Ready to embark on your entrepreneurial journey in Michigan by forming an LLC (Limited Liability Company)? The Great Lakes State offers a favorable environment for starting an LLC due to its business-friendly tax structure and diverse economic landscape.
Our guide outlines each step of LLC formation, incorporating links to essential government resources so you’re well-informed and compliant throughout the process.
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6 Steps to Starting an LLC in Michigan
An LLC combines liability protection with tax advantages, making it an attractive option for many business owners. Michigan offers a straightforward process for LLC registration, detailed below.
To launch your Michigan LLC, follow our quick six-step guide:
- Name Your Michigan LLC
- Appoint a Resident Agent
- File Your Articles of Organization
- Draft Your Operating Agreement
- Obtain an EIN and Handle Taxes
- File a Beneficial Ownership Information Report
Step 1: Name Your Michigan LLC
The first step is to register an LLC in Michigan is to name your business.
There are a few basic naming rules you will need to follow, including:
- The name must include “LLC” or “Limited Liability Company.”
- It must be unique and distinguishable from other business entities
- Cannot falsify your business purpose or imply government affiliationW
We recommend reviewing Michigan’s naming guidelines before selecting an LLC name.
Then, use the Michigan Department of Licensing and Regulatory Affairs (LARA) business entity search to ensure your desired name is available.
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Step 2: Appoint a Resident Agent
Michigan requires that you appoint a Resident Agent (also known as a Registered Agent). This is an individual or business entity designated to receive legal documents and government correspondence on behalf of your LLC.
A registered agent in Michigan must:
- Have a physical address in the state
- Be present at the designated address during normal business hours
- Cannot be the LLC itself but can be an LLC owner
Who Is Eligible to Serve as a Registered Agent?
A registered agent can be the LLC owner, an employee of the business, a friend, or family member. Alternatively, the LLC can opt to utilize a professional registered agent service instead.
Step 3: File Your Articles of Organization
Officially and legally register your LLC by filing the Articles of Organization with LARA.
This can be done online or by submitting this form by mail. The filing includes a $50 filing fee and requires information about your LLC and Resident Agent.
We recommend having the following details prepared:
- LLC name
- Business purpose
- Duration of the LLC
- Resident agent’s name and address
- LLC’s management structure
Quick Note: If your LLC is already registered in another state, you will need to file an Application for Certificate of Authority online or by mail along with a $50 filing fee to register as a foreign LLC.
Step 4: Draft Your Operating Agreement
While Michigan doesn’t require an Operating Agreement, having one is beneficial. It outlines the LLC’s operating procedures and ownership structure.
Creating an operating agreement ensures that all LLC members are aligned and helps to prevent future conflict among members.
Step 5: Obtain an EIN and Handle Taxes
Secure an Employer Identification Number (EIN) from the IRS for tax purposes, which is free of charge. An EIN is necessary to hire employees or open a business bank account for your LLC.
This can be done for free online.
Understand your tax obligations by consulting the Michigan Department of Treasury and the IRS.
Step 6: File a Beneficial Ownership Information Report
Starting January 2024, LLC owners must submit a Beneficial Ownership Information Report to FinCEN. Existing LLCs have until January 1, 2025 to comply, and new LLCs are given 90 days post-formation.
The report is free to file online, but failing to submit an accurate report by the deadline could result in a daily fine of $500. However, certain entities like large, tax-exempt, or publicly traded companies are exempt.
You can file this report for free on the FinCEN website.
Next Steps
After registering your Michigan LLC, it’s important to:
- Open a business bank account to keep your personal and business finances separate. Sign up for your business bank account in just minutes with Lili.
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- Determine the necessary licenses and permits for your LLC by researching local, state, and federal requirements.
- Maintain your LLC’s good standing by filing an annual statement with LARA, which involves a small $25 fee.
- Get business insurance to mitigate potential risks. Some of the most common types for LLCs are general liability coverage, professional liability coverage, and workers’ compensation coverage. We recommend Next Insurance for fast, affordable coverage.
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Additional Tips for Success
- Stay Organized: Keep all documentation, financial records, and legal paperwork in order.
- Understand Your Market: Conduct thorough research to ensure your products or services meet your target market’s needs.
- Plan for Growth: Develop a scalable business model that accommodates future growth and expansion.
Conclusion
Forming an LLC in Michigan involves careful planning and adherence to state requirements. Utilize the links provided to access official resources, ensuring a smooth and compliant start to your business venture.