If you are starting a business in Michigan, then chances are high you are considering an LLC. It’s one of the most popular types of a company because it can help shield you and its members from personal liability.
It is, however, important to understand how to start an LLC in Michigan to ensure you are afforded all the protections they offer.
The process is not overly complicated, and you can opt to use a service or file the paperwork yourself.
We’ll walk through both options in this article and give you links to the appropriate resources you will need to form your LLC.
Find a Business Name
An important component to starting an LLC in Michigan is establishing a business name. While it’s fun to come up with ideas, you need to make sure you don’t step on any toes when it comes to your final decision.
Business Entity Search
Michigan provides a business entity search tool that assists in this task.
You can search by several different factors including, Entity Name, Individual Name, Identification Number, or Filing Number.
Most of you are going to use the standard Entity Name search. In this case, less is more, so don’t be too specific in what you type into the tool. You want to see a broad range of names that are similar to what you are considering.
It’s not always a show stopper, but you’d like to know any company that might view your name as an encroachment on their brand.
Like the entity search at the state level, you want to conduct a trademark search via the United States Patent and Trademark Office.
You are looking for three things according to their site:
- Trademarks that are similar to yours
- Used on related products or for related services
Any of these things will prevent your trademark from being registered because it can create confusion.
If you need assistance with trademark issues, companies like Incfile.com can assist.
Check the Domain Name
In today’s world, every business needs a website, so making sure your domain name is available is a critical step.
You would love to get the exact domain name match, but that can be tricky. There are a lot of companies out there that buy up domain names. That means even if it’s for sale through a web hosting company, you may still be able to get it.
Services like GoDaddy have in-house brokers who can help you purchase a domain name if it’s not immediately available.
The other option is to find a domain that isn’t an exact match. An abbreviation can often-times work, but make sure it’s intuitive so customers can remember the name.
Assign a Registered Agent
The next step in starting an LLC in Michigan is to decide on a registered agent for your business. It is a requirement in Michigan, and you have a couple of different options. Regardless of what you choose, your registered agent will receive legal and other official documents sent to your company.
- File Yourself – You can choose an individual, including yourself, that has a mailing address in the state of Michigan.
- Use a Company – A third-party business can also serve as your registered agent. This is very common as many people don’t want to be personally responsible for receiving these documents.
Filing and Fees
You will find the form and fees to start an LLC in Michigan are actually pretty simple. They are so simple, in fact, that some companies will do this for no or little cost other than the filing fee.
Incfile and ZenBusiness are two of these businesses. They make their money by selling you other legal services (some discussed here).
- Articles of Organization – You will need to submit Articles of Organization to the Department of Licensing and Regulatory Affairs.
- Fees – The filing fee for the Articles of Organization is $50. You will see all the necessary details for filing the Articles of Organization in the documents provided by the State of Michigan
- Operating Agreement – You should also have put an operating agreement in place when starting an LLC in Michigan with more than one member. It’s not required and won’t be submitted to the state, but it is helpful down the road if any legal issues arise.
Obtain an EIN
An Employer Identification Number is like a social security number for your business. If you have an LLC with no employees then you may not need to get an EIN, and instead can just use your social security number.
But if you have any intention of having employees in the future, you will need the EIN. Talk with your accounting and tax professionals about the benefits of getting an EIN even if your LLC does not have employees.
It can help you to establish credit, and can also be used when opening business bank accounts.
Not every business is required to be licensed by the state of Michigan or to have permits. It completely depends on the type of business, your physical location, and other PPE you are using.
Regardless, you do need to conduct a state license search. Alternatively, many of the same companies that will help you with LLC formation services will also assist with business license searches in Michigan.
Open a Business Bank Account
An important step in starting your LLC in Michigan is setting up a bank account for the business.
The reason you need to do this is to keep your finances separate from your personal finances. As discussed earlier, one of the goals of an LLC is to limit your personal liability if anything goes wrong with the company. To do that, you need to treat the LLC as its own entity and not comingle personal expenses and finances with the company.
As with your personal bank, a business bank can also provide you with credit card options and other financing options for the business.
Purchase Business Insurance
Just like with personal insurance, some people don’t think of getting insurance for their business. But you shouldn’t make that mistake.
Business insurance is affordable and can give you some peace-of-mind in operating your business. When looking at LLCs in Michigan, you should consider a few different types of business insurance.
- General liability insurance – This is the most common type of insurance a business will carry. It covers general liability and losses that can occur during the normal course of business. As with personal insurance, make sure you look closely at the policy and understand what you’re purchasing. Some industries will have minimum insurance requirements, so be sure to come up to speed on your industry specifications.
- Workers compensation insurance: Required for Michigan businesses with one or more employees. It covers claims due to work-related injuries.
- Professional liability insurance: As the name suggests, this type of insurance is for people giving professional advice, including things like accounting, legal, and consulting services.
The Bottom Line
In all honesty, the tasks outlined in this document are some of the mundane tasks associated with starting an LLC in Michigan.
Luckily, they aren’t very complicated for most small businesses and can be handled on your own. If you don’t want to deal with the hassle, you also have many affordable options for companies to help file and create all the documents.
It is, however, important to take the time to do this work completely. The best part about starting an LLC is the protections it creates for you personally.
If you decide to skip some of these critical steps, you can leave yourself vulnerable in the event of a liability issue in the future.
So take the time, or spend the money to get your LLC registered completely with the State of Michigan. Your mind can rest easier once the task is complete.