Learn about the annual report and tax filing obligations for Michigan limited liability companies.
To establish and operate a Michigan limited liability corporation (LLC), you must prepare and submit a number of paperwork with the state. This article discusses the most significant Michigan LLC continuing reporting and state tax filing obligations.
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Annual Report
You must submit an annual statement for your LLC with the state of Michigan. Each year, you must submit the statement by February 15. (There is one exception: new LLCs created after September 30 of the prior year are exempt from filing a statement on the February 15 immediately following the date of creation.)
Around three months before the due date, your LLC’s registered agent will get a pre-printed annual statement form. You may use this form or submit it online. To access the online form, you’ll need your LLC’s state-issued entity ID number. The statement requires just a few pieces of information, such as the LLC’s registered office location and the name and street address of its resident agent. A Michigan LLC’s annual statement filing charge is $25.
State Corporation Tax
Most LLCs are pass-through tax corporations when it comes to income taxes. In other words, the burden for paying federal income taxes is passed via the LLC to the individual LLC members. LLCs do not pay income taxes by default; only its members do. Some states charge LLCs a separate tax or fee for the privilege of conducting business in their jurisdiction. Michigan, on the other hand, is not one of those states.
However, in certain situations, the owners of an LLC elect to have their firm taxed as if it were a corporation. This decision is made by submitting IRS Form 8832 to the IRS. (The form is available on the IRS website.) When an LLC elects to be taxed as a corporation rather than as a pass-through entity, the firm must submit a separate tax return. Michigan, like practically every other state, has a corporate income tax (CIT). The company tax in Michigan is a flat 6% of taxable income. This tax must be paid if your LLC is taxed as a corporation. The Michigan Department of Treasury receives the state’s business income tax return (Form 4891). (DOT).
Employer Taxes in the State
Do you have workers in your LLC? If this is the case, you must pay employer taxes. Some of these taxes are paid to the federal government (the IRS) and are not addressed in this section. (However, it is important to understand that federal employer tax duties begin with getting a federal employer identification number (EIN).) Employers in Michigan, however, must additionally pay state taxes.
To begin, you must withhold and pay employee income taxes to the DOT. Begin by registering your company with the DOT, either on paper (Form 518) or online (Form 518). After you’ve enrolled, you must submit withholding taxes on a regular basis (typically monthly or quarterly). Each year, you’ll also need to utilize Form 165 to balance your LLC’s tax withholding.
You’ll also need to register to pay state unemployment insurance (UI) taxes. These levies are collected by the Michigan Unemployment Insurance Agency (UIA). You may register for these taxes either online (which is suggested) or by mail (using Form 518). Then, on a quarterly basis, you must submit Form UIA 1028 to the UIA.
Taxes on Sales and Use
If your LLC sells items to clients in Michigan, you must collect and remit sales tax. This implies you’ll have to register with the Department of Treasury for this reason and then make periodic sales tax payments for products sold. On the DOT website, you may register online. After you register, you will get a sales tax license. Then, each year, you must file DOT Form 165 to pay sales tax. You should be able to submit this form online beginning in 2015.
Other States Registration
If you want to do business in states other than Michigan, your LLC may need to be registered in any or all of those states. The exact states concerned will determine if you are needed to register: each state has its own regulations for what defines conducting business and whether registration is required. For registration reasons, having a physical presence (a business location) in a state, recruiting personnel in a state, or soliciting business in a state (through telephone, print advertisements, mail, or the Internet) are sometimes considered conducting business. Obtaining a certificate of authority or comparable document is normally required for registration.