How to Start an LLC in Michigan

Thinking about creating a limited liability company (LLC) in Michigan? The Great Lakes State has a talented workforce of engineers and skilled tradespeople, easy access to global markets via rail, air, and waterways, and affordable costs for businesses.

Learning how to start an LLC in Michigan can be a great way to protect your personal assets and keep your business operations flexible. Before you get started, learn about the paperwork, licenses, taxes, and more so the process is as streamlined as possible.

How to get an LLC in Michigan in 8 steps

Many of the requirements for Michigan LLCs are laid out in the Michigan Limited Liability Company Act, including naming requirements, duties, rights, and liabilities. To make it more straightforward, we’ll break down what you need to do into steps.

1. Name your Michigan LLC

You’ll need to choose a business name before you can legally register a Michigan limited liability company. Names must comply with Michigan’s naming requirements, including:

• Your business name must include the words limited liability company, LLC, L.L.C., LC, or L.C.
• Your name must be different from an existing business in the state. You can do a Michigan LLC search using the Michigan Department of Licensing and Regulatory Affairs’ search tool to determine if a particular business name is in use.
• Your business entity name cannot contain a word or phrase indicating a purpose other than stated in the articles of organization.
• An LLC name can’t include the words “corporation,” “incorporated,” or the abbreviations “corp.” or “inc.”

If you aren't ready to register your LLC but are concerned your business name might be taken by someone else, you can reserve it for a small fee. In Michigan, names may be reserved for up to 180 days by paying a $25 fee and submitting an Application for Reservation of Name to the Michigan Department of Licensing and Regulatory Affairs.

2. Choose your resident agent

Michigan requires you to appoint a resident agent for your LLC (also called a registered agent in other states). This is the person or entity authorized to receive service of process and other official legal documents and notices on behalf of your LLC. You can be your own resident agent, appoint an employee of your LLC, appoint a business to serve as your agent, or use a professional resident agent service. The resident agent must meet the following criteria:

• Individuals must be 18 years old
• A business serving as a resident agent must be a domestic corporation or LLC, or a foreign corporation or LLC authorized to conduct business in Michigan
• The agent or entity must have a physical address in Michigan
• The agent must be on-site and available to accept documents during regular business hours

Many LLC owners find that resident agent services like those we offer at LegalZoom are convenient and flexible. Keep in mind you can change your resident agent at any time by filing a Certificate of Change of Registered Office and/or Resident Agent and paying a $5 fee.

3. Prepare and file articles of organization

Next you’ll need to prepare articles of organization and file them with the Michigan Corporation Division. The articles of organization are a document that officially establishes your LLC by laying out basic information about it, including:

• Your LLC name
• The name, physical street address, and mailing address of your LLC’s resident agent.
• The LLC’s purpose or business activity. This can be a general statement.
• The LLC’s duration, if other than perpetual. In most cases, LLCs are perpetual, meaning the duration is indefinite. A perpetual LLC can be dissolved voluntarily or involuntarily. If your LLC exists for a purpose that will end at a specified date, you will specify that date when forming the LLC.
• The effective date of the articles of organization.
• The submitter (person filing the paperwork) must provide their name, address, phone number, and email address if filing online. If filing a paper form and submitting by mail, the submitter is required to sign the articles and provide his or her name, signature, and contact information.

The filing fee for the articles of organization is $50. You can also pay $100 for 24-hour service or $150 for same-day service. Once you file, the Department of Licensing and Regulatory Affairs will review the articles of organization. If they’re approved, the state will issue you a certificate that confirms the LLC formally exists. You can use this to obtain an employer identification number (EIN), a business license, and a business bank account.

4. Create an operating agreement

An operating agreement outlines the way your LLC will conduct business. While it isn’t required to start an LLC in Michigan, it’s considered an essential component of your business. An operating agreement can include, but is not limited to, the following:

• The business name and principal address
• Duration and purpose of the LLC
• Name and address of the resident agent
• Information about the articles of organization
• How profits and losses will be divided
• Indemnification and liability clauses
• Management of the LLC
• Members and their contribution
• Procedure for admitting new members and releasing old members

Having a readily accessible, written operating agreement can help you settle disputes that may arise over financial agreements and other potential litigation. Otherwise, the courts make determinations based on Michigan state law, not necessarily what is in the best interest of the LLC. You can create it yourself or get help from a professional operating agreement service like LegalZoom to make sure it covers everything you need.

5. Get an employer identification number and open a business bank account

The nine-digit employer identification number (EIN)—sometimes called a Federal Tax Identification Number—is assigned by the Internal Revenue Service (IRS) to identify your Michigan LLC for federal taxes. The purpose of an EIN is to:

• File and manage taxes at the state and federal level.
• Open a business bank account.
• Hire employees (an EIN is required for payroll taxes).

You can obtain your EIN by mail or online through the IRS, or you can use a filing service to handle the process. You’ll get your EIN immediately after completing the application.

6. Comply with employer obligations

If you plan to hire employees, you must comply with certain regulations from the Michigan Department of Labor and Economic Opportunity.

• Employers must report employees. Employers must report new employees to the government within 20 days of their hire date.
• Employers are required to withhold taxes. In Michigan, employers are required to withhold federal, state, and local income taxes from their employees’ wages and forward what is collected to the government.
• Employers must pay unemployment taxes. Employers in Michigan must pay taxes to the state unemployment fund. Unemployment insurance helps provide benefits to employees who lose their jobs.
• Employers must buy workers’ compensation insurance. In Michigan, employers must purchase workers’ compensation insurance, which covers medical expenses for workers injured on the job.

7. Obtain business licenses

Next, you’ll need to obtain the permits or licenses necessary to operate your business, including health department permits, zoning permits, home occupation permits, professional licenses, and more.

Michigan does not issue a general business license, but depending on your type of business and where you’re located, you may need to obtain specific licenses or permits. In Michigan, many types of businesses need a license to operate, from skilled tradespeople like electricians, mechanics, and plumbers, to interpreters and athletic trainers.

In addition, if your Michigan LLC will provide a professional service, you will need to organize as a professional limited liability company (PLLC or professional LLC). Some examples of businesses that will need a professional LLC include accountants, attorneys, chiropractors, dentists, doctors, architects, engineers, and veterinarians. These professions typically have ongoing licensing requirements you’ll need to maintain to keep your PLLC in good standing. 

Cities or counties may also require a business license to operate your LLC. Conduct a business license search to determine if it is required for your industry and your area.

8. Register for state taxes

As you’re learning about how to get an LLC in Michigan, you’ll almost certainly hear about the “business privilege tax.” Officially the Michigan Business Tax (MBT), it’s a 4.95% business income tax and a 0.8% modified gross receipts tax that’s imposed on anyone with business activity in Michigan. If you expect your tax liability to be more than $800, you must also file quarterly estimates.

Some LLCs may be eligible to claim the Small Business Alternative Credit (SBAC), which allows you to pay a reduced tax rate. It’s always a good idea to talk to a tax professional about your business taxes. In addition, LZ Books can help you manage your projects, bookkeeping, and other small business solutions. 

Michigan has no city, local, or county sales taxes, but there is a state sales tax, which is 6%. If your Michigan LLC makes sales to end consumers, you’ll need a sales tax license, also called a seller’s permit. Service businesses that sell property to customers in connection with repairs, renovations, or other services they provide may also need to collect sales tax. 

Like many states, Michigan also has excise taxes on a number of products, including alcohol, marijuana products, tobacco, and gasoline. You can register for all of the taxes you owe by submitting Form 518, Registration for Michigan Taxes, to Michigan Treasury Online (MTO).

Next steps after forming your Michigan LLC

Now you know how to start an LLC in Michigan—but what about keeping it running? Don’t forget the following steps to help your business be successful.  

• Register a domain name. Most businesses need a webpage. You can reserve the option of having one in the future by buying your domain name now. Before finalizing your LLC name, check if the URL is available.
• Obtain a certificate of good standing. This certificate verifies your LLC is compliant with Michigan’s regulations. It costs $10 and can be useful when applying for loans or contracts. 
• Consider a foreign LLC. If you decide to expand your business to other states beyond Michigan, you’ll need to register as a foreign LLC in those states. Each state has its own process for registering a foreign LLC, so be sure to research the requirements.

Annual filing requirements for Michigan LLCs

A successful Michigan LLC application gives you a legal foundation to conduct business. But to stay compliant and in active status, Michigan LLCs must regularly file an annual statement (also called “annual report” in other states) every year. The statement is due by Feb. 15 every year, and the filing fee is $25. Michigan LLCs may also be required to make quarterly tax payments. You can check with the Michigan Department of Treasury or consult a tax professional if you’re not sure what you need to pay.

How much does it cost to form an LLC in Michigan?

The cost to form an LLC in Michigan is only $50 to file the articles of organization, making it a very affordable place to start a business. However, many LLC owners choose additional services. Here’s the complete breakdown.

• Name reservation: $25 filing fee
• Formation cost: $50 for filing the articles of organization
• Certificate of Good Standing: $10 filing fee
• Business licenses and permits: Varies by profession and area
• Registered agent service: $249 per year on average
• Operating agreement: $99 and up for an online service

The total cost to start an LLC in Michigan ranges from $50 to more than $400 if you take advantage of all the services available. Once you set up your LLC, you’ll also need to file your annual statement for a filing fee of $25 each year.

How to start your Michigan LLC with LegalZoom

LegalZoom makes forming an LLC in Michigan easy by managing the paperwork for you. We can help you file your articles of organization, create an operating agreement, and even act as your registered agent if you need one. We also handle other ongoing tasks like filing annual reports and providing general legal support, making your LLC journey stress-free. Start your LLC with LegalZoom so you can focus on running your business while we handle the details.

FAQs

What are the benefits of registering a Michigan LLC?

Registering a limited liability company in Michigan provides personal liability protection, meaning that your personal assets—like your home and savings—are generally protected from any debts or lawsuits your business might face. An LLC also offers flexibility in management and tax options.

How long does it take to form an LLC in Michigan?

The time it takes to form a limited liability company in Michigan varies depending on how you file your paperwork. If you choose to file online, the processing time is typically between 2 to 3 business days. If you file by mail, it can take up to 10-15 business days for the state to process your documents. Paying for expedited service can reduce the processing time.

Do I have to renew my LLC every year in Michigan?

Yes, all LLCs must file an annual statement with the Michigan Department of Licensing and Regulatory Affairs by Feb. 15 each year for a $25 filing fee. It includes basic information about your business and helps keep the state’s records accurate. You might also need to keep professional licenses updated if you have a professional LLC.

How do I dissolve an LLC in Michigan?

To dissolve a limited liability company in Michigan, you must file a Certificate of Dissolution with the Department of Licensing and Regulatory Affairs. This document formally closes your LLC and removes it from the state’s records. Make sure you pay all your taxes, cancel any business licenses, notify your creditors, and close any business bank accounts.

Rudri Bhatt Patel contributed to this article.