23 Feb How to Start a Limited Liability Company in Michigan
Congratulations! You’re starting your own business! Have you thought about forming a separate legal entity to operate your business? If not, you should. It’s one way to limit your personal liability and provide separation between you and your business.
A Limited Liability Company (LLC) is a favorite among startups because it does not have the same formalities as a corporation. With an LLC, one or more persons may operate a business and have liability protection along with certain tax advantages. A properly formed LLC will help to protect the personal assets of its members (the owners) from legal claims against the company. An LLC is relatively easy to form, requiring only a single document—the Articles of Organization—to be filed with the Michigan Department of Licensing and Regulatory Affairs (LARA).
If there are going to be multiple members of your LLC, you may want to consider drafting an operating agreement that will clarify how the LLC will operate, what ownership rights each member has, their rights and obligations to each other and to the LLC, as well as their roles within the LLC. Although the operating agreement is not required in Michigan, it is highly recommended in order to maintain the structure and operation of your business.
There are 3 easy steps to file your new LLC in Michigan:
- Complete a Mich-ELF Application: If this is your first time filing with LARA, you are required to apply for a filer number. This is probably the most time consuming step. But once approved, you will have an account number with your billing information on file for future use with LARA. You would simply fill out the appropriate form (http://www.dleg.state.mi.us/bcsc/forms/corp/llc/901.pdf) and fax it to the number provided. You will need the following information to complete the application:
- Name, address, and phone number
- Fax number
- Credit card information
- File Your Articles of Organization: After you’ve obtained your filer number, you are ready to file the required paperwork for your new LLC. The Articles of Organization (http://www.dleg.state.mi.us/bcsc/forms/corp/llc/700.pdf) takes only minutes to fill out, but there are several pieces of information you need to complete the form:
- Name of the company: be sure to have a unique name that includes “LLC” or “Limited Liability Company” at the end. You should search the business name directory before you decide on a name (https://www.lara.michigan.gov/apex/CORPORATIONS/f?p=210:1:2195682511017342)
- No purpose needed
- No duration needed
- Resident agent (the person responsible for your paperwork)
- Address/phone numbers
- Which pricing offer applies to you; The last page explains pricing- $50 for new companies
- Note: for a Professional Services LLC, such as for a doctor or attorney services, you would fill out the Articles of Organization for Professional Service LLC: (http://www.dleg.state.mi.us/bcsc/forms/corp/llc/701.pdf)
- Attach a Mich ELF Cover sheet (after you get your ELF number): http://www.dleg.state.mi.us/bcsc/forms/corp/elf/900.pdf. This cover sheet ensures your Articles of Organization gets filed correctly and efficiently. You will need the following information to fill out the form:
- Name of your business
- Contact person’s name
- Title of document (ie: “Articles of Organization For use by Domestic Limited Liability Companies”)
- Expected fee ($50 for the Articles of Organization)
Forming an LLC is a simple way to offer some protection for you against your personal assets in case a legal issue arises. It is also a way to easily operate your small business while gaining certain tax advantages.
As always, you should contact an attorney to see if an LLC is the best way to form your business and whether it makes sense for your LLC to be manager-managed, as opposed to member-managed.