How To Start an LLC In Michigan

A limited liability company (LLC) in Michigan is a business enterprise that provides several benefits to entrepreneurs. An LLC is easy to start and operate in Michigan. The company structure also offers certain tax benefits to the owners and limits the personal liabilities of the owners, allowing them to safeguard personal assets. 

Individuals who want to start an LLC in Michigan must usually complete the following steps:

The formation of limited liability companies in Michigan is governed by the Michigan Legislature, Act 23 of 1993 and executed by the Michigan Department of Licensing and Regulatory Affairs, which also maintains business records on LLCs. 

In Michigan, over 100,000 new limited liability companies are formed each year. Business data published by the Licensing and Regulatory Affairs Department (LARA) shows that 132,500 LLCs were formed in Michigan in FY 2021/2022 (October 1, 2021 to September 30, 2022). In FY 2020/2021, 151,552 LLCs were launched; in 2019/2020, the sum of LLCs created in the state was 113,945. As of October 2022, the number of limited liability companies in good standing in Michigan was 789,216.

What Is an LLC?

A limited liability company is a legal enterprise that merges the features of a corporation and partnership to offer owners special benefits. Like a corporation, an LLC limits the owner(s) from being personally responsible for company liabilities or debts, and like a partnership, it offers pass-through taxation to owners.

The Michigan Limited Liability Company Act outlines the provisions for the inception and operation of LLCs in the state. Per the law, any individual, foreigner, foreign cooperation, or another LLC can own an LLC. Persons who own an LLC are called members. 

In selecting the name of an LLC in Michigan, it is expected that:

Section 450.4204 of the Michigan Legislature contains the state’s LLC naming demands.

An individual can search for an LLC name on the Department of Licensing and Regulatory Affairs site to confirm its availability. Performing a name search ensures that one does not begin the process of registering a company to discover that the name is unavailable, leading to a filing rejection or delay. 

It is also advised that individuals choosing an LLC name perform a trademark search on the United States Patent and Trademark Office’s website to ensure the chosen name will not cause a trademark violation if used to market or sell a product/service.

If a name is available and the parties involved are not yet ready to start the business, the parties can complete and submit a Name Reservation form. The form can be submitted online or mailed with a $25 fee to the following address:

Michigan Department of Licensing and Regulatory Affairs

Corporations, Securities & Commercial Licensing Bureau

Corporations Division

P.O. Box 30054

Lansing, MI 48909

It can also be filed in person at the address listed on the form.

LLC names can be reserved for six months from the month of filing in Michigan.

Step 2: Choosing an LLC Registered Agent in Michigan

One of the legal requirements for starting an LLC in Michigan is having a registered agent. A registered agent can be a resident person or another company (provided the company is authorized to do business in Michigan). It is compulsory that an LLC have an agent to stand as an intermediary between the organization and the outside world. The agent collects notices, legal demands, and other official documents for the company.

A registered agent should be professional, prompt with delivery, and able to offer the value demanded by the position.

How Do I Change the Registered Agent for My LLC in Michigan?

In Michigan, an organizer can change the registered agent of an LLC by completing and submitting a Certificate of Change of Registered Agent for $5.

The form can be submitted via mail, in person, or online via the SOS Corporations Online Filings System (COFS). Fees can be paid using a VISA card, MasterCard, or Discover.

Persons submitting via mail can send the completed form and a money order or check of $5 to the Michigan Department of Licensing and Regulatory Affairs mailing address.

For in-person submission, visit:

2407 North Grand River Avenue

Lansing, MI 48906

Phone: (517) 241-6470

Step 3: LLC Filing Requirements in Michigan

To register an LLC in Michigan, one must meet the following requirements:

Domestic LLCs file the following documents with the Licensing and Regulatory Affairs Department in Michigan:

Michigan LLC Articles of Organization 

The Articles of Organization contain all relevant information about an LLC. The form can be submitted online or via mail. Filing articles of organization gives the LLC the right to run a business in Michigan. Information to be provided in the document includes:

The cost of filing articles of organization in Michigan is $50, and the processing time is usually about a week.

LLC Operating Agreement in Michigan

An operating agreement contains information about how the business will be operated, including the duties and rights of its members. An operating agreement is not a compulsory document to file for an LLC in Michigan, but it is recommended for LLC members who want to prevent future internal conflicts. 

The document includes the following information:

All members of the organization should sign the agreement. 

LLC Statement of Information in Michigan

A Statement of Information is the annual report of an LLC that must be filed with the Department of Licensing and Regulatory Affairs, Division of Corporations, each year. The agency usually sends a pre-printed form to registered LLCs about 90 days before the due date. 

This document (officially called Annual Statement and Report) can be submitted online, by mail, or in person. Companies that do not submit this document after two years are considered “not in good standing,” which means that another LLC can take the company’s name, and the SOS may dissolve the LLC.

The fee for filing a Statement of Information is $25. The Department of Licensing and Regulatory Affairs provides a filing guide that one can use. 

Do You Need a Michigan Address for LLC?

Yes. However, Michigan only requires a registered agent’s address to file articles of organization with the Licensing and Regulatory Affairs Department. Companies who do not have a principal place of business in the state can leave the provided section of the form blank (although it may be required later). LLC owners who want to list a principal office in Michigan but do not have one can list a virtual address to serve that purpose instead. 

How To Get a Virtual Address for LLC in Michigan

A virtual address is a physical address in Michigan where businesses can receive mail correspondence. A business owner who requires a virtual address for an LLC can conduct an online search to find a virtual address provider. Each service provider offers different plans and pricing. The owner can compare services to select one that suits their business needs better. 

Some virtual addresses can be used for banking, licensing, and general documentation purposes. Some also offer on-site space in case of a physical meeting. 

Please note that while a virtual address can be used as an office address, it does not serve the same purpose as a registered agent’s office. Businesses can use the former to receive any mail, but a registered agent is specifically for receiving legal and state correspondence. 

Step 4: How To File for an LLC in Michigan

An LLC can be filed online, via mail, or in person in Michigan. All applicants must complete the articles of organization and submit the document to the Licensing and Regulatory Affairs Department, including the required fee. An LLC’s organizer(s) can also visit in person to submit the filled form and pay the required fee at:

2407 North Grand River Avenue

Lansing, MI 48906

How To Create an LLC Online in Michigan

LLC organizers can visit the Corporations Online Filing System (COFS) provided on the Licensing and Regulatory Affairs Department’s website to create an LLC online in Michigan. Then, they can follow these steps: 

The office will review the submission and contact the owner to verify the formation.

Can You Have Multiple Businesses Under One LLC in Michigan?

Yes, an LLC can have multiple businesses under it in Michigan by filing a Doing Business As or DBA (fictitious name) with LARA. This allows the business to operate under other names than its true name without filing articles of organization for each LLC. However, having multiple businesses under one LLC has its advantages and disadvantages.

The advantages include:

The disadvantage includes higher liability as failure in one of the businesses can cause failure in all. Also, keeping financial records for each business can be complicated if one uses a single bank account. It is advised that one separates the bank accounts for all businesses. 

How Long Does It Take To Set Up an LLC in Michigan?

The time taken to set up an LLC in Michigan depends on how long it takes to fulfill all state requirements and the method by which the documents are submitted. For instance, if an LLC’s organizer does not follow the state’s naming guidelines outlined above, their filing could take longer. Also, an LLC filed via mail has a four-week processing time, while one filed online takes up to two weeks to be formed.

A prospective owner of an LLC can also choose to pay for expedited processing—the more urgent the request, the higher the cost.

Step 5: How To Get an EIN for LLC in Michigan

Generally, all LLCs are expected to have an Employer Identification Number (EIN). An EIN is also known as a Federal Tax Identification Number. Persons interested in getting an EIN in Michigan can apply online or via mail to the Internal Revenue Service (IRS). This number can be used to open a business account, file taxes, and pay employees. 

LLC owners can apply for an EIN online on the IRS website if eligible:

Online applications must be completed quickly, as each session expires after 15 minutes of inactivity. EINs requested online are issued immediately.

To file for an EIN via mail or fax (available to both domestic and international applicants), one must fill out Form SS-4 and submit it to the address below:

Internal Revenue Service

Attn: EIN Operation

Cincinnati, OH 45999

Fax: (855) 641-6935 

The time to process an application sent via mail is four weeks, while fax processing is four days if the applicant’s fax number is provided. International applicants can also call (267) 941-1099 to apply for an EIN. 

Step 6: Do LLCs Pay Taxes in Michigan?

Yes. The amount paid in tax depends on the company’s total income and its tax classification. An LLC in Michigan can be taxed either as a corporation or not. If taxed as a corporation, the LLC must remit a 6% flat rate on its income. If taxed as a disregarded entity or partnership, the owners of the LLC pay taxes on their personal tax returns to the state.

How Are LLCs Taxed in Michigan?

LLCs in Michigan are taxed as a corporation or pass-through entity. LLCs taxed as corporations pay taxes at the individual and corporate levels. Meanwhile, LLCs taxed as pass-through entities only pay taxes on the individual tax returns of members. More information about Michigan’s taxation processes can be obtained from the Department of Treasury’s website.

Tax Benefits of an LLC in Michigan.

There are several tax incentives available to LLCs in Michigan, including:

Do You Have To Renew LLC Every Year in Michigan?

Yes. Once an LLC is filed in Michigan, members do not need to register the company again. However, the company must file an annual report every year. An LLC that defaults on this annual requirement forfeits its good standing with the state and can be administratively dissolved.

An LLC that lost its good standing in Michigan can file a Restoration of Good Standing alongside owed annual statements and fees, as stated in Section 450.4207a of the Michigan Legislature.

The form to be submitted for a Domestic LLC is CSCL/CD-770, while that for a foreign LLC is CSCL/CD-771. The processing fee is $50.

How Much Does It Cost To Start an LLC in Michigan

Starting an LLC in Michigan costs $50, which is the fee for filing articles of organization (for normal review). An expedited review costs more, thus increasing the cost of starting the LLC. Apart from the fee for articles of organization, an LLC’s members must also pay a yearly fee of $25 to file the mandatory annual report.

Additional costs also apply if one hires a registered agent, reserves an LLC name, files a Certificate of Assumed name, orders a certified copy of documents, etc. On average, an organizer may spend $50 to $500 to start an LLC in Michigan.

Can You Form an LLC In Michigan for Free?

No. LLCs starting up in Michigan must pay the state fee required to file articles of organization, among other startup costs.

How To Start an LLC in Michigan for Free/At Minimal Cost

Generally, the cost of starting an LLC in Michigan is minimal. Only the fee for filing the articles of organization is compulsory, and it is $50. The fee for filing articles of organization can only be waived if the majority of the members of the LLC are veterans (this has to be proven when applying for a waiver).

Any other cost is optional and based on the LLC’s startup needs. 

What Businesses Should Consider Forming an LLC in Michigan?

Businesses that can benefit from forming an LLC in Michigan include small businesses, tech startups, and businesses that do not have a large capital to start up. Business owners who want to constrain legal liability and obtain some tax flexibility can also consider establishing an LLC in the state.

What Are the Benefits of An LLC in Michigan?

The following are some benefits of an LLC in Michigan:

How Does an LLC Work in Michigan

A limited liability company in Michigan can be established by an organizer (an individual or business entity) who may be a member of the organization. The business entity is separate from its members, who bear liability per their contributions to the organization. 

An LLC possesses characteristics of corporations and partnerships, thus providing business owners with the benefits of both business structures. This organization type can be managed by members or managers (who may also be members). 

Generally, starting and managing an LLC costs less than starting and maintaining other business structures (apart from a sole proprietorship). Members can also decide how they will be taxed (as a pass-through entity or a corporation).

An LLC can be a domestic, professional, or foreign company in Michigan. A domestic LLC is formed and based in Michigan. A professional LLC is formed by persons licensed to provide professional services within the state. A foreign LLC is a business entity formed in another state and authorized to conduct business affairs in Michigan.

LLC VS S Corp in Michigan

An S Corporation, commonly called S Corp, is a corporation granted a special tax status, particularly to avoid the seeming double taxation disadvantage of C Corps. An S Corp allows some profits and losses to pass through to owners’ personal income, which is similar to an LLC. The financial records of the stakeholders are separated from that of the business, which reduces the risk associated with equity liquidation.

LLC membership is unlimited, while an S Corp can only have up to shareholders.

Also, an S Corp is independent in that if a shareholder leaves, sells their shares, or dies, the company continues. In other words, changes in ownership in an S Corp do not disturb the running of the business. However, an LLC may be dissolved upon ownership changes. 

In Michigan, an S Corp must file with the Licensing and Regulatory Affairs Department to be established but must file with the IRS to be considered an S Corp. Meanwhile, LLCs only file with the Licensing and Regulatory Affairs Department to be formed. Further, although non-U.S citizens can be members of an LLC, only citizens can be shareholders of an S corp.

Lastly, an S Corp enjoys certain tax benefits not available to an LLC.

LLC vs. Sole Proprietorship in Michigan 

The following are some differences between an LLC and a sole proprietorship in Michigan:

Michigan provides incentives for starting an LLC, which may make it more favorable than forming a sole proprietorship. However, a sole proprietorship typically requires less paperwork to form compared to an LLC, and the cost of starting one is relatively low. Choosing which business structure to establish will depend on a business’s purpose.

LLC vs. Corporation in Michigan

A corporation, called a C Corp, comprises shareholders, officers, and directors. The shareholders of a corporation are protected from the liability and debts of the business, as are the members of an LLC. 

Corporations, unlike other business entities, are subject to stricter legal requirements. For example, corporations are taxed twice, a concept known as double taxation (the corporation is taxed, and the personal income of the shareholders in the company is also taxed). Also, corporations are mandated to hold meetings at least once a year and keep extensive records. This requirement is not imposed on limited liability companies.

A C Corporation is a recommended business structure for organizations that plan to raise large capital and have a wide range of investors. A corporation is advantageous because it has a better and clear-cut structure that is good for equity financing and attractive to investors.

Business License vs. LLC in Michigan

A business license is not the same as a limited liability company. A business license is a permit a government authority gives a business owner to run a specific business or carry out a certain business activity. On the other hand, a limited liability company (LLC) is a method by which a company is structured to limit owners’ personal liability and provide them with other benefits discussed earlier. 

Further, several government authorities issue business licenses in Michigan, depending on the agency that regulates one’s business affairs. However, only the Michigan Licensing and Regulatory Affairs Department can create an LLC.

Do I Need a Business License If I Have an LLC in Michigan?

Yes, in almost all cases. While Michigan does not require a general business license for LLCs, most counties and cities in the state require one before an LLC can legally operate in their jurisdictions. Some LLCs may also require a federal license. Examples include aviation, agriculture, mining and drilling, and nuclear energy businesses.

How To Dissolve an LLC in Michigan

An LLC in Michigan is dissolved when:

To dissolve an LLC in Michigan, one must file Form CSCL/CD-731 with the Licensing and Regulatory Affairs Department and obtain tax clearance from the Michigan Department of Treasury within 60 days of submitting the dissolution papers. 

Only LLCs in good standing can be dissolved in Michigan.