A limited liability company (LLC for short) is a way to legally structure a business. It combines the limited liability of a corporation with the flexibility and lack of formalities provided by a partnership or sole proprietorship. Any business owner who seeks to limit his or her personal liability for business debts and lawsuits should consider forming an LLC.
Here are the steps you need to take to form an LLC in Michigan. For more information on how to form an LLC in any state, see Nolo's article How to Form an LLC.
Under Michigan law, an LLC name must contain the words "Limited Liability Company" or the abbreviations "L.L.C." or "LLC."
Your LLC’s name must be distinguishable from the names of other business entities already on file with the Michigan Department of Licensing and Regulatory Affairs. Names may be checked for availability by searching the Michigan business database. You may reserve a name for six months by filing an Application for Reservation of Name with the Michigan Department of Licensing and Regulatory Affairs. The application may be mailed in or you can file online. The filing fee is $25.
Every Michigan LLC must have an agent for service of process in the state. This is an individual or business entity that agrees to accept legal papers on the LLC’s behalf if it is sued. A registered agent may be a Michigan resident, a Michigan corporation, a foreign corporation with a certificate of authority to transact business in Michigan, a Michigan LLC, or a foreign LLC authorized to transact business in Michigan. The registered agent must have a physical street address in Michigan.
A Michigan LLC is created by filing Articles of Organization with the Michigan Department of Licensing and Regulatory Affairs. The articles must include:
The articles may be filed by mail or online. The filing fee is $50.
All of the paperwork and procedural steps to start a limited liability company in Michigan can be done online using Nolo's Michigan Online LLC Formation application.
An LLC operating agreement is not required by the state of Michigan (or any state), but is highly advisable. This is an internal document that establishes how your LLC will be run. It sets out the rights and responsibilities of the members and managers, including how the LLC will be managed. It can also help preserve your limited liability by showing that your LLC is truly a separate business entity. In the absence of an operating agreement, state LLC law will govern how your LLC operates.
If you've already formed an LLC, Nolo offers an LLC operating agreement that you can create online. For help creating an LLC and an operating agreement, see Form Your Own Limited Liability Company, by Anthony Mancuso (Nolo) or use Nolo’s Online LLC.
Additional tax and regulatory requirements may apply to your LLC. These may include the following:
EIN: If your LLC has more than one member, it must obtain its own IRS Employer Identification Number (EIN), even if it has no employees. If you form a one-member LLC, you must obtain an EIN for it only if it will have employees or you elect to have it taxed as a corporation instead of a sole proprietorship (disregarded entity). You may obtain an EIN by completing an online application on the IRS website. There is no filing fee.
Business Licenses: Depending on its type of business and where it is located, your LLC may need to obtain other local and state business licenses. For local licenses, check with the clerk for the city or town where the LLC's primary place of business is located (or county if it is in an unincorporated area). For state license information, check State License Search at the State of Michigan website. For more information, see Nolo's article How to Get a Small Business License In Michigan.
Department of Treasury: In some cases, for example if you have employees or will be selling goods and collecting sales tax, you’ll need to register with the Michigan Department of Treasury (DOT).You can register online using the DOT’s e-Registration application or by mail.For more information on state LLC tax registration, check Nolo's article, Michigan LLC Annual Filing Requirements.
All LLCs doing business in Michigan must file an annual statement with the Department of Licensing and Regulatory Affairs. The report must be filed by February 15 after the year of formation or qualification; however, if the LLC is organized or qualified after September 30, it need not file a statement on the February 15 immediately after its formation or qualification. A pre-printed annual statement, BCS/CD-2700, is mailed to the LLC’s resident agent at the registered office approximately three months prior to the due date. The report can be filed online or by mail. The filing fee is $25.
If you are just starting your business or have already been operating as a sole proprietor, you should consider forming an LLC. LLCs limit an owner's personal liability for business debts and lawsuits and offer a lot of flexibility when it comes to ownership, management, and taxation of the business. To learn more about LLCs and decide if it is the right business structure for you, see What is a Limited Liability Company (LLC)?
It is important to make sure that your LLC's name is distinguishable from the names of other existing businesses on file with the Michigan Department of Licensing and Regulatory Affairs. You can conduct a name search for free on the Michigan Department of Licensing and Regulatory Affairs website to make sure your proposed name is available.
Filing yourself is often the cheapest option, but completing all of the forms and filing them yourself can be complicated. Hiring a lawyer is another option, but will often cost you hundreds, if not thousands, of dollars in the process. Nolo's Online LLC formation service can complete all of the paperwork and filings for you, with packages starting at just $79.00.
Michigan does not require LLCs to have operating agreements, but it is highly advisable to have one. An operating agreement will help protect your limited liability status, prevent financial and managerial misunderstandings, and ensure that you decide on the rules governing your business instead of state law by default. For more information, see The LLC Operating Agreement.
To do business in Michigan, all LLCs organized outside of the state must register with the Michigan Department of Licensing and Regulatory Affairs. Foreign LLCs must appoint a registered agent for service of process physically located in Michigan or appoint the Department of Licensing and Regulatory Affairs to be the agent. To register, file an Application for Certificate of Authority to Transact Business in Michigan. The filing fee is $50.
The completed application must be accompanied by a Certificate of Good Standing or Existence from the foreign LLC’s home state, dated no more than 30 days prior to the filing of the certificate.
Before filing, make sure the LLC’s name is available in Michigan by checking the Michigan business name database. If the name is not available, the foreign LLC must adopt an assumed name for use in Michigan. The assumed name becomes the LLC's name in Michigan to be used in all transactions and in its dealings with the state. Item 2 of the Application for Certificate of Authority to Transact Business in Michigan is to be completed for this purpose only. Foreign LLCs may also transact business under other assumed names by filing separate Certificates of Assumed Name.
For most formation purposes, a Michigan single-member LLC is considered the same as a multi-member LLC. The steps to form a single-member LLC in Michigan are the same as those listed above.
Single-member LLCs do have additional flexibility when it comes to filing a tax return. To learn more, see Nolo’s article, How Single-Member LLCs Pay Federal Income Tax.
If you provide a licensed professional service in Michigan and want to form an LLC, you will be required to form a professional LLC (PLLC). Examples of professional services include architects, attorneys, dentists, certified public accountants, and more. Generally, if you provide a service that requires you to obtain a Michigan state license before practicing, then you are a professional service. Each member of the company must be licensed in order to form a PLLC. To learn more about forming a Michigan PLLC, see our article, How to Form a Professional LLC in Michigan.
If you reach the point where it is time to close your business and cease all operations, then you will want to properly dissolve your LLC to limit your liability for lawsuits and government fees. Learn about the steps you will need to take in How to Dissolve an LLC in Michigan.