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. With all this in mind, it’s understandable that Michigan is a desirable place for many entrepreneurs to start a new venture, especially small businesses. In fact, as of 2024, more than 96% of all private companies in the state were small firms.
Forming 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. This all-encompassing guide to LLCs in MI is your go-to for getting your new business up and running.
Key takeaways
- Understand the basics: We'll define what an LLC is and its fundamental features.
- Michigan specifics: Learn the unique advantages and potential drawbacks of forming an LLC in the Great Lakes State, plus get a better idea of the tax and legal landscape.
- A clear road map for the LLC formation process: Follow our step-by-step instructions to properly name your LLC, appoint a registered agent, file your paperwork, and more.
- Costs and requirements: Get a transparent look at the one-time and ongoing fees, including the annual statement.
What is an LLC, and what are its key features?
LLC stands for “limited liability company,” and it’s a type of business entity designed to offer similar benefits as a corporation but with fewer restrictions and more flexibility. Here are the key features of LLCs:
- Limited liability. All of the owners (called members) enjoy limited liability, meaning that their personal assets are usually protected from business debts and legal claims.
- Flexible management. The management structure can be either member-managed, where members take part in day-to-day operations, or manager-managed, where someone else is hired to oversee business operations.
- Pass-through taxes. LLCs default to either sole proprietor or partnership pass-through tax, meaning that business profits and losses flow through to members’ personal tax returns. However, LLCs can elect to be taxed as an S or a C corporation to avoid self-employment and payroll tax, given that they meet certain requirements from the Internal Revenue Service (IRS).
- Fewer requirements and regulations. Generally speaking, LLCs are less complex to form and manage compared to corporations, requiring less paperwork, more flexible allocation of profits, and fewer procedures.
Why Create a Michigan LLC?
A Michigan LLC can be a great option for your new venture, as these formal business entities have less red tape than other business structures but still offer limited liability protection that sole proprietorship and partnerships don’t have. And the Great Lakes State is one of the best places to get your company off the ground. In fact, Michigan ranks sixth out of all 50 states in CNBC’s list of America’s Top States for Business 2025 due to its supportive business environment.
Even with the benefits of an LLC, it’s still important to understand the advantages and potential downsides of starting this type of business structure to ensure that it’s the right fit for your needs.
Pros
- Pass-through taxation
- Personal asset protection
- Management flexibility
- Easy to maintain, with fewer requirements than a corporation
- Flexibility with profit distributions
Cons
- Need to pay self-employment and/or payroll taxes (if taxed as a sole proprietorship or partnership).
- Certain licensed professionals, like dentists, doctors, and attorneys, cannot form an LLC; rather, they must form a PLLC in Michigan.
- Must understand and pay applicable taxes such as the personal income tax, flow-through entity tax, corporate income tax, sales and use tax, and employer and payroll taxes. (More on this later.)
- Michigan does not allow the formation of series LLCs.
Types of LLCs in Michigan
There are two main types of LLCs in Michigan: standard and professional limited liability companies (PLLCs).
Standard LLCs may be structured as a single-member and multiple-member business. This distinction refers to the number of owners, called members, and the definition of each is pretty straightforward. A single-member LLC is made up of only one member, and they’re taxed like a sole proprietorship by default. A multiple-member LLC has two or more members, and they’re taxed as a partnership.
A PLLC is a structure required for businesses that provide certain professional services, like doctors, lawyers, and accountants. A professional LLC can either be single-member or multiple-member.
Some states also allow series LLCs, which can be used to organize several LLCs under one umbrella LLC. However, Michigan does not permit the formation of a series LLC.
How to create an LLC in Michigan in 7 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.
Step 1: Name your Michigan LLC
Your business name must comply with Michigan’s naming requirements, which state that your LLC name:
- Must include the words limited liability company, LLC, L.L.C., LC, or L.C.
- 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’s search tool to determine if a particular business name is in use.
- Cannot contain a word or phrase indicating a purpose other than stated in the articles of organization.
- Cannot 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 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.
Step 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, hire an individual to serve as your agent, or use a professional resident agent service.
Your resident agent must:
- Be 18 years old if an individual, or be a domestic corporation or LLC, or a foreign corporation or LLC authorized to conduct business in Michigan
- Have a physical address in Michigan
- Be on-site and available to accept documents during regular business hours
LegalZoom offers convenient and flexible resident agent services. 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.
Step 3: Prepare and file articles of organization
Next you’ll need to prepare articles of organization and file them with the Michigan Department of Licensing and Regulatory Affairs (LARA). 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. If the Michigan Department of Licensing and Regulatory Affairs approves them, 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.
Step 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 LLC operating agreement can include the following:
- The business name and principal address
- Duration and purpose of the LLC
- Name and address of the resident agent
- 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
You can create it yourself using a Michigan LLC operating agreement template, but it is advisable to get help from a professional operating agreement service like LegalZoom to make sure it covers everything you need.
Building a business is enough work as it is. We'll help you start your LLC with confidence.
Step 5: Get an EIN
The nine-digit employer identification number (EIN) is assigned by the IRS to identify your Michigan LLC for federal taxes. An EIN is your business's federal tax identification number, and will allow you to do the following:
- 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.
Step 6: Register for state taxes
Your LLC may need to register for state taxes, depending on various factors. If you determine that you’ll need to pay state taxes, then you must register on the Michigan Treasury Online (MTO).
Most businesses that need to pay state taxes do so under the Michigan Corporate Income Tax (CIT). If your LLC is taxed as a corporation and does business in Michigan, you may be subject to the CIT. If your expected annual tax liability exceeds $800, then 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.
Michigan also has something called the Michigan Business Tax (MBT), a 4.95% business income tax and a 0.8% modified gross receipts tax imposed on anyone with business activity in Michigan. Only certain businesses are subject to the MBT, and typically only if they are claiming specific credits. A CPA or business attorney can help you determine if you are subject to either of these taxes.
Michigan has no city, local, or county sales taxes, but there is a flat state sales tax, which is 6%. Also, if your LLC makes sales to end consumers in Michigan, you’ll need a sales tax license, often called a seller’s permit in other states. 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.
Step 7: Apply for necessary 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 business type 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.
Licenses also apply to certain business activities. For instance, if you’re opening a restaurant that hopes to serve alcohol, you’ll need to apply for a license through the Michigan Department of Licensing and Regulatory Affairs.
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.
What to do after forming your LLC in Michigan
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 $50 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.
Michigan LLC tax and legal considerations
There are some key things to keep in mind regarding the tax and legal environment in the Great Lakes State.
Federal and state taxes
As a pass-through entity, the income and losses of the LLC are reported on the individual members' personal federal and state income tax returns. In Michigan, the flat income tax rate is 4.25%.
Michigan also offers a state-specific tax election for pass-through entities, including LLCs, known as the Flow-Through Entity (FTE) tax. This was created in 2021 as a response to the federal 2017 Tax Cuts and Jobs Act’s state and local tax (SALT) deduction cap of $10,000. (Note that the 2025 One Big Beautiful Bill Act increased the limit to $40,000, but it is set to decrease to $10,000 by 2030.)
The purpose of the FTE is to allow certain business owners to pay tax at the entity level, essentially reducing their amount of pass-through income and subsequent federal taxes owed. Eligible entities who can apply for this FTE tax credit are:
- S corporations
- Partnerships
- LLCs that file federal income tax returns as partnerships
Businesses who choose to elect into the FTE tax must do so through the Michigan Treasure Online portal, typically by March 15 of the tax year, and reelect every three years.
Local taxes
Along with state income tax, LLC members may also have to pay local income tax depending on where they live. There are 24 cities in Michigan that levy income tax, including East Lansing, Flint, Pontiac, and more. The tax rate varies by municipality; for example, East Lansing income tax is 1% for residents and 0.5% for nonresidents.
Local business licenses
Some cities and counties require business licenses to be able to operate there. Even if the city in which you conduct business doesn’t require you to obtain business licenses, you may still be required to obtain an industry-specific license or permit. For instance, in Bay City, Michigan, companies don’t need a general business license, but those that operate food trucks or pedicabs must apply for separate licenses.
Common mistakes to avoid
The following are some common pitfalls that should be avoided when forming your LLC in Michigan:
- Failing to file the annual statement. To stay compliant and in active status, LLCs in Michigan must regularly file an annual statement. The statement is due by February 15 every year, and the filing fee is $25.
- Picking the wrong business name. Adhere to Michigan’s specific LLC naming requirements (noted earlier).
- Mixing personal and business finances. Open a separate bank account to track all business expenses and make payments.
- Not having an operating agreement. 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.
- Not fulfilling all licensing requirements. Follow your specific industry and profession’s licensing requirements, and ensure that if you form a PLLC, all members are licensed in the specific service.
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: $50 filing fee
- Business licenses and permits: Varies by profession, business activity, and area
- Registered agent service: $249 per year on average
- Operating agreement: $99 and up for an online service
- Business insurance: Varies depending on the insurance company and type of insurance, but generally between $40 and $70 per month, per policy
The total cost to start an LLC in Michigan ranges from $50 to more than $400 if you take advantage of all the professional 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.
Is a Michigan LLC right for you?
The legal business entity you choose should fit your business and financial needs. It’s important to consider all that goes into forming and maintaining an LLC to determine if it’s right for you.
When a Michigan LLC is the best choice
When you operate as a sole proprietorship vs. LLC, you take on more personal liability, meaning your personal assets could be used to settle business debts and obligations. While an LLC requires submitting formal LLC formation documents to the Michigan Corporation Division and annual legal requirements, you can still be a single-member LLC and safeguard your personal assets.
Operating as an S corp vs. LLC can be beneficial if you need investors to help grow the business or want to issue stock. However, LLCs have fewer requirements and regulations, enjoy more flexible management structures and profit distributions, and have greater flexibility with tax elections. Even if you form an LLC, you can elect to be taxed as an S corporation.
When another state might be better
If you decide not to form an LLC in Michigan, there are other states that could be good picks for various reasons:
Start an LLC in Any State
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Why choose LegalZoom to form a Michigan LLC?
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.
Michigan LLC FAQs
What are the benefits of registering a Michigan LLC?
Registering a Michigan limited liability company 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. Plus, in Michigan, LLCs don’t face county or city sales tax, instead only paying the 6% state sales tax.
How long does it take to form an LLC in Michigan?
It 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 February 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 renew professional licenses.
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 and Carolyn Albee contributed to this article.
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