, then you need the Articles of Organization (Professional Service LLC) Form 701.
|Did You Know? |
Michigan noticed the interest in Limited Liability Companies for the first time in 1993. The interest in owning an LLC has risen up to this day. Essentially, the inexpensive living standard accompanied by the low tax rates in Michigan produced a convenient climate for Limited Liability Companies. The optimal LLC requirements to run a business in a given state require a stable economic rate to comply with the flexible tax rate that these businesses have and a convenient fee standard to manage the workflow within and outside the company. That includes employees and state and federal expenses.
LLC Taxes In Michigan
As said, LLCs are pass-through companies where technically, taxes aren’t required. Every LLC owner must pay federal and state taxes.
Not all LLCs have to pay state and federal taxes, but in Michigan, they are. That’s why you need your EIN number, so you can settle the taxes straight away.
Below we go through the obligatory LLC taxes each employee must pay.
- State income tax: the flat rate of the net income of Michigan state is 4.25%;
- Michigan Business Tax: Any registered business in Michigan is subject to the limitations of federal law. That is, unlike other states, Michigan imposes the state business tax that must be settled;
- Federal income taxes: Although you pay the state income tax, you also must settle the federal income taxes;
- Self-employment taxes: Any single-member LLC is required to pay 15.3% tax under self-employment regulation;
- Employee taxes: If you have hired employees, then you must pay the federal employee taxes;
|Range of Tax in the US|
|Taxes in Michigan|
Flat corporate tax
State income tax
|The state with the lowest taxes are Nevada, South Dakota, and Wyoming||0%|
|The state with the highest tax: California||13.30%;|
|Average taxes paid in the state||4.25%|
Many businesses and tax benefits for future LLC owners will help them grow. Moreover, Michigan offers additional relocating businesses in benefits. Those who wish to move to Michigan with their LLC will have the Jobs Ready Michigan program at their disposal.
How Long To Form An LLC In Michigan?
The average time used for processing documentation and approval for an LLC in Michigan State is 10 days. However, this can take up to 15 business days, depending on the regulation in your paperwork. Therefore, before you file the documents, please ensure that you have everything to prevent stalling your formation.
Additionally, you can accelerate the process by paying:
- $50 to be ready in 24 hours;
- $100 to be ready the same day;
- $500 to be ready in two hours;
- $1,000 to be ready in an hour.
How Much Does It Cost To Run An LLC In Michigan?
To start an LLC in Michigan, you need a $50 filing fee for the above-mentioned articles.
However, to keep your business running, you have an annual cost of $25 for domestic and foreign LLCs and $75 for PLCs.
What To Do After Formation?
Setting up the documentation and getting the approval is just the prologue. The main part is what to do afterward. Essentially, you need a plan for the beginning because many things wait on you after.
Here’s what we registered as most important:
- Create a logo – If you want to be recognized by the public, hire a graphic designer to create your logo. If you don’t want to employ someone for a one-time-only business, you can use one of our recommended logo makers.
- Build a website/eCommerce store – Since everything is narrowed to online, the first thing after getting your approval is forming a website;
- Bank account – This is for more organized purposes. You need a separate bank account, so your accountants can manage the income easily;
- Business insurance – You shouldn’t question why having insurance is among the top 5 to-dos after getting approval for operating LLC. Anything can happen, so you better prepare;
- Annual reports – Contact the agent to prepare the annual reports straight away, so you won’t have to pay penalties for being late.
These are the basics you need to cover immediately after forming your LLC. Once you get them done, then you will have an easy sail later.
Resources To Start A Successful LLC In Michigan
If you still have specific questions regarding the LLC in Michigan, then we suggest visiting the official government and state sites for further information.
- General LLC information in Michigan;
- Information regarding Annual Filings;
- Resident Agent Information;
- Information regarding LLC Changes;
- Information about Mergers;
- Information about Dissolution;
- Information about Withdrawal.
Start Marketing Your LLC In Michigan
Getting noticed at the beginning is a tough stage for any LLC. But, luckily, you have the internet, or basically the world, in your hands.
The best way to stand out from the crowd is to hire a Social Media content creator and digital marketing agent. Discuss the options to get noticed and implement a strategy.
How To Dissolve An LLC In Michigan
According to the official government, dissolution of an LLC can occur only in the case of an:
- A unanimous vote of all members entitled to vote;
- Automatically at the time specified in the articles of organization;
- After an event specified in the articles of organization or in the operating agreement, including a vote of members;
- Right after an entry of a decree of judicial dissolution.
If you face a situation like this, you should file a Certificate of Dissolution. CSCL/CD 731.
Michigan is a great choice to start and form your LLC with all those state benefits at your disposal. If you’ve been wondering how to start an LLC in Michigan for free, sadly, you can’t, but the costs aren’t too high either.
The costs for starting an LLC are only $50 for the Articles, and later $25 or $75 for annual taxes for maintaining your business. However, getting the licenses and permits to run your company isn’t enough. You have to devise a plan to organize your time with all the agents, designers, and marketers to kick in the business.
Remember to always keep track of the bills and finances and to hire an experienced accounting team because Michigan has high penal fees for belated payments.
Ultimately, don’t rush; read this text once or twice more if needed and then send the files. Also, get in touch with the bank, designers, and marketers before you file so you’d know where you stand.