An LLC or limited liability company is one of the best business formations. Its benefits include limited personal liability for lawsuits and business debts. It also provides you with flexibility, yet has a more solid structure than a partnership or sole proprietorship.
Guide for setting up an LLC in Michigan
There are a few basic steps required to set up an LLC in Michigan:
Choose a business name
In Michigan, before you file for an LLC you must first choose a name for your business. It is important for your business that you find a catchy name, but whatever you choose, it must comply with the laws of the state.
The legal name of your business must differ from that of other business entities already registered with the Michigan Department of Licensing and Regulatory Affairs. It must also include the words “Limited Liability Company”, “LLC”, or “L.L.C.”
Other restrictions to naming your business include: No words in the business name can be associated with a government organization, imply that the business is trading as a bank, hint at a professional corporation (unless a doctor or lawyer is a member), or contain the words corporation or incorporated.
If you are unsure how to name your business, you can use a business name generator. The same tool allows you to check for the name availability in the state. You can also reserve the name you have decided on for 6 months by applying and paying a further $25. At this point, it is also advisable to purchase a quality domain name for your business website.
The name registered in your Articles of Formation is your business’s legal name, but you can also give your business a DBA or brand name to trade with. This must also be registered with the state’s licensing department at the cost of $25 and is valid for 5 years.
Appoint a registered agent in Michigan
Even though you have an option to act as your own registered agent in Michigan, it is better to appoint a professional registered agent in the state. The registered agent you choose will receive all legal and state papers for your business on your behalf, ensuring that you are aware of all compliance filings and legal paperwork so that you don’t miss any deadlines. Your registered agent must maintain normal working hours and be present during these at the physical address daily.
File the Articles of Organization with the state
It is easy for you to form your LLC by filing the Articles of Organization with the Michigan Corporation yourself. However, if you have other pressing demands as you try to set up the organization of your LLC, you can also have it done through a professional LLC formation in the state.
The filing fee is $50, and you can download the forms online from the Department of Licensing and Regulatory Affairs. When completed, these can be filed online, or you can mail them. If you file online, the processing takes only 24 hours, otherwise, you may wait up to 5 days.
Create an LLC Operating Agreement
This agreement helps to define the role of each of the business members, including the structure of ownership and management. This document allows for an easier settlement of any disputes. The provisions should also state how members will be admitted, how memberships will be transferred or terminated, and the distribution of profits and dividends. Any other provisions that do not state with the laws in Michigan can also be added.
Other regulatory requirements
If there is more than one member, the LLC must obtain an Employer Identification Number (EIN) from the IRS. If there is only one member, but with employees, the EIN is essential.
Depending on the business and its location, you may need to obtain a local or state small business license in the state of Michigan.
If you have a retail business that collects sales tax, you need to register with the Michigan Department of Treasury (DOT).
Filing of annual statements in Michigan
All LLCs in Michigan must file an annual statement with the Department of Licensing and Regulatory affairs. This can be filed online by February 15 and the filing fee is $25. If your LLC is qualified after September 30, you will not need to file on February 15 immediately after its formation.