Cost to Form an LLC in Michigan: MI LLC Cost

Last Updated on November 29, 2023 by Dr. Gabriel O’Neill, Esq.

Navigating the path to entrepreneurship in Michigan and forming your own Limited Liability Company (LLC) involves more than just paperwork – it entails understanding the costs involved. While the prospect of expenses might seem daunting at first, there are avenues to make this journey more cost-effective without compromising on quality. In this article, we’ll delve into the various expenses tied to forming an LLC in Michigan. 

Furthermore, we’ll introduce you to invaluable LLC services like ZenBusiness that can not only streamline the process but also offer insights for wise cost management, ensuring your entrepreneurial dreams are realized without breaking the bank.

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What Is the Cost of Forming an LLC in Michigan?

The primary cost to form an LLC in Michigan is a $50 fee, which covers the online submission of your LLC’s Articles of Organization through the Michigan Department of Licensing and Regulatory Affairs.

Here’s the LLC Cost Guide for all US States:

Michigan Foreign LLC Formation Costs

In case you possess an existing LLC that’s registered in a different state and wish to extend your business operations to Michigan, it’s essential to enroll your LLC as a foreign entity within Michigan.

The fee for the registration of a foreign LLC in Michigan amounts to $50. To complete the registration of a foreign LLC in Michigan, you’re required to submit an Application for a Certificate of Authority to Transact Business in Michigan (Form 760).

Annual Cost for LLCs in Michigan 

When contemplating the establishment of a Limited Liability Company (LLC) in Michigan, it’s crucial to comprehend the continuous expenses linked with LLC upkeep. Factoring in these expenses aids in approximating the overall operational costs of a Michigan LLC. 

The main recurring expenditures for a Michigan LLC encompass the $25 fee for filing an Annual Statement with the Department of Licensing and Regulatory Affairs, a requirement for all LLCs in the state. 

Additionally, appointing a resident agent (or registered agent) is mandatory, with costs ranging from $100 to $300 annually, depending on whether you opt to serve as your own agent or engage a third-party service.

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How Much Does It Cost to Start an LLC in Michigan With the Best LLC Service?

ZenBusiness LLC Formation Cost

The initial cost for filing an LLC in Michigan begins at $50, with potential variations based on additional services. Typically, the standard processing time ranges from 2 to 3 weeks. Nevertheless, for those seeking a swifter processing and approval of their documentation, an expedited service fee of $50 is available, resulting in document delivery within 4 to 6 days. Alternatively, a more immediate option entails a $100 fee, reducing the processing time to 1 to 2 days for document receipt.

ZenBusiness presents three distinct pricing tiers for their LLC formation services: Starter, Pro, and Premium. 

• Starter plan: The, priced at $0 alongside state fees, caters to fundamental business formation requirements. 

• Pro plan: The, priced at $199 plus state fees, encompasses supplementary features like expedited filing and registered agent service. 

• Premium plan: The, priced at $349 plus state fees, stands as the most comprehensive option, integrating all Pro plan features along with unlimited Worry-Free Compliance, which assists businesses in adhering to state and federal regulations. 

With the purchase of any plan, ZenBusiness also includes a complimentary year of Worry-Free Compliance.

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Additional Costs When Starting an LLC in Michigan

Michigan LLC Name Costs

Choosing a name for your Limited Liability Company is free of charge. The Michigan Secretary of State doesn’t mandate the submission of an LLC Name Reservation or similar steps. Your business name gets endorsed without additional expenses upon the approval of your Articles of Organization by the state in the process of forming the LLC.

If you want to secure your name before the LLC formation, you can do so for half a year by submitting an Application for Reservation of Name (Form 540) and settling the $25 filing fee.

Michigan Registered Agent Costs

Michigan’s Resident Agent Fee can either be $0 or $125 per year. One of the stipulations for a Michigan LLC is the appointment of a Resident Agent.

Upon establishing your LLC in Michigan, you’re obligated by law to assign a Resident Agent. The advantage is that there are no extra charges associated with indicating a registered agent in your LLC Articles of Organization.

In Michigan, a Resident Agent is an individual or entity responsible for receiving legal papers and official communications from the state on behalf of your LLC. This registered agent must possess a physical address within the state and should generally be accessible during standard business hours.

It’s worth noting that in Michigan, the formal term is Resident Agent; however, the more commonly used term is registered agent. Both terms are synonymous and can be used interchangeably.

If you choose to act as your own registered agent or designate someone you know, there won’t be any added expenses. Alternatively, you have the choice to enlist a registered agent Service, typically costing between $100 to $300 annually. These companies not only offer registered agent services but also provide other beneficial business-related services and can help safeguard your privacy.

Opting for a registered agent Service is a prudent decision under the following circumstances:

• You lack a physical address in the state (Michigan’s law necessitates a Resident Agent to maintain a physical in-state address).

• You prefer not to disclose your address in public records (depending on the chosen company, you might be able to use their address to keep your information private).

Michigan Operating Agreement Costs

An LLC Operating Agreement Fee in Michigan amounts to $0. This document serves as a contractual arrangement among LLC Members, outlining ownership, management procedures, and profit allocation within the LLC.

Both Single-Member and Multi-Member LLCs are advised to create an Operating Agreement, retain it within their business documentation, and provide copies to all Members. Possessing an Operating Agreement is crucial for all Michigan-based LLCs.

While numerous websites demand between $50 to $200 for crafting LLC Operating Agreements, cost-saving alternatives involve self-composition of the Operating Agreement.

Michigan EIN Cost

The LLC EIN Number Fee, which amounts to $0, pertains to acquiring an Employer Identification Number (EIN) or Federal Employer Identification Number (FEIN), essential for tasks such as income tax filing, initiating an LLC bank account, and employee recruitment. 

While several platforms levy charges for aiding in EIN procurement, it’s possible to obtain it without cost. The Internal Revenue Service (IRS) offers the option of online filing, a brief process that requires only a few minutes.

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Michigan LLC Taxes

The annual expenses for various Michigan LLC taxes can significantly differ due to the array of obligations that small business proprietors need to fulfill. A selection of these taxes encompass:

Federal Income Taxes

When it comes to federal income taxes, the IRS offers different treatment options for your LLC. For Single-Member LLCs they’re treated as Disregarded Entities, meaning they don’t file their own tax return. Instead, the owner files the return and pays the taxes. If the LLC is owned by an individual, it’s taxed as a Sole Proprietorship. If owned by another company, it’s taxed as a branch/division. 

Multi-Member LLC Taxes (Default Status)

Multi-member LLCs are taxed as Partnerships. The LLC files a Partnership Return, distributing Schedule K-1s to owners to report their share of profits. K-1 income is then reported on personal tax returns (Form 1040).

Husband and Wife LLC Taxes

In states like Texas, a husband and wife LLC can opt for Single-Member LLC (Qualified Joint Venture) taxation, unlike Multi-Member LLC taxation. However, this option isn’t available in non-community property states like Michigan.

Electing Corporate Taxation

LLCs can choose corporate taxation instead of default options. Corporate elections include S-Corporation and C-Corporation.

• LLC Taxed as an S-Corporation (Elective Status): By submitting Form 2553 to the IRS, an LLC can request S-Corporation taxation. This can reduce self-employment taxes for established businesses. Generally, businesses should consider this once they have consistent revenue.

• LLC Taxed as a C-Corporation (Elective Status): Filing Form 8832 allows an LLC to choose C-Corporation taxation, beneficial for large employers seeking healthcare fringe benefits.

Michigan State Income Tax for Michigan LLCs

In Michigan, Single-Member LLCs don’t file state-level returns; the owner includes LLC profits/losses in their personal state return. Multi-member LLCs may need to file a Partnership return at state/city levels, with owners reporting profits/losses in personal state returns. Certain industries have specific business taxes.

Local Income Tax for Michigan LLCs

Local municipalities may require you or your LLC to file/pay income taxes. Hiring an accountant is recommended, or you can contact your municipality for requirements.

Michigan Sales Tax

Selling products to Michigan consumers may necessitate collecting sales tax with a Seller’s Permit. Michigan Department of Revenue issues these permits, allowing tax collection on retail sales. It’s also known as a resale/wholesale/sales tax permit.

Michigan LLC Payroll Taxes

For Michigan LLCs with employees, payroll taxes encompass federal/state income tax withholding, Social Security/Medicare taxes, and unemployment taxes. Setting up payroll, tax withholding, and submission to agencies are essential. While filing yourself is possible, its complexity often leads to hiring experts or payroll companies.

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Michigan LLC Cost FAQs

How Much Does It Cost to Open an LLC in Michigan?

The cost of opening an LLC in Michigan typically starts at $50 for the filing fee with the Michigan Department of Licensing and Regulatory Affairs. Additional costs might arise from legal assistance or expedited processing fees if desired.

How Much Does an LLC in Michigan Cost Per Year?

Michigan LLCs are obligated to pay an annual fee of $25 for the Annual Report directed to LARA, which constitutes the sole obligatory state fee to maintain the LLC’s active status. If you’ve engaged a Resident Agent service, an additional yearly fee of around $125 typically applies. Depending on your industry and location, certain LLCs might necessitate a Michigan business license, with potential annual fees contingent upon municipal regulations.

Should I Hire an LLC Formation Service?

Obtaining the services of a professional provider isn’t obligatory in the process of establishing your Michigan LLC. Business owners retain the flexibility to personally oversee the LLC formation process. Nevertheless, those seeking a smooth and accurate filing journey might find it beneficial to explore the aid of ZenBusiness.

ZenBusiness is renowned for its outstanding client assistance and extends the offer of free registered agent services for the initial year. Furthermore, they furnish added advantages, such as an Operating Agreement and support with the Annual Report submission.

Conclusion

In conclusion, navigating the process of forming an LLC in Michigan necessitates a comprehensive grasp of the financial implications involved. Michigan offers a promising business ecosystem with its favorable regulations; however, prospective business owners must factor in various costs such as filing fees, registered agent charges, and potential legal consultations. The utilization of expert LLC service providers like ZenBusiness can simplify the procedure significantly. 

It’s imperative for entrepreneurs to conduct a meticulous evaluation of these costs, legal framework, and overall standing to ensure that their decision harmonizes with their goals and fiscal capabilities.

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