If you want to start and run a Michigan limited liability company (LLC), you'll need to prepare and file various documents with the state. This article covers the most important ongoing reporting and state tax filing requirements for Michigan LLCs.
The State of Michigan requires you to file an annual statement for your LLC. You must file the statement each year by February 15. (The one exception is for new LLCs formed after September 30 of the preceding year, which don't need to file a statement on the February 15 immediately succeeding the date of formation.)
A pre-printed annual statement form will be sent to your LLC's registered agent approximately three months before the due date. You can either use this form or file online. You'll need your LLC's state-issued entity ID number to access the online form. Only a few pieces of information, such as the LLC's registered office address and the name and street address of its resident agent, are required to complete the statement. The annual statement filing fee for a Michigan LLC is $25.
When it comes to income taxes, most LLCs are so-called pass-through tax entities. In other words, the responsibility for paying federal income taxes passes through the LLC itself and falls on the individual LLC members. By default, LLCs themselves do not pay income taxes, only their members do. Some states do impose a separate tax or fee on LLCs for the privilege of doing business in the state. Michigan, though, is not one of those states.
However, in some cases, the owners of an LLC choose to have their business treated like a corporation for tax purposes. This choice is made by filing IRS Form 2553 with the IRS. (See the IRS website for the form.) Unlike the default pass-through tax situation, when an LLC elects to be taxed as a corporation, the company itself must file a separate tax return. The State of Michigan, like almost every other state, has a corporation income tax (CIT). In Michigan, the corporate tax is a flat 6% of taxable income. If your LLC is taxed as a corporation you'll need to pay this tax. The state's corporate income tax return (Form 4891) is filed with the Michigan Department of Treasury (DOT). For more details, check Nolo’s article, 50-State Guide to Business Income Tax, or the DOT website.
Does your LLC have employees? If so, you'll need to pay employer taxes. Some of these taxes are paid to the federal government (the IRS) and are not covered here. (But note that federal employer tax obligations start with obtaining a federal employer identification number (EIN).) However, Michigan employers also must pay taxes to the state.
First, you'll need to withhold and pay employee income taxes to the DOT. Begin by registering your business with the DOT either on paper (Form 518) or online. Once you've registered, you'll need to file withholding taxes on a periodic basis (typically monthly or quarterly). You'll also need to use Form 165 each year to reconcile your LLC's tax withholding.
In addition, you'll probably need to register to pay state unemployment insurance (UI) taxes. These taxes are handed through the Michigan Unemployment Insurance Agency (UIA). You can register for these taxes online(recommended) or by mail (using Form 518). Then, on a quarterly basis, you'll need to file Form UIA 1028 with the UIA. For more information, check the UIA website.
If your LLC will sell goods to customers in Michigan, you will need to collect and pay sales tax. This means you'll have to register for this purpose with Department of Treasury and then make periodic sales tax payments for goods sold. You can register online on the DOT website. After you've registered, you'll be sent a sales tax license. Then, each year, you'll have to pay sales tax using DOT Form 165. Starting in 2015 you should be able to file this form online.
If you will be doing business in states other than Michigan, you may need to register your LLC in some or all of those states. Whether you're required to register will depend on the specific states involved: each state has its own rules for what constitutes doing business and whether registration is necessary. Often activities such as having a physical presence (a business location) in a state, hiring employees in a state, or soliciting business in a state (such as by telephone, print ads, mail, or the Internet) will be considered doing business for registration purposes. Registration usually involves obtaining a certificate of authority or similar document.
For more information on the requirements for forming and operating an LLC in Michigan, see Nolo’s article, 50-State Guide to Forming an LLC, and other articles on LLCs in the LLC section of the Nolo website.