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Michigan may be known for its lakes and other natural wonders, but it also represents some good business opportunities as well. If you’re thinking of starting a limited liability company (LLC) here, you’ll have a number of steps to complete before you’re set up. Learn how to start your Michigan LLC below.

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An LLC is a popular business model due to its taxation flexibility and the personal asset protection it offers. Michigan is gaining attention as a good place to do business, thanks to factors like regulatory friendliness, technology and innovation availability, and a low cost of doing business. The state has also been investing in cutting-edge advancements, like electric vehicle production and climate change initiatives which may help make for a promising future.

Different states have different rules for setting up an LLC. Understanding the requirements in your chosen state before you get started will make the process easier. Here’s what you need to know about starting an LLC in Michigan.

Step 1: Pick a Name for Your Michigan LLC

When you complete the Articles of Organization needed to register your Michigan LLC, you’ll be asked to give your LLC’s desired name. The name must be unique and can’t be the same or similar to another business name existing in the state. There are also restrictions regarding certain words that can’t be used; for example, the word “ambulance” can’t be used unless the business is licensed by the Department of Community Health.

If you have a business name in mind that you really want to use and you’d like to reserve it, you can complete a form to save the name. This might be necessary if you aren’t yet ready to file the actual Articles of Organization, for instance. You can save a name for an LLC for up to six months. The cost is $25.

Step 2: Find a Registered Agent

Michigan requires that every LLC registered in the state designates a registered agent with a registered office. This individual or business entity must be named when filing the Articles of Organization. A registered agent is an individual or entity appointed to receive formal notices or documents on your business’ behalf. This could include anything from IRS notifications to lawsuits.

Michigan requires that the resident agent be a legal Michigan resident or Michigan corporation. A foreign corporation with a certificate of authority to do business in the state can also be the registered agent, as can a Michigan LLC or a foreign LLC approved to do business in the state. The registered agent must have a street address in Michigan; you can’t use a P.O. box.

Step 3: File the Michigan Articles of Organization

To officially register your LLC with the state of Michigan, you have to submit the Articles of Organization to the Michigan Department of Licensing and Regulatory Affairs. This paperwork requires you to provide your LLC’s name, describe its business purposes, and designate the name and contact details of your registered agent.

When you submit the document, you’ll have to pay the $50 filing fee (plus expedited fees, if desired). Finally, make sure to include the name and contact information, including a business telephone number, of the “preparer” (your or whoever is completing the paperwork). In case of any issues while processing, it’s important that you can be contacted. There are many LLC services that can help complete all of these paperwork items for you if you do not wish to do it yourself.

Step 4: Draft an Operating Agreement

When completing the Articles of Organization for a Michigan LLC, you’ll see a section of the application where you can add “any desired additional provision.” This gives you the option to attach additional pages to your application, if needed. This is an ideal opportunity to include an operating agreement. Michigan doesn’t require an LLC to have an operating agreement. However, it’s recommended to create one.

An operating agreement includes details like the LLC’s members and what percentage of the LLC they own; the members’ voting rights; the members’ duties opposite the LLC; the frequency of holding meetings; how profits and losses are distributed; and buy-out and buy-sell rules. It can also detail what happens to a member’s shares in case of death. By laying all of this information out in an operating agreement, it’s possible to firm up verbal promises, reduce the risk of misunderstandings, and help protect your liability in case of legal issues.

Step 5: Get Your Employer Identification Number (EIN)

An EIN is a special number that’s similar to a Social Security Number (SSN) except that it’s for a business instead of an individual. The EIN is used by the Internal Revenue Service (IRS) to identify your business. You will include your EIN on tax paperwork. You’ll also need your EIN in case you ever hire employees for your business.

Getting an EIN is easy and fast. The quickest route to getting your EIN is to apply online through the IRS’s dedicated website. Alternatively, you can request an EIN via mail, fax, or telephone. That said, the IRS prefers online applications. Best of all, requesting an EIN doesn’t cost you a thing. It’s free!

Author: Allison Killian, US NEWS, 2023.