How Much Does an LLC Cost in Michigan?

When forming your small business, you may be wondering how to structure it. From sole proprietorship to C corp to LLC (and more!), there are several types of tax structures to choose from. A limited liability company (LLC) business entity offers more financial and legal protection than a sole proprietorship and enjoys more tax flexibility than a C corp, making it a popular choice for small businesses.

If you’re starting a limited liability company in Michigan, you’ll face a variety of upfront costs, from document submission to obtaining the proper licenses and getting the right insurance coverage. Learn about all of the potential fees for your business in the Great Lake State.

How much is the Michigan LLC formation filing fee?

The standard Michigan LLC filing fee is the cost of submitting your articles of organization, which is $50 for a standard review period and up to $1,000 for an expedited review (more on these costs next). There are no other foundational fees for filing your Michigan LLC formation.

Some states require business owners to publish their articles of organization in a local newspaper, but Michigan law does not include this step.

How much do LLC articles of organization cost in Michigan?

The first formal step to starting an LLC in Michigan is filing articles of organization with the Corporations Division of the Michigan Department of Licensing and Regulatory Affairs (LARA). This form provides details about your business, including its name and purpose, the registered agent, and any other desired provisions you’d like to list. (This is different from a Michigan LLC operating agreement, which is an internal business document.)

According to the Michigan Limited Liability Company Act, the Michigan LLC filing fee for articles of organization is $50 for 24-hour service, meaning that the Corporations Division’s review will be completed within 24 hours. Expedited review costs for articles of organization are as follows: 

• Same-day review: $100
• 2-hour review: $500
• 1-hour review: $1,000

If the Michigan Corporations Division rejects your articles of organization, you will receive an email listing the reason for the rejection. At this point, you will need to fix any errors and submit an amendment. This additional Articles of Organization filing fee costs $25.

How much is the Michigan annual report fee?

All LLCs in Michigan are required to file an annual report (sometimes called a Statement of Information) each year by February 15, which costs $25. LLCs formed after September 30 may submit their first annual report by the subsequent February 15. An annual report typically includes information about your LLC’s registered agent, management structure, business location, and mailing address.

Registered agents for Michigan LLCs will receive a form from LARA 90 days before the statement is due, but if you’re ever unsure, speak with the Michigan Corporations Division or consult a legal expert. 

How much does a registered agent cost in Michigan?

A registered agent is the person appointed to manage all of your LLC’s legal documents, receive and reply to all government correspondence, and ensure compliance with state regulations.

Michigan articles of organization must list the LLC’s registered agent. A registered agent can be free if a member of the LLC agrees to do it, or you can hire a service, which can range anywhere from $49 to about $250 per year. You’ll pay the registered agent for their services, not LARA.

As long as the person is a Michigan resident and is reachable at a physical location during regular business hours, that person can be the registered agent. However, it serves LLCs well to use a professional registered agent service, as it can save you time, protect your privacy, and take the small details off your plate.

If the registered agent of your Michigan LLC changes, you will need to submit a Certificate of Change of Registered Office/Registered Agent to LARA, which will cost $5.

How much does a Michigan sales tax license cost?

If your Michigan LLC plans to sell taxable goods to consumers from a location in Michigan (at more than three events per year), then it must have a sales tax license, also known as a seller’s permit.

In Michigan, there is no fee to apply for the LLC sales tax license. Business owners can simply register and apply online with the Michigan Treasury Office. Sales tax licenses are issued annually and apply to January through December of the issued year. 

How much do local business licenses cost in Michigan?

Local business licenses for a Michigan LLC cost anywhere from approximately $50 to $5,000 per year, depending on the municipality in which your business is located and the type of business you’re operating.

Not all Michigan counties and cities require LLCs to apply for a business license. Check with your local city and/or county government to understand if you need to apply for a Michigan business license and the fees involved. 

How much is the annual LLC fee in Michigan?

There is no additional fee on top of the cost of your annual report filing fee, which is $25.

How much does business insurance cost in Michigan?

The cost for business insurance in Michigan varies depending on your industry, the types of insurance you need, and the amount of coverage you decide on. 

There are several types of business insurance that you can get in Michigan—some of which are required.

Workers’ compensation insurance 

If your Michigan business has employees, you must pay for workers’ compensation insurance, which financially covers your employees and legally covers your business in the event of a work-related injury or illness.

Auto insurance 

Michigan’s auto insurance law requires every vehicle owner to purchase auto insurance. This requirement also applies to businesses that own and operate vehicles, lease vehicles, or use personal vehicles for business purposes. These businesses need to purchase commercial auto insurance for owned vehicles, or “hired and non-owned auto insurance” for leased vehicles.

General liability insurance

This type of insurance covers common risks for businesses, such as customer injury or damage to customer property. For example, if a customer suffers an injury on a slippery floor of a retail space, general liability insurance can help the business cover costs related to medical bills or even legal fees.

Commercial property insurance

If your business has a physical space, like an office building or retail store, this type of insurance financially covers the structure in case of theft or damage due to fire, weather, or vandalism. It’s very important to understand your commercial property insurance coverage, as some policies might not cover certain weather events depending on the location.

Business owner’s policy (BOP)

LLC owners can also choose to bundle their general liability and commercial property insurance (and sometimes cyber insurance) with a BOP. BOPs are typically less than the cost of individual insurance policies. 

Professional liability insurance

Also called errors and omissions insurance or E&O, professional liability insurance covers any costs related to lawsuits against your business due to negligence, missed deadlines, or other professional errors. 

Cyber insurance

If your Michigan LLC processes sensitive customer information like credit cards, bank account details, Social Security numbers, or medical records, getting cyber insurance can be immensely helpful, as it covers your business in the event of a data breach. Furthermore, Michigan state law requires businesses to notify Michigan residents affected by a security breach, and the process of notifying customers can be expensive. A cyber insurance policy can help alleviate some of these costs.

So, what’s the bottom line on insurance costs? According to Insureon, the average cost of general liability insurance in Michigan is $42/month, the average cost of professional liability insurance is $59/month, and the average cost of workers’ compensation is $44/month. For the other types of business insurance listed above, you’ll need to get a quote for your specific business needs. Cost factors can include the number of employees you have, the type of vehicle for work (if any), the level of coverage you need, your industry and business location, and policy deductibles. 

What is the Michigan franchise tax?

Some states charge franchise tax, which is a tax for the pleasure of doing business in the state. Michigan’s version of this tax is called a business tax and applies to “all taxpayers with business activity in Michigan, subject to the limitations of federal law.” 

So, any Michigan taxpayer who receives business income, including income from a Michigan LLC, is required to pay business tax in the state at a rate of 4.95%. Taxpayers who expect their tax liability (income that can be taxed) to exceed $800 in a given tax year are required to submit quarterly estimated returns to the Michigan Department of Treasury. Additionally, Michigan also imposes a gross receipts tax of 0.08%; this is a tax on income from the sale of goods or services, minus any potential deductions. 

Some types of businesses, like insurance companies and financial institutions, are subject to different business tax rates in Michigan. For example, financial institutions are required to pay a 0.29% franchise tax, and insurance companies pay a premiums tax.

You can find all the forms needed for filing Michigan LLC taxes on the Michigan Department of Treasury’s website.

Other Michigan fees and business costs you might encounter

There might be some other costs or fees related to your business, such as the following: 

• Certificate of Assumed Name. If your Michigan LLC conducts business under a name other than its legal name, you’ll need to submit a Certificate of Assumed Name—also sometimes called a “doing business as” or DBA—to the Corporations Division of the Michigan Department of Licensing and Regulatory Affairs (LARA). This certificate is effective for 5 years from its submittal date, at which point you’ll need to file again. 
• Reserving a business name. If you’ve identified a stellar business name but you’re not quite ready to file your Michigan LLC articles of organization, you can reserve your business name with LARA. If approved, your business name will be reserved for six months.
• Certificate of Good Standing. This certificate may be needed depending on your industry and business activities.  

What is the total cost to start an LLC in Michigan?

Bottom line: How much does it cost to start an LLC in Michigan? Let’s break it down. 

• Business name reservation: $25
• Articles of organization: $50
• Certificate of Assumed Name: $25
• Registered agent: Up to $250
• Sales tax license: Free
• Local business license: $50 to $5,000
• Business insurance: Varies depending on the type of business, amount of coverage, location, deductible, and more
• Business tax: Varies depending on the type of business and its taxable income
• Certificate of Good Standing: $10

So, how much does an LLC cost in Michigan? The total cost will vary, but it will range from $50 to thousands of dollars (to account for business licensing, insurance, and other variable factors).

FAQs

Does it cost more to register a foreign LLC in Michigan?

Yes, it does cost more to register a foreign LLC in Michigan. In addition to filing the Michigan articles of organization (the filing fee is $50—the same for both domestic and foreign LLCs), foreign LLCs will also need to submit a Certificate of Authority to Transact Business in Michigan, which costs an additional $50 for a standard 24-hour review period. The application should be filled out and sent via the Michigan Department of Licensing and Regulatory Affairs’s Corporations Online Filing website.

Can you get grants to help cover the cost of starting a business in Michigan?

Yes, there are several grants that business owners can apply for in Michigan, depending on their type of business and location. For example, individuals wanting to start a business in Detroit can apply for the Motor City Match grant.

Can veterans get their LLC fees waived in Michigan?

Yes, Michigan LLC fees can be waived if the majority of the LLC’s members are veterans. Fee waiver request forms and more information on eligibility requirements can be found on the Michigan Department of Licensing and Regulatory Affairs’s website.

What’s the cheapest way to start an LLC in Michigan?

You can start a Michigan business cheaply by filing all required paperwork yourself and designating yourself as the LLC’s registered agent. However, it might be a good idea to use a professional service, like LegalZoom LLC formation services, that can provide guidance throughout the formation process. A professional service can also save you money in the long run by helping you avoid noncompliance fees.