How Much Does an LLC Cost in Michigan
It costs $50 to start an LLC in Michigan. But there are a range of other expenses, too. Read on to know how much to budget.
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Here are the following costs to consider:
- Domestic LLC Formation Fee: $50
- Foreign LLC Formation Fee: $50
- LLC Annual Report Fee: $25 to $75
- Business Permits and Licenses Fees: $0 to $1,500+
- Business Taxes: 4.25% to 6%
- Optional Fees: $0 to $3,000+
Although Michigan's LLC formation fee costs $50, the total cost of forming an LLC goes beyond this filing fee.
There are other expenses to consider. For example, mandatory expenses include the annual report filing fee and business permits.
Not to mention, there's a long list of optional fees that could increase the total expense to more than $3,000.
This comprehensive checklist should help you prepare a more accurate budget.
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Michigan Domestic LLC Formation Filing Fee
Cost: $50
To form a domestic LLC in Michigan, you must submit the Articles of Organization to the Department of Licensing and Regulatory Affairs (LARA).
The $50 filing fee covers the administrative costs.[1] Processing time is up to 4 weeks if sent via mail and up to 2 weeks for online filings.
But you can opt for an expedited service. Fees vary based on how fast you need the articles.
In Michigan, if the majority of an LLC's owners are veterans, the company can waive its filing fees. This includes the fees for filing the Articles of Organization and the annual report.[2]
Michigan Foreign LLC Formation Filing Fee
Cost: $50
If your LLC is already established in a different state and you want to expand your business to Michigan, you need to register it as a foreign LLC.
Foreign LLCs in Michigan must submit a Certificate of Authority to LARA. It typically takes longer to process a foreign LLC application compared to domestic LLC applications, but you can pay for expedited services.
In addition, if your foreign LLC's original name is unavailable in Michigan, you must file a Certificate of Assumed Name. The assumed name becomes your LLC's official business name only in Michigan.
No. Series LLCs are not legally recognized in Michigan. If your LLC in another state is a series LLC, you'll need to create a separate foreign LLC in Michigan. This involves filing a Certificate of Authority.
Michigan Annual Report Fee
Cost: $25 (LLC) or $75 (PLLC)
All LLCs in Michigan must submit an annual report. It updates the state of your LLC's current information, including the business address and registered agent's name. The report also confirms that your business is still active.
Here are the requirements:[3]
- General LLCs: Limited Liability Company Annual Statement + $25 filing fee
- Professional LLCs: Professional Limited Liability Company Annual Statement and Annual Report + $75 filing fee
In Michigan, the LLC annual report is due by February 15th each year, starting the year after your business is formed. But if your LLC was formed after September 30th, you don't have to file an annual report in the year immediately following your formation.
If your LLC's annual report is not submitted or the fee is unpaid by February 15, there will be a $50 late penalty fee.[3] You will also be unable to get a Certificate of Good Standing, typically required by banks and investors.
Michigan Business Permits and Licenses Fees
Cost: $0 to $1,500+
Michigan does not have a general state-level business license. However, your LLC may need to get local business permits.
The local business permit fees vary per city and could be renewable yearly. For example, at Grand Rapids, business licenses for home-based businesses and street vendors could cost up to $500.[4]
In Detroit, businesses with a physical location must get a Certificate of Occupancy and a business license. The certificate is free, but licenses could cost up to $1,500.[5]
Aside from the $25 - $75 annual report filing fee, LLCs in Michigan must also pay business permits and licenses. You should renew them every year. Other ongoing costs include registered agent services and website domain fees.
Michigan Business Taxes
Cost: 4.25% (Individual Income Tax) | 6% (Sales Tax)
LLCs are treated as pass-through entities for tax purposes. This means profits and losses are passed directly to members and reported on their tax returns. In Michigan, your earnings are subject to a flat 4.25% individual income tax rate.[6]
Additionally, some municipalities collect local income taxes:
- Detroit: 2.4% for residents; 1.2% for non-residents[7]
- East Lansing: 1% for residents; 0.5% for non-residents[8]
- Flint: 1% for residents; 0.5% for non-residents[9]
- Grand Rapids: 1.5% for residents; 0.75% for non-residents[10]
If your LLC in Michigan sells products, you must also collect a 6% sales tax.[11] You can register online for a seller's permit (for free).
Consult with a tax advisor to determine the specific taxes that apply to your business. A qualified accountant could charge $300 yearly for a simple tax return. The fee is higher for more complex tax requirements.
Michigan LLC Optional Fees
While the fees below are optional, you may need to pay for some of them depending on your business needs.[1]
| Michigan LLC Optional Fees | Cost |
|---|---|
| Expedited Service Fee | $50 - $1,000 |
| Resident Agent Fee | $0 - $400 |
| Operating Agreement Fee | $0 - $1,000 |
| Employer Identification Number (EIN) | FREE |
| Name Reservation Fee | $25 |
| Certificate of Assumed Name Fee | $25 |
| Certificate of Correction Fee | $25 |
| Certificate of Amendment Fee | $25 |
| Certificate of Change Fee | $5 |
| Certified Document Copy Fee | $16+ |
| Certificate of Good Standing Fee | $10 - $12 |
| Business Website Domain Fee | $20 - $30 |
| Business Insurance Premiums | $ - $$$ |
Michigan Expedited Service Fee
Cost: $50 to $1,000
In Michigan, all of your LLC documents can be expedited for a fee. This includes the Articles of Organization and the Certificate of Good Standing.
The cost depends on how quickly you need the documents to be processed:[12]
- 24-hours: $50 (new LLCs); $100 (existing LLCs)
- Same-day: $100 (new LLCs); $200 (existing LLCs)
- 2 hours: $500 for all types of LLCs
- 1 hour: $1,000 for all types of LLCs
In Michigan, forming an LLC online takes about 10 business days. Mailing your application takes the same time plus additional days for mail delivery. You can pay for expedited service to get your LLC within 24 hours.
Michigan Resident Agent Fee
Cost: $0 to $400
In Michigan, a registered agent is called a "resident" agent. This agent, either a person or an entity, is authorized to accept official legal documents and notices for your LLC.
Before forming an LLC, you must decide who is going to be the resident agent. According to Michigan law, the full name and address of the resident agent must be included in the Articles of Organization.
To save money, you can be your LLC's resident agent. You must be at least 18 years old and have a physical address in Michigan. However, your address will be publicly accessible.
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Hiring a registered agent service is not required, but doing so provides privacy and convenience. You get to keep your address off public records while letting a professional handle your LLC's legal documents.
Michigan Operating Agreement Fee
Cost: $0 to $1,000
The costs associated with the operating agreement come in the drafting of the document. You can create an operating agreement for free by using templates online. Alternatively, it could cost upwards of $1,000 if you hire an attorney.
An operating agreement is a legal document that details the operating procedures of the LLC. It also defines the roles and responsibilities of the members or managers.
LLCs in Michigan are not required to have one, but it helps prevent and solve any business disputes that may arise later on.
If you don't create an operating agreement, you'll have to follow Michigan's default legal provisions for LLCs. These rules aren't always beneficial to your LLC.
The default rules in Michigan distribute profits and losses equally among members, regardless of individual contributions. This could be a problem if members' contributions differ significantly.
Michigan Employer Identification Number
Cost: FREE
An Employer Identification Number (EIN) is a unique nine-digit number assigned by the IRS. This number is used to identify a business entity for tax-related purposes.
You're not required to get an EIN if you're a single-member LLC in Michigan. However, you might still need it down the line if you want to hire employees or open a business bank account.
Yes. Separating your LLC's finances from personal assets is a requirement of liability shielding. Use a separate bank account for accepting payments and paying business expenses to prevent piercing the corporate veil.
Michigan Name Reservation Fee
Cost: $25
Naming your LLC in Michigan is free. It's included when you pay the Articles of Organization filing fee. But if you're not ready to submit your Articles of Organization, you can pay to reserve your LLC's name instead.
In Michigan, you can reserve a business name for 180 days. And if you need more time, you can pay the name reservation fee when the first 180 days expire. The maximum name reservation period cannot exceed 365 days.[13]
Check online to see if your business name is available as a web domain. Even if you don't plan to make a business website today, you may want to buy the URL to prevent others from acquiring it.
Michigan Certificate of Assumed Name Fee
Cost: $25
A trade name (also known as "Doing Business As" or DBA) allows your LLC to operate under a name different from its legal name registered with the state. Some LLCs use a DBA for branding purposes. It's also ideal if you want to use a name that doesn't have an "LLC" at the end.
An alternate name for businesses in Michigan is valid for up to 5 years. It expires on December 31st of the fifth full calendar year. You will need to renew it for $25 so that your LLC's trade name can be retained.[14]
Michigan Certificate of Correction Fee
Cost: $25
After your Michigan LLC application is approved, get a copy of your Articles of Organization and review all the details carefully.
If there are errors, like a misspelled business name or incorrect address, correct them as soon as possible by filing a Certificate of Correction.
Michigan Certificate of Amendment Fee
Cost: $25
Your Michigan LLC's Articles of Organization contain specific details about your business. Should these details change, you must submit a Certificate of Amendment to the Department of Licensing and Regulatory Affairs (LARA).
File Articles of Amendment if you:
- Add, remove, or change an LLC member or manager
- Update your LLC's business address
- Modify your LLC's stated business activities
A Certificate of Correction is for fixing mistakes in initial filings. Meanwhile, a Certificate of Amendment is for updating key details as the LLC evolves.
Michigan Certificate of Change Fee
Cost: $5
An LLC can change its resident agent's details anytime. If this happens, you must submit a statement of change to the Department of Licensing and Regulatory Affairs (LARA). Changes include the resident agent's name and address.
In Michigan, the Certificate of Amendment is used to change the business name, business purpose, and other details. The Certificate of Change is focused solely on changes regarding the resident agent.
Michigan Certified Document Copy Fee
Cost: $16 for up to six pages + $1 per additional page
Certified copies of business documents prove that your LLC's details are accurate. A certified document from LARA also verifies that your LLC is legitimate.
You might need these for circumstances like opening a business bank account or expanding your LLC in another state.
Michigan Certificate of Good Standing Fee
Cost: $10 (online) | $12 (in-person)
A Certificate of Good Standing verifies that your business is legally authorized to conduct business in Michigan. Plus, it shows that your business is in good standing with the state.
In addition, the certificate is often necessary to:
- Open a bank account
- Conduct business outside of Michigan
- Qualify for business insurance
- Apply for business loans
If your LLC in Michigan is in bad standing, first you must pay any outstanding penalties and fees. You should also file the annual report if it's late. Afterward, file a Certificate of Restoration of Good Standing along with the $50 filing fee.[15]
Michigan Business Website Domain Fee
Cost: $20 to $30
A website provides a dedicated online space for your business. It's essential for marketing, customer engagement, and brand visibility in today's digital world.
Even if you're not planning to build a business website now, it's a good idea to at least buy the domain name. This prevents others from using your LLC's name as a web address.
Domain squatters often monitor newly registered LLC names. They purchase corresponding website domains and then resell them at significantly higher prices.
Michigan Business Insurance Premiums
Cost: $ - $$$
All LLCs in Michigan with at least one employee who works at least 35 hours a week must get workers' compensation insurance.[16]
The cost depends on factors like the number of employees, the risk level of your industry, and your past insurance claims.
Failure to obtain workers' compensation insurance can lead to hefty fines, potential lawsuits from injured employees, and even business closure.
Bottom Line
Michigan's $50 LLC filing fee is affordable compared to other states. However, this is not the only expense you will face when forming an LLC in the Great Lakes state.
The total cost will increase depending on the additional services, documents, and licenses your LLC needs. Ultimately, it's never a bad idea to set aside an extra budget for unexpected fees.
References
- ^ Michigan Department of Licensing and Regulatory Affairs. Filing Fees, Retrieved 01/25/2024
- ^ Michigan Department of Licensing and Regulatory Affairs. Waiver of Fees for Veterans, Retrieved 12/08/2023
- ^ Michigan Department of Licensing and Regulatory Affairs. Limited Liability Company Filing Information, Retrieved 01/25/2024
- ^ City of Grand Rapids. Business Licensing, Retrieved 12/13/2023
- ^ City of Detroit. Licensing and Permits - Buildings, Safety Engineering, and Environmental Department, Retrieved 12/13/2023
- ^ Michigan Department of Treasury - Taxes. Income Tax Rate Change Overview, Retrieved 01/25/2024
- ^ State of Michigan. Detroit City Tax, Retrieved 12/13/2023
- ^ City of East Lansing. Income Tax, Retrieved 12/13/2023
- ^ City of Flint. Income Tax Forms, Retrieved 12/13/2023
- ^ City of Grand Rapids. Income Tax Department, Retrieved 12/13/2023
- ^ State of Michigan. Sales and Use Tax, Retrieved 12/13/2023
- ^ Michigan Department of Licensing and Regulatory Affairs. Limited Liability Company Forms, Retrieved 12/08/2023
- ^ Michigan Department of Licensing and Regulatory Affairs. Form 540, Retrieved 12/13/2023
- ^ Michigan Department of Licensing and Regulatory Affairs. Certificate of Assumed Name, Retrieved 01/25/2024
- ^ Michigan Department of Licensing and Regulatory Affairs. Restore My LLC, Retrieved 12/13/2023
- ^ Michigan Department of Labor and Economic Opportunity. Employer Insurance Requirements, Retrieved 01/11/2024
Nicole King is a research analyst at CreditDonkey, a business formation services comparison and reviews website. Write to Nicole King at nicole.king@creditdonkey.com. Follow us on Twitter and Facebook for our latest posts.
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