How to start a Michigan LLC

An LLC is a type of business that helps protect its owners (called members). This means that if the business owes money or gets sued, the members' personal assets, like their house or car, are usually safe. 

In the state of Michigan, an LLC is defined as “an entity that is an unincorporated membership organization formed under this act" (Michigan Limited Liability Company Act, 450.4102). That means an LLC in Michigan is a company created within the state or a company that becomes subject to Michigan's state regulations surrounding LLCs.

If that sounds like a lot of legal jargon - that's because it is! What you need to know is that LLCs are popular with business owners because they are simple and flexible to run. They have fewer rules compared to comportations and the owners can choose if they want to manage the business themselves or appoint managers to do it. 

Another benefit is how taxes work: LLC owners can pay taxes through their own personal tax returns, or they can choose to have the business pay taxes separately, like a corporation. This gives owners more choices in how they handle taxes as their business grows.

Why should I register for an LLC in Michigan?

You may want to register for an LLC in Michigan when:

• You own or want to start a business in Michigan, or want to expand an existing business into Michigan, and want to stay legally compliant. 
• You own or want to start a business, and want more flexibility on how you will manage the business or pay taxes than a corporation would provide.
• You want to protect your personal assets from potential liability resulting from business you conduct in the state of Michigan. 
• You own or want to start a business, and want to register in Michigan to open accounts, lease or buy property, secure funding, or hire employees.

Do I need to file my LLC in Michigan if I live in another state?

Any LLC that does business in Michigan must file with the State of Michigan. Michigan does not outline any specific actions that constitute transacting business, however, these actions, among others, are not considered to be doing business in Michigan:

• Maintaining, defending, or settling any legal proceeding.
• Holding meetings of its members or carrying on any other activities concerning its internal affairs.
• Maintaining bank accounts.
• Maintaining offices or agencies for the transfer, exchange, and registration of the foreign limited liability company's own securities or maintaining trustees or depositaries with respect to those securities.
• Selling through independent contractors.
• Soliciting or obtaining orders, whether by mail or through employees or agents or otherwise, if the orders require acceptance outside this state before they become contracts.
• Creating or acquiring indebtedness, mortgages, and security interests in real or personal property.
• Securing or collecting debts or enforcing mortgages and security interests in property securing the debts.
• Owning, and not leasing, real or personal property.
• Conducting an isolated transaction that is completed within 30 days and that is not 1 in the course of repeated transactions of a like nature.
• Transacting business in interstate commerce.

LLCs based in Michigan are called "domestic LLCs," and out-of-state LLCs are called "foreign LLCs." Foreign LLCs and domestic LLCs may have different filing and compliance requirements -- Rocket Lawyer can help you navigate foreign LLC registration, regardless of where you live.

How to start an LLC in Michigan

1. Find a unique name for your Michigan LLC

The state of Michigan requires that the names of all LLCs in the state:

• They shall contain the words "limited liability company," or the abbreviation "L.L.C." or "L.C.," with or without periods or other punctuation.
• The name of a low-profit limited liability company shall contain the words "low-profit limited liability company," or the abbreviation "L.3.C." or "l.3.c.," with or without periods or other punctuation.
• They shall not contain a word or phrase, or abbreviation or derivative of a word or phrase, that indicates or implies that the company is formed for a purpose other than the purpose or purposes permitted by its articles of organization.
• They shall not contain the word "corporation" or "incorporated" or the abbreviation "corp." or "inc."
• They are not too similar to existing LLCs in the state. You can search the state of Michigan's database of business entities in the state to ensure your business' name is unique.

Rocket Lawyer can help you determine whether your business' name is eligible for registration in Michigan and may be able to help you reserve the name before you file your LLC.

2. Include your other LLC members (if any)

In Michigan, you can in fact form as a one-person LLC. In this case, the LLC would be referred to as a single-member LLC (SMLLC), whereas if there is more than one owner, the LLC may be called a multi-member LLC. 

The main difference between single-member and multi-member LLCs lies in ownership structure and management. With a single-member LLC, you have full control over the business. In contrast, a multi-member LLC has multiple owners, each with a specific percentage of ownership as defined in the operating agreement. This means that in a multi-member LLC, owners share profits, losses, and tax responsibilities based on their ownership percentage.

3. Provide a Michigan address

This will be used as your official LLC address. The address that you list may either be your home, an office, or another physical location, but it cannot be a PO box.

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. Register your LLC with the state of Michigan

Once you have a business name and registered agent, you can register your business as a Michigan LLC with the state of Michigan by filing your Articles of Organization. This document may be referred to informally as an LLC's "Articles," or in other states, it may be called a "Certificate of Organization," "Certificate of Filing," or "Certificate of Formation."

6. Get an Employer Identification Number (EIN)

Michigan LLCs are required to have a Federal EIN tax number. Think of your tax ID as the social security number for your company. It will be important for business contracts, tax filings, and all manner of documents down the line. Every company should have one to remain in good standing.

7. Pay the state filing fee

Every state has different fees for forming an LLC, which can also vary from one year to another.

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

What to do after forming a Michigan LLC

There are a few steps you need to take to maintain your Michigan LLC:

1. Create an Operating Agreement: while not mandatory, this is very advisable. We can help you create your Michigan LLC Operating Agreement online.
2. Hold a meeting: a first meeting with members of an LLC is not required by law, but it is highly suggested in order to get organized. Also, unlike corporations, LLCs are also not required to maintain Meeting Minutes, but these documents are also recommended as they provide records for important decisions made.
3. Pay taxes according to how you chose to be taxed: traditionally, LLCs are "pass-through entities." This means that you pay your business taxes on your personal tax form. That said, you can elect to be taxed like a corporation, if you choose to do so.
4. File an Annual Statement: this is required of all LLCs in Michigan and it is due February 15 every year.

What is needed to keep records for my Michigan LLC

The state of Michigan has no statutes requiring the recordkeeping of any specific documents pertaining to your LLC, but it may be helpful to keep documents regarding governance, management, taxes and other important affairs for your LLC.

Still have questions? Rocket Lawyer can help you with the process of forming a Michigan LLC. Get started today!

  

Key takeaways Registering an LLC in Michigan can give you a lot more flexibility than a corporation, as well as protection for your personal assets from potential liabilities. Even if you live in another state, you must register your LLC in Michigan if you do regular business there, like selling things or having employees. After starting your LLC, it's advisable to create an Operating Agreement and hold a first meeting. You will also need to file an Annual Statement. Keep records of your Michigan LLC, like the names of all members, tax documents, and your business rules. These help you stay organized and follow the law.

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 an LLC
• How are LLCs taxed
• How to start an LLC
• Do I Need a Registered Agent?
• How and when to file an Annual Report