Michigan Processing Times and Fees
Most states offer both standard and expedited processing times for your corporation paperwork. Michigan is no different. To help you choose the best option, see our list of the average wait times for each.
Michigan charges a filing fee for forming your corporation. This fee is based on the number of authorized shares.
Deciding Between a Michigan C-Corp or S-Corp Tax Designation
In most aspects, a C Corp and an S Corp are the same. They both have the same limits on liability, structure, management and compliance documents. When deciding between them, these are the differences that matter:
Ownership Rules: There are no limits on the number of shareholders or stock classes a C Corp can have. An S Corp may have only one stock class and no more than 100 shareholders. All shareholders of an S Corp must be citizens or legal residents of the United States.
Taxes: A C Corp is taxed separately from its shareholders. The business pays taxes on corporate earnings, and individual shareholders then pay taxes on dividends they have received. An S Corp does not pay corporate taxes. It's a "pass-through" entity, which means all earnings pass through to the shareholders, who then pay taxes on their share of earnings.
Documents: When you form a corporation, it is automatically a C Corp. In order to become an S Corp, you must file IRS Form 2553, Election by a Small Business Corporation.
Personnel Requirements
Michigan sets few limits on a corporation's personnel.
- Age requirement: The state does not set any age requirements for directors or incorporators.
- Minimum number of directors: Your corporation must have at least one director.
- Residency requirement: Michigan does not require that directors live in the state.
You don't have to list your directors in your Articles of Incorporation.
Other Requirements for Your Articles of Incorporation
In addition to meeting personnel requirements, your Articles of Incorporation must meet these other Michigan requirements:
Every corporation in Michigan must appoint a registered agent to be responsible for accepting tax, legal and government documents on its behalf. Your agent must be available during regular business hours and must have a physical Michigan address. Post office boxes aren't acceptable. When you incorporate with Rocket Lawyer, we'll help you designate an agent. You must include your registered agent's name, physical address and mailing address--if it's different from the physical address--in your Articles.
Michigan also requires that you include the following information in this document:
- The name of your corporation.
- The purpose of your corporation. It's acceptable to state that it will engage in any lawful business allowed under the Michigan Business Corporation Act.
- The total number of shares your corporation is authorized to issue.
- If the shares will be divided into classes, list the class designations and number of shares of each class.
- The name and address of each incorporator.
- If your corporation will have a defined end date, state that date.
You may also include other provisions, such as limitations on the powers of the corporation or its directors, or limits on a director's liability to the corporation.
Guidelines for Your Name
Your corporate name is a reflection of your business. When choosing a name, keep these Michigan requirements in mind:
- The name must include the words "Company," "Corporation," "Incorporated," "Limited," or one of the abbreviations "Co," "Corp," "Inc" or "Ltd." You may use the abbreviations with or without periods.
- The name should not imply organization for any purpose other than what your business actually does. For example, if you sell appliances, don't call your company "Gemstones, Ltd."
- Companies that are not in the banking business cannot use words like "Bank" or "Security" in their names unless the rest of the name makes it clear that the business isn't in banking.
- Your name can't be the same as, or too similar to, a name already registered or reserved with the Secretary of State.
Michigan Corporate Taxes & Reports
Taxes are part of owning a business, so you'll have to pay them for your new corporation. One of the first things you'll need is an employer identification number, or EIN. You can apply for one with the IRS. This number is similar to a Social Security number, but its for businesses. Any corporation with employees needs one, and you should get yours before doing any business. If you'd like to learn more about the tax structure of corporations, here's more information about S Corps and C Corps.
Depending on your business's type and size, you may need to submit Form 518, Registration for Michigan Taxes. This form registers you for sales and use taxes, withholding taxes, Michigan business tax, motor fuel tax and tobacco products tax.
Michigan also requires that all corporations file an annual report. The report is due by May 15 each year, beginning in the calendar year after your incorporation.
Corporations must also send all shareholders an annual financial report. This report must be sent out within four months of the end of your fiscal year. It should include the company's year-end balance sheet, income statement and anything else required by state law.
Keeping Corporate Records and Ongoing Filing Requirements
In order to maintain its corporate status, your business must also create and maintain other corporate records. The two major documents are bylaws and corporate minutes. Some states require bylaws and minutes, and others do not.
Bylaws: A company's bylaws define its structure and operating procedures. All provisions in your bylaws must be consistent with your Articles of Incorporation and with the law.
Corporate Minutes:All corporations must hold annual shareholder and director meetings. The meeting minutes record all actions and decisions that occur in these meetings.
You don't need to file these documents with the state in Michigan. You should keep them with your other corporate documents. Michigan allows corporations to store these documents outside the state.
We hope this information has been helpful, and we wish you the best of luck with your new business. When you're ready to start your Michigan corporation, we're ready to help.
This article contains general legal information and does not contain legal advice. Rocket Lawyer is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.
