Are you thinking about starting your own business in Michigan this year? Great choice! Michigan is a fantastic place for new companies. I’m here to guide you through setting up a Limited Liability Company (LLC) in Michigan, and guess what? You can do it for free! Services like Bizee or Northwest Registered Agent can handle everything if you’d rather skip the details. But if you’re ready, let’s get started!
Step 1: Picking the Name for Your Michigan LLC
First things first, your LLC needs a name. Michigan has rules about what your name should include, like “Limited Liability Company” or “LLC.” Ensure your name stands out and isn’t too similar to others, especially in your industry. Avoid using official terms like “FBI” or “Treasury” – those are no-nos.
You can do a quick, free name check online to see if your chosen name is available. If you consider getting a website name that matches your business name, you can find good deals for website domain names on Namecheap.
Step 2: Obtain a Resident Agent and Registered Office
Your LLC needs a Registered Agent in Michigan. A Resident Agent receives official papers and legal documents on behalf of your LLC. This could be you, a friend, or you can hire a professional service. The registered office is the official business address of your LLC. It can be your home, your office, or even the address of the Resident Agent.
Alternatively, you can use a legal service specializing in this area, services to Complete the Formation Process. You can bypass these six steps using a third-party service such as Bizee or Northwest Registered Agent.
Check out our blog: ‘Is a Registered Agent Necessary? Your Guide to Finding an Affordable Option‘
Step 3: File Articles of Organization or Certificate of Authority
Now, let’s get official! You must file the Articles of Organization (Form CSCL/CD-700) with the Michigan Department of Licensing and Regulatory Affairs. This form is super important as it legally creates your LLC in Michigan.
How much it costs:
Filing this form costs about $50. Other forms related to LLCs have varying costs, but this is the primary fee for starting an LLC.
How to send your form:
- Online: You can file the Articles of Organization online through the Michigan Department of Licensing and Regulatory Affairs website.
- By Mail: If you prefer to file by mail, you can send the completed form to the Michigan Department of Licensing and Regulatory Affairs, Corporations Division, PO Box 30054, Lansing, MI 48909.
- In-Person: For in-person filings, the address is 2501 Woodlake Circle, Okemos, MI
Step 4: Getting Your EIN from the IRS
Your business needs a number called an EIN from the IRS. It’s like an ID number for your business. This number will help you as an identification number when getting bank accounts and credit accounts, filing taxes, and hiring employees.
It’s free, and you can get it from the IRS website at https://www.irs.gov/businesses/small.
Step 5: Making an Operating Agreement for Your Business
Let’s discuss setting up some ground rules for your business. This is where an Operating Agreement comes in. Think of it as a handbook that explains how your business runs. It’s important because it helps everyone understand their role and what’s expected in your LLC.
Here’s what an Operating Agreement usually includes:
- Ownership: This part talks about who owns what percentage of the business.
- Member’s Rights and Responsibilities: Here, you’ll write down what each person in the LLC can and cannot do and what they’re responsible for. It’s like a job description for each member.
- Joining & Leaving: This section covers how new people can enter your business and what happens if someone decides to leave. It’s good to have this figured out so there are no surprises later.
- Dissolution: This might sound a bit gloomy, but it’s practical. It’s about how to close down the LLC if you ever need to. It includes the steps to take and how to handle everything when wrapping up the business.
Creating an Operating Agreement is a smart move. It keeps things clear and organized so everyone knows what to expect, and it can save you a lot of time.
Michigan LLC Taxes and Requirements:
- Local Income Tax:
Depending on your municipality, you may need to file and pay local income taxes. Contact your local city or county for specific requirements.
- Michigan Sales Tax:
If your LLC sells goods to consumers in Michigan, you’ll likely need to collect sales tax. Register for a Seller’s Permit through Michigan Treasury Online.
- Michigan LLC Payroll Taxes:
If your LLC has employees, you must withhold payroll taxes, including federal and state income taxes, Social Security, and Medicare taxes.
- Quarterly Estimated Taxes:
LLCs may need to pay quarterly estimated taxes, project earnings, and a portion of expected taxes in advance.
- Annual Tax Return:
File your annual tax return, consolidate financial records, and report all income sources. This can be complex, so consider using tax software or hiring a tax professional.
- Self-Employment Tax:
LLC members must pay self-employment tax on profits reported on their tax returns.
- Excise Tax:
If your LLC engages in specific business activities (like selling alcohol or tobacco), you may need to pay federal excise taxes.
- Employment Tax:
If you have employees, withhold Social Security, Medicare, and payroll taxes.
- Michigan Business Tax:
Michigan imposes a 4.95% tax on business income and a .8% gross receipts tax. However, different rates may apply to insurance companies and financial institutions.
New 2024 Reporting Requirements (BOI)
Effective from January 1, 2024
Big news! Starting January 1, 2024, there are new reporting requirements for both domestic and foreign reporting companies. This includes LLCs, corporations, and other entities. Here’s what you need to know:
First Report Deadlines:
- Existing Entities: If your LLC was already around before 2024, you’ve got until January 1, 2025, to submit your first report.
- New Entities: If you’re forming your LLC in 2024, you must file your report within 90 days of your company’s creation.
Who Needs to Report:
- Domestic Reporting Companies: This includes LLCs and similar entities within the U.S.
- Foreign Reporting Companies: Entities registered foreign entities must also adhere to these new rules.
Exceptions to Reporting:
- For specific exceptions, you’ll want to refer to the Beneficial Ownership Information Reporting Regulations at 31 CFR § 1010.380(c)(2) and the Small Entity Compliance Guide.
What Must Be Reported
What you need to report is all about transparency. The exact details can be found in the compliance guide, but it generally involves information about your LLC’s ownership and control.
When Must Reporting File Reports
Timing is key! Remember, if you’re an existing entity, your deadline is January 1, 2025. For new LLCs formed in 2024, it’s within 90 days of creation.
Filing Reports & Noncompliance Penalties
Starting January 1, 2024, all BOI reports must be filed electronically. Here are some critical points:
- Filing Before the Date: You must file on January 1, 2024.
- Accuracy: Filer certification of accuracy is mandatory – you need to double-check that everything you report is correct and accurate.
Penalties for Noncompliance:
- False Information: Providing false information or failing to report accurately is a big no-no.
- Penalties: If you slip up here, you could face a fine of up to $10,000 or even imprisonment for up to 2 years.
- FinCEN’s Approach: The Financial Crimes Enforcement Network (FinCEN) focuses on education and outreach to ensure compliance. They’re not trying to trip you up; they want to help you get it right.
- Safe Harbor Rule: Did you make a mistake? If you discover inaccuracies in your initial report, you have a 90-day grace period to submit a corrected report.
If you need more information or specific guidance, please visit the FinCEN website for all the details.
What to Do After You’ve Started an LLC
- Open a Separate Business Bank Account: Keeping your personal and business money apart is super important. Mixing them up can cause significant problems, like losing the protection of having an LLC. This mix-up is sometimes called “piercing the corporate veil,” it can put your stuff, like your car or house, at risk if your business runs into trouble. To open a business bank account, you’ll need:
- Your LLC’s Articles of Organization.
- Your Operating Agreement.
- Your Employer Identification Number (EIN).
When picking a bank for your business, consider the fees, minimum deposits, and benefits (like earning interest) they offer. Look for features that help your business, like using a debit card to pay for things.
Get a Business Credit Card
A business credit card is an excellent tool for handling business purchases and can help build your company’s credit history. Just like with personal credit, a good business credit score can make it easier to get loans and may qualify you for better terms. Visit our website to see our favorite business cards review.
Check out our blog: Novo Review: The Best Business Banking Account in 2024?
- Set Up Your Finances Right: Use good habits to track your money. This means not mixing your cash with your business’s. Good record-keeping makes tax time less stressful and helps avoid problems with the rules. You should use a program like QuickBooks to track your money, inventory, payroll, and sales. Talking to professionals like accountants or business lawyers is also intelligent, especially when understanding your LLC state’s tax rules. Find experts who know a lot about the area where your business is.
- Create a Professional Website: Having a website makes your business look legit. WordPress is a great tool to build your site. You can check out SiteGround or Hostinger for web hosting. They’re both good options to get your site up and running.
- Announce Your Business with a Press Release: A press release is a fantastic way to promote your new business and attract customers.
Starting your Michigan LLC can be exciting and overwhelming, but it’s doable! Just follow these steps, and you’ll be on your way. If you need help, services like Bizee or Northwest Registered Agent exist. They can handle any legal details your LLC requires, like getting your EIN and sorting out your operating agreement. We recommend checking out their gold package. It’s more than the free option; it covers your needs and saves time. This way, you can focus more on growing your business.
Bizee Overview
Bizee LLC handles the paperwork and legal stuff needed to get your business. Think of it as having a personal assistant for your business setup, ensuring you don’t trip over any legal hurdles or paperwork nightmares.
Why Choose Bizee?
Now, you might wonder, “Why go with Bizee?” First off, they save you a ton of time. We all know how precious time is, especially when you’re trying to get your business rolling. Bizee takes care of the tedious and complex stuff, like filing documents with the state, so you can focus on the fun parts of running your business.
Another big plus is how they help you avoid mistakes. Let’s be honest: filling out government forms can be confusing, and one small error can set you back big time. Bizee knows their way around these forms like the back of their hand, ensuring everything is done right the first time.
Bizee Core Services
- Business Formation: They’ll help you officially start your business by filing it with the state. This includes setting up LLCs, corporations, and more.
- Compliance: Bizee ensures your business stays in good standing with the state by managing annual reports and other legal requirements.
These services are the backbone of Bizee, ensuring your business is set up correctly and remains compliant with state laws.
Bizee Additional Services
- Registered Agent Service: This is a must-have for keeping your business legit. Bizee will be your official contact for legal documents, ensuring you get all the necessary info.
- EIN Acquisition: Think of an EIN as a social security number for your business. Bizee can get this number for you, which you’ll need to open bank accounts and hire employees.
Starting a business is exciting, but the paperwork and legal stuff can drag. That’s where Bizee LLC takes the hassle out of the equation. We recommend getting the gold/platinum plan for 99% of business owners.
