How to start a Michigan corporation

It might seem like a lot at first, but once you understand the steps, it’s very doable. This guide will walk you through everything you need to know to start your Michigan corporation.

How to start a corporation in Michigan

Incorporating means registering your business as a corporation so the law sees it as its own entity, separate from you. Each state has its own rules for how to do this, so the process can seem confusing. Let’s go through each step: 

1. Choose a name for your Michigan corporation

Your corporation’s name should be unique and make a statement about your business. Make sure it complies with the following Michigan requirements:

• 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.

Need help coming up with a business name for your corporation? Try the Rocket Copilot™ AI Business Name Generator, a free tool to help you brainstorm business names and get started registering your corporation.

2. Decide between a Michigan S-Corp and C-Corp tax designation

There are similarities between a Michigan S-Corp and a C-Corp regarding personal liability, management, structure, and compliance. The differences, however, come down to the following:

• Ownership Rules: There are no limits on the number of shareholders or stock classes a C-Corp can have. An S-Corp, however, 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.

3. Appoint directors and shareholders for your Michigan corporation

Each state has its own personnel requirements for incorporating. In Michigan, your corporation must have at least one director. You don't have to list your directors in your Articles of Incorporation. The state does not set any age requirements for directors or incorporators, nor does it require that directors live in the state.

4. Choose a Registered Agent

A Registered Agent is the person or business responsible for receiving tax, legal, and government documents during regular business hours. It's important that every business has one. You can either serve as your own registered agent (if you have a Michigan address) or choose one to do that service for you (if you are not located in Michigan or would like an extra layer of privacy).

5. File your Articles of Incorporation with the state of Michigan

Once you have a business name and registered agent, you can register your business as a Michigan corporation with the state by filing your Articles of Incorporation. This document may be referred to in other states as "Certificate of Organization," "Certificate of Filing," or "Articles of Organization."

6. Get an Employer Identification Number (EIN)

Before opening your doors for business, apply to the IRS for an employer identification number, or EIN. All corporations with employees in Michigan must have an EIN. An EIN is similar to your Social Security number, but it's for businesses. You'll also need an EIN to open your corporate bank account.

Congratulations! After you have completed all these steps, you have formed your Michigan corporation.

What to do after incorporating in Michigan

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 Meeting 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, but you should keep them with your other corporate documents. Michigan allows corporations to store these documents outside the state.

Still have questions? Learn more about how to start your own business with Rocket Lawyer and get started today!
 

Key takeaways Starting a corporation in Michigan means following state rules, like choosing a unique name, filling out paperwork, and paying fees to make it official. One important choice is deciding how your corporation will be taxed in Michigan, either as an S-Corp or a C-Corp. This affects how the business and owners pay taxes, and the differences between the two change from state to state. After forming the corporation, it’s required to keep records – like Bylaws and Meeting Notes – to stay in good standing with the state and prove your business is real and operating correctly.

Additional resources

Learning how to enforce a contract is just one step. Explore these additional topics to learn more and take the next steps.

• What is a corporation?
• What is an S-corporation?
• How are corporations taxed?
• How to start a corporation
• How to register a corporation by state