Vinnys House of Knowledge

Starting your own business has never been easier. Everything you need to do is accessible online. I will go over the steps to setup a Limited Liability Corporation in Michigan.

Note: I am not a lawyer, before doing this, you should consult a business lawyer to determine what the best type of corporation to start for your needs. LLC’s and Class C corporations are not for everyone. A Partnership might be best, etc. Do not take my advice as fact..

With that said, if you are starting a small business and do not plan to sell shares of your company, you can start a Limited Liability Corporation or LLC. This allows the income from the company to flow through to the owners, or members as they are called. In Michigan you are allowed to have a one member LLC, so you can open this by yourself. When it comes to tax time, you fill out a few more forms and the income is added to your personal taxes. The LLC gives you the protection of a Corporation by keeping the business operations separate but having income flow to you. The members must be careful to keep all accounting separate in case a disagreement comes up. This goes as far as having a separate business computer system if you work from home, a business checking account, credit card, etc. There are different types of LLC’s, so research the one you may need. If you are a non-profit, professional services, etc there are different forms to fill out.

My steps here will be for a single member Domestic LLC which should cover the majority of businesses.

There is a great guide online with the more information here. There are a great deal of things to think about like federal and state taxes, and if you have employees it gets more complicated.

To get started, search to see if your kind of business requires a license here. If you are running a service, most require state licensing. You can apply for licenses here at MI TAPS.

The first step to creating your corporation is to name it! You can search the current business names online at Michigan.gov Business Lookup. This site is also great if you want to research a local company and see who owns it, etc.

Once you have determined a name and checked that no one else has it, you need to send in an Articles of Organization form which specifies the members and the business name to the state. Follow all the instructions and get it right! The fee will be payed through your MICH-ELF account described below.

The process for sending forms into Michigan is through the MICH-ELF system. This is a fax based system where you create an account, and can fax in most forms. The information is available here. You can use email to send in forms with FILEonline once your ELF account is established.

Once the state accepts your Organization, they will fax back the OK. You now have an LLC!

The next step is to create a federal ID tax number to keep it separate from your social security number. You can register for federal EIN here. You should consult your attorney or accountant before making some of those tax decisions in that form, they can have implications down the road.

Once you have an EIN, you then must register for Michigan taxes online, so you can purchase tax free, then charge customers sales tax. You will then receive a tax license. After that you must file with the state the amount of taxes you expect to charge, and if its over a certain amount, you will have to pay them up front. Read up on the ETF payments for taxes, it makes your life easier. Make sure to read up on this as much as possible. Don’t get caught by not paying up!

After you have completed your EIN you have the business setup. The sales tax portion takes longer, so you need to wait if you are purchasing products. You can register for a business checking account, credit card and start finding suppliers. If you are serious about this, you might need a DUNS number which is what other businesses look at; it is your businesses credit report. The cheap version is $299.

The various state taxes, unemployment, social security, etc can overwhelm you. Just read through them all, and hire an accountant to help with the details.

Make sure to file your state taxes (whatever the timing you need based on income), and yearly articles of organization with the state to keep your business! They will send out a mailing once your articles are due.

It is also a good idea to look into trademarking your business name and logo when you create it. You can do this at the state and federal levels. State information is here, and the federal information is at the USPTO website.

Good luck and I hope you succeed!