How Much Does an LLC Cost in Michigan?

The formation of an LLC can feel confusing and expensive. However, it does not have to be either of these things. You can start an LLC in Michigan quickly if you understand what documents you need ahead of time, or you can hire an LLC formation service. Each state has different requirements for LLCs and charges different fees. In this section, we will explore the costs associated with an LLC in Michigan.

General Steps and Costs When Forming a Michigan LLC

When establishing a Michigan LLC, it is important to understand what steps must be taken and what documents are required. This is to ensure your business meets all legal requirements to do business within the state. 

Naming your Michigan LLC

Before you establish your LLC, you will want to review the existing list of business names in Michigan. Keep in mind that you can select your LLCs name up to six months in advance. While the search is free, you have the option of reserving your business name. To reserve the name, you would file the appropriate application along with a $25 fee to reserve your business name for six months.

The LLC owners may also consider using a fictitious name in Michigan to more clearly state how they wish to be identified. An assumed name, or DBA (Doing Business As) application, called a Certificate of Assumed Name, can be filed and a fee of $25 paid to the State of Michigan.

Filing articles of organization

When establishing an LLC, articles of organization must be filed with the state. The application is filed with Licensing and Regulatory Affairs (LARA), and the $50 fee can be paid in person, by mail, or online.

Filing the articles of organization will involve gathering the following information:

The articles may be filed by mail or online. Here is a complete list of what documents may be filed using the Michigan LARA online system.

Appointing a registered agent

You must have a street address of a person who can be available during working hours during every business day of the year to accept documents from the state, receive service, and sign for other legal matters. The LLC may opt to do this on their own, but for reasons including privacy and flexibility, many opt to hire a registered agent service which can incur a fee of between $199 and $400. The registered agent form, a Certificate of Appointment, may be filled out and filed through LARA. The fee is $5.00.

Creating an operating agreement

Michigan does not require an LLC to have an operating agreement. However, there are some important reasons why a business may opt to create one, including:

LLC owners may opt to create their operating agreement on their own, hire an attorney to do it for them, or use a service that provides operating agreements. Costs will generally range from $0 if you do it yourself up to $1,000 if you hire an attorney to prepare an operating agreement on your behalf.

Other Annual and Additional Michigan LLC Costs

There are some additional annual fees which may be required when you are operating an LLC in Michigan, including:

Sales tax

Any business which sells products to a consumer is required to collect sales tax in Michigan. While the sales tax certification does not have a fee associated with it, business owners must maintain accurate records and submit the appropriate funds quarterly to the Michigan tax authority. A complete list of who must obtain a sales and use tax certification is available on the State of Michigan website.

Business licenses & permits

Michigan does not require a business to have a general business license. However, specific municipalities may require those operating in their municipality to have a license or various permits. Some of the most common ones include:

Annual report

Every Michigan LLC is required to file an annual report with the state. The report is mailed approximately three months before the due date (February 15th) to the registered agent. The filing may be done online, in person, or by mail. If the LLC annual report is not filed on time, it may be necessary to file a restoration of the company. This will incur an additional $50 fee as well as the annual fee which is required.

What Expenses You Can Write Off

While these expenses may feel overwhelming when you are starting your business, it is important to remember that you will also get a tax break on your federal income taxes. The following expenses may be deducted from your federal taxes:

Summary of Michigan LLC Costs

Here is a list of the LLC costs you can anticipate in Michigan. Please note these are accurate as of 2022 and are subject to change.

Fee Name

Reason

Amount

LLC Filing Fee

Used to establish the LLC

$50.00

Certificate of Authority

Must be used to obtain a Certificate of Authority to Transact Business in Michigan.

$50.00

Business Licenses

The only required business license is a sales tax if you are selling products to the public. However, each municipality may have alternative licensing and permitting requirements. Examples include Detroit which has an extensive list of businesses that require a license.

$0 – $1,000 annually

Registered Agent (Optional)

While it is optional to have a registered agent, this means you have to be at your office during normal business hours.

$199 – $400 annually

Reserving a Business Name (Optional)

If you are not quite ready to set up your LLC, you may wish to reserve your business name so it remains available to you.

$25.00 to reserve for six months

Filing for a DBA (Optional)

This is an option for those who wish to make their business name more closely reflect the industry or service they are operating in.

$10.00

Operating Agreement (Optional)

While having an operating agreement is optional, it is typically a good idea

$0 – $1,000

Annual Report

This report is required annually not later than February 15th

$25

LLC owners should contact their respective county clerks in counties where they are doing business to ensure they are meeting their reporting obligations within the county. A complete list of the clerks may be found on the Michigan Association of County Clerks website.

Conclusion

As stated, it’s important to understand all the mandatory and optional costs when starting an LLC in Michigan. This will allow you to better prepare your budget for setting up your business and working out a plan for the ongoing costs. We’re here to help you in every step of the way!

This portion of our website is for informational purposes only. Tailor Brands is not a law firm, and none of the information on this website constitutes or is intended to convey legal advice. All statements, opinions, recommendations, and conclusions are solely the expression of the author and provided on an as-is basis. Accordingly, Tailor Brands is not responsible for the information and/or its accuracy or completeness.

The post How Much Does an LLC Cost in Michigan? appeared first on Tailor Brands.