Company formation laws in Michigan
Table of contents
LLC Formation in Michigan
Check for availability and choose a business name for your LLC: As per Michigan law, an LLC’s name requires the words “Limited Liability Company” or the abbreviation “L.L.C.” In addition, the name of the LLC may also include the words “Corporation” or “Incorporated” or the abbreviation “Corp.” or “Inc.”, and the name must be easily distinguishable from another LLC based in Michigan.
Prepare and file articles of organization: The next step is, preparation and filing articles of organization with the Department of Labor & Economic Growth, Bureau of Commercial Services, Corporation Division. The Department of Labor & Economic Growth website has a simple form for the articles of organization. The filing fee is $50.
If the LLC will be managed by one or more than one manager, then a clause is required, which will state the same.
Negotiate and execute an operating agreement: Michigan law doesn’t require an operating agreement to form an LLC. However, executing one is highly recommendable. Though there is no hard-and-fast rule regarding the content of an operating agreement, it usually contains issues like how meetings are conducted, how the corporation will be managed, what capital is required from each member and in which way profit and losses will be allocated. However, the operating agreement is not required to be filed with the state.
Obtain local licenses: Most local or city governments require every business to avail a basic business license, often called tax registration certificate. To know in details about this licensing, it is best to get in touch with local county or city clerk’s office or other local government authority.
Know what tax and other regulatory obligations do the LLC has: Initially, the company needs an Employer Identification Number (EIN) from the IRS. This can be done via online application and there is no filing fee.
If the LLC has any employee in Michigan, it is required to register for Michigan business taxes by making use of the Business Tax e-registration website. For more information on this process, Michigan Business Taxes Registration Booklet can be referred to. Whenever you hire an employee, both the IRS and the State of Michigan must be informed.
If the LLC has three or more employees in Michigan or has employed anyone for at least thirty-five hours per week for thirteen or more weeks, then it must bear workers’ compensation insurance. However, if you are required to bear workers’ compensation but you don’t do so, then you must get a certificate of exemption from the Insurance Division.
Open a bank account: Opening a separate bank account for your business is the best way to keep your business’ finances separate from your personal ones. To open one, you need a Tax ID number (EIN), a copy of the articles of organization, and a resolution identifying authorized signers if those names are not listed in the articles.
Other significant requirements: Each year, before February 15, every Michigan LLC must file an Annual Statement with the Department of Labor & Economic Growth. The filing fee is $25 and can be filed online. However, if the LLC has been formed after September 30 of a certain year, the Annual Statement is not required before February 15 of the following year.
The state of Michigan requires some specific documents to be kept at an LLC’s principal place of business. A list of the required documents can be found in Mich. Comp. Laws § 450.4213.
Incorporating a corporation in Michigan
The following is not an attempt to let you know all you require to form a corporation in Michigan, rather to keep you informed about some of the basic information and requirements regarding forming a corporation in Michigan.
Corporation’s board of directors: A Michigan corporation’s board of directors shall consist of 1 or more members as fixed by the bylaws unless such number is fixed in the articles of incorporation. The corporation’s directors need not be shareholders of the corporation unless dictated by the bylaws or articles of incorporation.
Michigan corporation officers: The officers of a corporation in Michigan shall consist of a president, a secretary, a treasurer, chairperson of the board if required, 1 or more vice-presidents, and such other officers as set by the bylaws or articles of incorporation.
Corporation’s shareholders and directors’ meetings:
For the selection of directors and other business issues, annual shareholders’ meetings shall be held as per the bylaws. As stated in the bylaws, shareholders’ meetings may be held within or without Michigan. If there is no such bylaws, the board of directors shall decide and may hold meetings either at the corporation’s registered office or at any other place. Special meetings of shareholders’ may be organized by the board or by officers, shareholders or by directors, or upon application of at least 10% of the shareholders entitled to vote at a meeting.
Michigan registered agent: Corporations that are incorporating in Michigan are required to have a registered agent in the state of Michigan. A professional registered agent assures that all tax documents, legal documents, annual reports and correspondences with the state and regulatory agencies will be handled with utmost professionalism and efficiency.
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