Are you planning to form an LLC in the state of Michigan? Make sure that you detail each members’ responsibilities in the operating agreement, how new members are admitted or transferred, the process for altering or dissolving the LLC, or how the profits are distributed.
Read on for more information on how to go about creating and registering an LLC in Michigan.
Is an LLC Operating Agreement Required in Michigan?
An LLC operating agreement isn’t required in Michigan, but it’s highly encouraged to protect the members’ assets from the businesses’ creditors. The LLC operating agreement outlines the ownership of each LLC member, addresses how issues are resolved, and creates rules for your business.
Michigan Operating Agreement Laws
Michigan’s general operating agreement laws are clearly set out in the Limited Liability Company Act (Act 23 of 1993.) To simplify the process, Michigan State created the Lara Corporations Online Filing System and the articles of organization form.
A few things to keep in mind:
- Your LLC name must include the abbreviations LLC or L.L.C or the phrase limited liability company
- Your LLC name can’t include the words that may be associated with the government.
- Additional paperwork may be required for licensed individuals such as lawyers or doctors.
How Much Does it Cost to Form an LLC in Michigan?
It will cost $50 to file your articles of organization with Michigan’s Licensing and Regulatory Affairs department. Every year, all LLCs in Michigan must file an annual statement or annual report with the same department for $25. Do submit your report on time, or you will pay a penalty of $50.
Foreign LLCs or those already registered in another state and planning to expand their operations in Michigan will need to pay $50. You need to file an Application for Certificate of Authority to Transact Business in Michigan to register.
How to Form an LLC in Michigan?
Starting an LLC in the state of Michigan only involves a few steps. We have detailed everything you need below:
Step 1 – Name your LLC
How to start an LLC in Michigan only involves a few steps. The first thing you need to do is choose a name for your LLC. When creating a business name, ensure that you have adhered to the state regulations to avoid problems and other issues with your LLC.
We highly recommend that you choose at least three names if your first choice is taken. Take your time selecting the best name for your LLC and consider reserving this name so that no one else can take it.
You’ll need to apply to the Department of Licensing and Regulatory Affairs to reserve your business name. They can reserve that name for up to six months, so ensure that you have taken the necessary steps to establish your LLC.
Step 2 – Appoint a Michigan-based Agent
While you or a member of your LLC can serve as the registered agent, we highly suggest that you hire an individual or company outside of your LLC. This will be your point of contact for legal matters. The registered agent can help you manage important documents and remind you of important dates.
To ensure compliance, consider hiring a registered agent service. They can help ensure that you meet all the legal requirements necessary, and they usually have flexible business hours, which can be beneficial for you.
Step 3 – File Your Articles of Organization
The next step is to file your articles of organization with the Department of Licensing and Regulatory Affairs Corporations, Securities, and Commercial Licensing Bureau, Corporations Division in Michigan. Below are some of the information you’ll need:
- Name of the LLC and its purpose
- Duration of the LLC
- Name and address of the registered agent
There is a non-refundable fee for filing your articles of organization. You can file the paperwork in person, online, or by mail. There is also an expedited option with additional fees — you can choose to have the process completed in an hour, two hours, or within 24 hours.
Step 4 – Create your Michigan Operating Agreement
It’s not mandatory to create an LLC operating agreement in the state of Michigan, but it’s highly recommended for you and the members’ protection. The operating agreement covers how your LLC is managed, the rules of your company, and the percentage ownership. It also details how finances are handled and other necessary regulations.
Step 5 – Apply for an EIN
The last step would be to secure a Federal Employer Identification Number or EIN to finalize your LLC in Michigan. You need the EIN for tax purposes and for opening business accounts. You can get your EIN at the Internal Revenue Service website, by fax, or by mail.
As soon as you have the EIN, we suggest opening a business bank account to help you better sort out your finances.
Michigan LLC Operating Agreement Template
Are you ready to get started with your LLC in Michigan? Use our Michigan LLC operating agreement template for guidance: