Establishing a Limited Liability Company (LLC) in Michigan offers protection against personal liability for business obligations and potential tax advantages. Here’s a step-by-step guide to help you create an LLC in Michigan:
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STEP 1: Choose a Name for Your LLC
Naming Requirements: Your chosen name must include “Limited Liability Company,” “L.L.C.,” or “LLC.”
Uniqueness: The name must be distinguishable from existing businesses registered with the Michigan Secretary of State.
Check Name Availability: You can verify your desired name’s availability using Michigan’s online business database.
Optional Name Reservation: If you wish, you can reserve your desired name for up to 6 months by filing a Name Reservation application and paying a fee.
Time it Takes to name an LLC
Researching and deciding on a name: 1-2 hours
If opting for a name reservation: The act of filing can take about 10-15 minutes.
If opting for a name reservation: Filing can take minutes, but approval might take a few days to a week.
STEP 2: Appoint a Registered Agent
A registered agent is an individual or business entity responsible for receiving official correspondence, legal documents, and service of process on behalf of your LLC.
The agent must be a Michigan resident or a business authorized to conduct business in Michigan and must have a physical address in the state.
Time it Takes to be a Registered Agent
Registered Agents MUST BE at the Business Address everyday during business hours. This is why Home Addresses Are Not Accepted.
If you already have someone in mind (like an attorney or a service), this can be quick. If you need to find and appoint a registered agent: 1-3 hours.
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Benefits of having Inc Authority serve as your Registered Agent include:
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· Efficiency: Easily receive and promptly process state and legal documents
· Hassle-free: Reduction of junk and solicitation mail
· Legal Compliance: Avoid fines, penalties, and possible dissolution
· Convenience: Serves as your public & legal business address
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STEP 3: File Articles of Organization
Prepare and file the Articles of Organization to officially create your LLC with the Michigan Secretary of State.
The form will ask for details like the LLC’s name, the registered agent’s name and address, and more.
You can file online or by mail with the Michigan Department of Licensing and Regulatory Affairs (LARA).
There is a filing fee associated with this form.
Time it takes to write the Articles of Organization
Preparing the document: 1-2 hours
Filing online: 30 minutes to 1 hour.
Waiting for confirmation/approval: This can range widely, but typically, online filings can be processed in a few days to a couple of weeks.
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STEP 4: Create an Operating Agreement
An Operating Agreement outlines the operational procedures, member responsibilities, and other essential aspects of your LLC.
While Michigan doesn’t require an Operating Agreement, it’s recommended to have one, especially if your LLC has multiple members.
Time it takes to write an Operating Agreement
If using a template and making minimal changes: 1-3 hours
If drafting from scratch or having extensive negotiations among members: Several days to weeks.
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STEP 5: Obtain an Employer Identification Number (EIN)
Apply for an Employer Identification Number (EIN) from the Internal Revenue Service (IRS) for tax purposes.
You can apply for an EIN online at no cost through the IRS website: https://www.irs.gov/businesses/small-businesses-self-employed/apply-for-an-employer-identification-number-ein-online
The EIN will be used for tax filings, opening bank accounts, and hiring employees.
Time it takes to get an EIN / Tax ID
Filling out the online form and receiving the EIN: Approximately 0.5 to 1 hour (the online process is relatively quick if there are no complications).
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SO HOW MUCH TIME WILL IT TAKE TO FORM AN LLC MYSELF? DO IT MYSELF (DIY) an LLC?
Total Time Investment (Minimum): 5 hours (if you exclude the higher range estimates and name reservation)
Total Time Investment (Maximum): 11.5 hours (if you include the higher range estimates and name reservation)
This gives a ballpark range of 5 to 11.5 working hours for an individual, excluding all waiting times. It’s worth noting that these times can vary based on the person’s familiarity with the processes and any specific details or challenges related to the business being set up.
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