Choosing to start a new company is both exhilarating and terrifying. It’s the first of many choices you’ll have to make along the path. Depending on where you reside, you may need to register your company at the state, municipal, and federal levels. This guide will assist you through the process of registering your Michigan company.
Establishing a Business in Michigan
1. Give Your Michigan Business a Name
There is one crucial step you must do before registering your new business: you must choose a name. While naming your new company may seem simple on the surface, it is really one of the most important and time-consuming activities you will do throughout the business launch process.
Your company’s name should be unique and capture customers’ attention, but it also conveys much more. It should provide a clear message about the things you sell and/or the services you provide. The name of your firm exposes the public to your brand and may convey a message about your company and what it stands for.
Considering Your Name
While many entrepreneurs are inclined to speed through the name process, you should take your time and investigate all naming options. Take multiple brainstorming sessions and utilize the free internet business tools available today to assist you come up with a variety of choices, narrowing them down as you go.
Our company name generator is a fantastic, industry-specific brainstorming tool that will not only help you come up with the right name, but will also verify domain name availability for you. If you’re still unsure where to begin, our name guide may help you establish your brand and provides practical recommendations for brainstorming sessions.
Michigan Name Lookup
The Michigan Department of Licensing and Regulatory Affairs (LARA) features a business entity search engine that may assist you identify business entities by name. You should also make sure that your name isn’t too similar to any existing firm in your state. This will assist to prevent future misunderstanding and legal problems.
It’s time to start legitimizing your firm once you’ve chosen a name that appropriately portrays your brand. These following procedures will differ based on your company structure and the legal requirements of your state. The next section will go through the various company structures.
If you want to utilize a “doing business as” (DBA) name, often known as an assumed name in Michigan, our DBA guide will assist you in ensuring that you are legally registered at the state, county, and/or local levels. There are a number of advantages to registering your assumed name with the state. It provides an additional degree of security against other Michigan firms, establishes your company’s validity, and may be needed by certain suppliers, banks, and lenders.
2. Select a Business Structure for Your Michigan Company
Now that you’ve picked a good name for your brand, it’s time to start the legalization process. Before you begin the registration procedure, you must decide which company structure is appropriate for you. Each has its own set of perks, drawbacks, and tax advantages.
The sole proprietorship
A single proprietorship is the simplest straightforward business form. This informal corporation was created for entrepreneurs who do not want to work with others. It provides no personal asset protection and does not need state filing.
Sole proprietorships usually operate under the owner’s surname. If you want to conduct business under an assumed name in Michigan, you must register a DBA by completing an application and submitting it to the county clerk(s) where you do business. Filing costs and renewal processes differ from county to county. Contact information may be found on the official Michigan Counties List.
Partnership
A general partnership, like a sole proprietorship, is an informal structure established for entrepreneurs who form a partnership with at least one other person. You and your partners’ surnames may be used for the firm, or you can get a DBA name. Profits and losses would be reported on your (and your partners’) personal tax return, and no personal assets would be protected.
Some partnerships (including limited partnerships and limited liability partnerships) in Michigan are required to submit formal documentation with the state, along with a filing fee.
LLC
If you do not intend to go public in the foreseeable future, a limited liability corporation (LLC) may be the best option. It provides more freedom and protects your personal assets in the case of a lawsuit.
The state of Michigan requires all LLCs to select a resident agent (also known as a registered agent) to receive legal papers on their behalf. Your resident agent must be a qualified Michigan resident or a company allowed to do business in Michigan. Many new LLCs choose to use a registered agent service, which costs between $29 and $300 each year.
Michigan also needs you to follow particular name rules and submit the Articles of Organization, which include important information about your business.
It should be noted that certain states need NAICS codes. You may use an NAICS Code Lookup to locate the NAICS Code for LLC that corresponds to your industry.
Corporation
A corporation is a kind of business entity for those who have (or want to have) shareholders. So, if you want to go public in the future, this may be the greatest alternative for you.
Corporations, like LLCs, must designate a resident agent to receive paperwork, compliance papers, and government communication on the organization’s behalf. Your resident agent, like an LLC, might be a professional service, a corporate organization, or a person.
You will also need to submit Articles of Incorporation with the state in addition to becoming a registered agent.
3. Determine whether your business has to be registered in Michigan.
Once you’ve decided on your formal company structure and registered your new business name, you need check with your state to see what the criteria are for business registration. Each state has its own set of rules, which must be strictly followed.
Most informal company arrangements, such as sole proprietorships and general partnerships, do not need to be registered with the State of Michigan. Check with your local government to discover whether your sole proprietorship or general partnership has to be registered at the county or municipal level.
Furthermore, certain firms (for example, sole proprietorships and single-member LLCs with no workers) are exempt from registering and filing for a Tax ID Number, also known as an Employer Identification Number (EIN), with the IRS. Even if this is not a necessity for your company, you should consider registering regardless since there are various legal and tax advantages.
Even though you are not compelled to register your firm, it is important to recognize that creating an LLC has several legal and financial advantages. Your business debts are considered personal debts if you are a single proprietorship or a partnership. This implies that in the case of a lawsuit, your personal assets might be taken. Personal protection is provided through LLCs, which legally shield your personal assets and minimize your personal liabilities.
Aside from personal protection, LLCs have various additional advantages, including:
Profit distribution, decision-making, and company management flexibility
“Flow-through” taxes permits the LLC’s revenue and costs to pass through to the owners’ personal income tax returns, with no limits on the number and type of owners.
If you don’t have the time or skills to organize your own LLC, there are a variety of trustworthy LLC filing services that may assist you. We analyzed and selected the five finest LLC registration services because we realize how difficult it can be to navigate through the thousands of accessible alternatives. Our LLC service review compares each to ensure you associate with a service that saves you both time and money.
4. Register Your Michigan Business for Taxes
EINs are used by the IRS to identify firms for tax purposes. Every company with workers is obligated to have one. Our EIN guide will assist you in determining the EIN requirements for your company structure and will coach you through each stage of the procedure.
You may register with your state to pay employment and other taxes after you have your EIN. If you do not have an EIN, the state will provide you with an account number. You may then use the online tools to maintain your account in good standing.
If you sell real goods, you may be required to register for sales tax. Some companies may be required to register for industry-specific taxes, such as the motor fuel tax. Visit the Michigan Department of Treasury’s website for further information.
5. Obtain Michigan Business Permits and Licenses
The licenses and permissions required for a Michigan company are determined by factors such as your location in the state and your chosen speciality. To stay lawful, most real estate firms will need to apply for and renew licenses with the state Board of Real Estate Brokers and Salespersons. Using the Michigan State License Search, you may find more about your specific company.
Furthermore, certain businesses are governed by a federal agency and need federal licenses and/or permits. A liquor company, for example, would be subject to FDA standards and recommendations. Visit the Small Business Administration (SBA) website to learn more about federal permit requirements and costs.
