HOW TO START AN LLC IN MICHIGAN
When it comes to getting started with an LLC, Michigan can be the right choice. Its requirements for an LLC’s formation and operation are not as restrictive as some states, while still requiring enough information for the safety and legality of everyone involved. Before choosing any state as a home for an LLC, though, it is important to take a careful look at what that state specifically offers. That can make the decision easier and provide more peace of mind, whether Michigan is the choice or not.
Naming the LLC
- Michigan allows people to search online in order to see whether the name they want for their LLC is already taken. Additionally, Michigan requires the words Limited Liability Company or its abbreviation to be used in all names, and has a list of restricted and prohibited words that cannot be used by everyone. Restricted words require extra paperwork, while prohibited words cannot be used at all. But Michigan, like Kansas, has a list of extra restrictions that go beyond what is required by most states. These include using the “distinguishable upon the record” requirement to stop names from being too close to one another, along with differences in what is considered to be distinguishable. Before committing to Michigan, an LLC should also see if the domain name is available.
Select a Registered/ Statutory Agent
- Choosing a registered agent is straightforward. It must be a person who is a resident of Michigan or a company that is authorized to do business there. It should be an entity that is readily available at nearly all times to receive official correspondence, and it can be a person within the LLC or even the owner themselves. It does not have to be an independent or outside third party for the appointment of that registered agent to be valid. Incfile offers FREE Registered Agent service for the first year with every package or as a $0 standalone service.
Filing Articles of Organization
- The online filing of the Articles of Organization for a Domestic LLC is what is required in Michigan. These are, essentially, the official documents that turn a company into an LLC. In Michigan they need to be filed online only, not through the mail, and the fee is $50.
Create Operating Agreement
- No operating agreement is required to start an LLC in Michigan. Many LLCs create these anyway, as it can provide a clearer picture of the business, but the state does not request that one be developed before a company can legally become a registered LLC in Michigan.
RUNNING YOUR BUSINESS
Getting Your EIN
- An EIN is an employee identification number, issued by the Internal Revenue service. Sometimes it is also called a Federal Tax Identification Number. It’s a unique number issued to each business. You’ll need an EIN to open a business bank account; file Federal and State Taxes; and hire employees.
- Before you get your EIN make sure your new business has been properly formed before applying and be wary of paid sites. EINs are free direct from the IRS.
- The easiest way is to apply online for an EIN. Note, the IRS website has office hours, and is only available Monday through Friday, 7am to 10pm. Yes, we also agree this is one of the most ridiculous things we’ve ever seen. You can call 1-800-829-4933, between 7am to 7pm of your time zone, Monday to Friday. Snail mail: You can download the form and mail it in.
Keeping Business and Personal Accounts Separate
- Get a business bank account for your business. This will help you protect your personal assets from potential creditors and lawsuits, and will also make life a lot easier come tax time.
- Get a business credit or debit card. This will help you keep your expenses separate and easier to track.
- No matter what business you run, accounting software and processes is a must for any small business. If you have an accountant, ask them which software they work with and recommend. A good accounting system is necessary to track income and expenses, so you can easily see if you’re making money and make filing income taxes so much easier.
- Always try and find something that will: sync with all of your bank and credit card accounts automatically – not just downloads, but auto sync; auto-match vendors, customers and other accounts; and let you accept credit cards and ACH drafts with ease. This can be applied for online, as can unemployment.
Michigan LLC Taxes
- Taxes and licensing requirements are some of the largest hurdles for people when they create an LLC. They may be uncertain how to proceed, or what all they need to register for, so something gets overlooked. That can cause a lot of unintended problems. In Michigan, there is the Michigan Business Tax, but that is not the only consideration.
- Michigan requires unemployment insurance tax in order to provide those benefits for people who are out of work.
- The employee withholding tax is designed to ensure that income taxes are paid.
- An LLC that sells any goods or services that are taxable must set up for sales tax.
- In addition, there are also licensing requirements. These all have to be considered and addressed, because they are all needed. Depending on the type and scope of the LLC, the licensing requirements may differ, as well.
Getting Insurance for your LLC
- Michigan requires Workers’ Compensation insurance, like other states that want to carefully protect employees and businesses from some of the problems that occur when an employee is injured on the job. Most people believe that this type of insurance is only for the employee to collect money if they are hurt, but it is also a way to protect the business from a lawsuit or from an inability to pay for the injury that the employee may have sustained. The amount of insurance the LLC is required to carry will vary with the number of employees and the type of work they do, as some types of work are inherently much more dangerous than others.
KEEPING YOUR LLC COMPLIANT
- In the state of Michigan there are specific hiring requirements. These should be carefully followed to avoid serious problems such as hiring workers who are not legally allowed to work in the United States. Additionally, an annual report will need to be filed. This is due every year by February 15th, and the cost of the filing is $25. A Certificate of Good Standing is also available, and can be requested for a $10 fee.
FILING A FOREIGN LLC IN MICHIGAN
- A company can file a foreign LLC online in Michigan, and the fee for doing so is $50. Not all foreign companies may qualify to operate an LLC in Michigan, as there are specific requirements that must be met.
ABOUT HOW TO START AN LLC
I'm an entrepreneur myself. When talking to others who want to start their own business, they often get wrapped up in the nitty gritty of paperwork and forming the company. They forget that what really matters is customers, sales, and profit. That's why I created How to Start an LLC.org: a simple resource and guide so you can spend less time on forming your company, and more time on building it.
My lawyers want me to remind you that I'm not a lawyer and that I'm completely unqualified to offer legal advice. This site is meant to serve as a reference for you on your journey. If you have questions or concerns, please contact a qualified lawyer (or accountant) to help you. Also, as a general rule, never take random legal advice on the internet.