How to Start an LLC in Michigan for Free
Most LLCs in Michigan must pay the $50 domestic filing fee. But you may qualify for exemptions. Read on to learn how.
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Starting an LLC in Michigan without spending anything might be a stretch. But cutting down costs is achievable. Specifically, you don't have to spend a dime on Michigan LLC formation services.
That said, there are other costs to consider. But this guide will help you determine where and how you can save. Read on.
Can You Get a Free LLC in Michigan?
You can start an LLC in Michigan for free through waiver fees if you're a veteran. You can also save on other costs through free LLC formation packages or by filing all the paperwork yourself.
Here's how to do each of them.
Apply for a Veteran-Owned LLC Fee Waiver
Michigan LLCs with a majority of interests owned by veterans may qualify for LLC fee waivers.[1] This means you won't have to pay for the LLC formation filing fee and annual report fee. Michigan's domestic filing fee is $50.
Just present evidence of your veteran status and prove that at least 51% of the LLC is owned by veterans.[1]
You can show your veteran status through your:[1]
- VA Veteran Health Identification Card
- Certificate of Military Service
- Certificate of Release or Discharge from Active Duty
- Michigan driver's license with Veteran designation
Not qualified for a waiver fee? Try a DIY approach instead.
Try a Do-It-Yourself Approach
If you plan to form an LLC in Michigan, consider doing everything yourself. This way, you won't have to pay for LLC formation services. These services can cost anywhere from $50 to $399 depending on the additional services included.
That said, here are some of the LLC formation expenses you need to prepare for:
| Michigan LLC Fee | Cost |
|---|---|
| Michigan LLC Formation Fee | $50[2] |
| Name Reservation Fee | $25[2] |
| Certificate of Assumed Name Fee | $25[2] |
| Operating Agreement Fee | Up to $2,000+ |
| Resident Agent Services Fee | Up to $399+ |
| Legal and Tax Advice | Up to $1,000+ |
The cheapest way to start an LLC in Michigan is to do everything on your own. For example, you can file the Articles of Organization, be the LLC's resident agent, and create the Operating Agreement using a free template online.
Here are the steps to get started:
- Name Your Michigan LLC ($0 to $50)
There's no cost to naming your LLC. It's included when you pay the LLC formation filing fee. You'll also be asked to write your desired LLC name in the Articles of Organization.But before choosing a business name, you must conduct a name search. Michigan has a business database that you can access for free.
You can also reserve your desired name first. Paying the $25 name reservation fee can save that name for 6 months.[3] Plus, you can register an assumed name for an additional $25.[2] This lets your LLC do business under a different name.
Michigan's Naming Requirements:
Make sure to follow the state's naming requirements to prevent your Articles of Organization from getting rejected. For example, your LLC name must not contain restricted words if you can't prove that your LLC meets the criteria for using that word. Restricted words include:[4]- Hospital
- College
- Bank
- Drugstore
- Insurance
- Hospital
- Create an Operating Agreement ($0 to $2,000+)
You're not required to have an Operating Agreement in Michigan. But it's highly recommended because it outlines the internal rules and structure of your LLC.You can create one for free by using templates online. You can also use Article V of your Articles of Organization as an Operating Agreement.
Alternatively, you could hire an attorney to draft one for you. A business attorney typically charges a flat fee ($500 to $2,000) for a standard Operating Agreement. You might be charged an hourly rate ($150 to $350 per hour) if you need a more complex Operating Agreement.
LLC Operating Agreement
Among other things, an Operating Agreement should state:- The LLC's management structure (member or manager-managed)
- Each member/manager's initial contribution
- How the profits and losses are distributed
- The responsibilities of each member/manager
- The procedures for when a member/manager leaves or sells shares of the business
- The LLC's management structure (member or manager-managed)
- Choose a Resident Agent ($0 to $399+)
All Michigan LLCs are required to have a resident agent. Also called a registered agent, a resident agent is responsible for receiving business and legal documents on behalf of your LLC.You can do it for free if you're your LLC's resident agent. You only need to be at least 18 years old and have a physical street address in Michigan. Otherwise, professional resident agent services may cost up to $399+ per year.
How much does a resident agent cost in Michigan?
In Michigan, resident agent services could cost as low as $35 a year. However, the price gets higher if you want to use additional business services. Some resident agents offer their services for free in the first year. - File Your Articles of Organization ($50 to $1,000)
Your LLC's formation documents are commonly called the Articles of Organization. It contains important information about your LLC, including:- LLC name (with an "LLC" or "Limited Liability Company" at the end)
- Business purpose
- Duration of your LLC's life
- Resident agent's name and address
It could take days or weeks to process your application depending on the number of applicants. But you can expedite the process for a fee:[5]
- $50: 24-hour expedite
- $100: same-day expedite
- $500: two-hour expedite (if received by 3 PM ET)
- $1,000: one-hour expedite (if received by 4 PM ET)
You must submit your documents with the $50 domestic filing fee to the Michigan Department of Licensing and Regulatory Affairs. Unfortunately, the filing fee is mandatory. There's no way to file your articles for free unless you're a veteran.
Foreign LLC Registration in Michigan
In Michigan, the $50 filing fee is the same for domestic and foreign LLC registrations. But instead of the Articles of Organization, you need to register an Application for a Certificate of Authority to Transact Business in Michigan. This is an entirely different process and involves other steps. - LLC name (with an "LLC" or "Limited Liability Company" at the end)
- Get an EIN ($0 to $$)
An Employer Identification Number (EIN) is a unique nine-digit number assigned by the Internal Revenue Service (IRS). This number is used to identify a business entity for tax-related purposes.Some LLC formation services offer to process your EIN for a fee. That said, the IRS never charges fees for obtaining an EIN. You can get an EIN online in a few minutes at no cost.[6]
Note that you're not required to get an EIN if you're operating a single-member LLC. But you might need it eventually if you hire employees or open a business bank account.
As an optional step, you can seek business, legal, and tax advice for your LLC. Consulting with professionals will help you make the best business decisions, ensure you're complying with federal, state, and local policies, and help you minimize your tax burden.
Do these steps seem complicated? Try a free LLC formation service instead. They'll do the work for you.
Select a Free LLC Formation Package
LLC formation services help you avoid the hassle of doing the paperwork yourself. They can also answer your questions and ensure you follow the correct procedures when forming your LLC.
Here's a list of what they typically offer:
- Business name availability search
- Preparation and filing of your LLC paperwork
- Registered agent services
- EIN services
Some companies offer to file your LLC formation documents for free while providing freebies like registered agent services for 1 year. But you may still have to pay for other services, like creating an operating agreement.
You can get started by checking out the companies that offer free packages below.
Best Free LLC Formation Packages
The best free packages offer services more than filing your Articles of Organization. First up on this list is Bizee, one of the most affordable business formation services today.
Bizee: Silver Package
Bizee, formerly known as Incfile, offers a silver package with a free LLC formation service. You just need to pay the state filing fee.
With Bizee, you'll also get free registered agent services for a year. These include receiving and scanning important legal documents on your behalf, such as tax notices and service of process.
ZenBusiness: Starter Package
ZenBusiness has a starter package for new entrepreneurs. It includes an LLC formation service and a 100% accuracy guarantee. This means your formation documents will be refiled for free if there is any mistake due to their error.
You can also use their Worry-Free Compliance service, so you never have to worry about missing deadlines for your annual report.
However, unlike Bizee, ZenBusiness' resident agent service comes with annual fees regardless of your package. It will cost you an additional $199 per year.[7]
Starter - $0 + State Filing Fees
- Includes 1 optional free year of Worry-Free Compliance that renews at $199/year
- Standard filing speed
- 100% accuracy guaranteed
- Other services are available with additional costs
Inc Authority: Free LLC Package
Inc Authority helps you form an LLC online for free. Just note that this doesn't waive Michigan's $50 domestic filing fee.
Inc Authority will prepare your formation documents and submit them to the Licensing and Regulatory Affairs. You also get a free resident agent service during your first year.
Swyft Filings: Basic Package
Swyft Filings has a basic package that includes free LLC formation services. You just need to pay Michigan's $50 state filing fee.
Swyft Filing's ComplianceGuard will automatically be added to your total bill. It's a 14-day free trial for a service that helps you stay compliant with annual state requirements.
Having said all this, it's not possible to start an LLC in Michigan completely for $0. Below are annual expenses you can't avoid.
LLC Annual Expenses You Can't Avoid
LLCs in Michigan generally can't avoid two types of annual expenses—the annual report fee and annual taxes. These fees are discussed below.
Michigan Annual Report
All LLCs in Michigan must submit an annual statement along with the $25 filing fee.[2] 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.
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.[8]
If your LLC's annual report is not submitted or the fee is unpaid within two years of the due date, your LLC will no longer be in good standing.[9] You can't get a Certificate of Good Standing, typically required by banks and investors. And you'll have to pay extra to reinstate your LLC.
All LLCs in Michigan must pay the $25 annual report fee.[2] You must also pay federal, state, and local taxes. Other annual expenses like resident agent services could add to your total bill as well.
Michigan Business Taxes
Your LLC in Michigan must budget for annual local, state, and federal taxes. LLC members are considered self-employed and must pay self-employment taxes on their share of the profits.
| Self-employment Tax Rate | 15.3% (combined); 12.4% goes to Social Security and 2.9% to Medicare[10] |
|---|---|
| Federal Income Tax | 10% to 37% of your taxable income[11] |
| Income Tax in Michigan | 4.25%[12] |
Additionally, some municipalities collect local income taxes:
| Municipality | For Residents | For Non-residents |
|---|---|---|
| Detroit[13] | 2.4% | 1.2% |
| East Lansing[14] | 1% | 0.5% |
| Flint[15] | 1% | 0.5% |
| Grand Rapids[16] | 1.5% | 0.75% |
If your LLC in Michigan sells products, you must also collect a 6% sales tax.[17] You can register online for a seller's permit (for free). Depending on the purpose and nature of your business, your LLC might be subject to more tax.
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.
Apart from the typical annual expenses, there are other fees you may need to budget for. Read on.
Other Potential Costs for LLCs
Some of these costs aren't mandatory. But since they can be essential in starting an LLC, it's always better to prepare for them.
BOI Report
The Corporate Transparency Act of 2021 requires businesses to submit a Beneficial Ownership Information (BOI) report to the Financial Crimes Enforcement Network (FinCEN).[18]
You are considered a beneficial owner if you own 25% or more of the ownership interests in your LLC. Or if you exercise substantial control over the LLC.
The BOI report includes detailed information about your LLC's beneficial owners, including name, birth date, and address. This information will not be disclosed to the public.[18]
There's no filing fee for the BOI report. But watch out for penalties. Civil fines cost up to $500 per day for late filings.[18]
The BOI report's due date depends on when your LLC was formed:[19]
- LLCs formed before January 1, 2024: due on January 1, 2025
- LLCs formed on or after January 1, 2024: due within 90 days after the date your LLC was formed
- LLCs formed on or after January 1, 2025: due within 30 days of company formation
Business Permits and Licenses
Michigan does not have a general state-level business license. However, your LLC may need to get local business permits. For example, at Grand Rapids, business licenses for home-based businesses and street vendors could cost up to $500.[20]
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.[21]
The number of permits and licenses your LLC needs depends on its business purpose. Some businesses may be regulated simultaneously by various governmental offices, racking up total costs of over $1,000.
Most LLCs who sell taxable goods or services in Michigan need a sales tax license.[22] Even if you only sell online, you still need to get a sales tax license.
Business Bank Account
An LLC provides limited liability. This means personal assets (like your home and car) are protected from business debts and liabilities. However, mixing personal and business finances in one bank account can weaken this shield.
If you can't clearly distinguish between personal and business transactions, a court might hold you personally liable for business debts. A separate business bank account creates a clear separation of personal and business finances.
While opening a business bank account is frequently accompanied by charges, check out banks for LLCs that have low fees and valuable perks to help your business grow.
Once your LLC has a sufficient credit history, you can submit a business loan application to the U.S. Small Business Administration. You must submit a business plan and show proof that you understand your LLC's finances.
Business Insurance
If your newly-formed Michigan LLC needs to hire employees, you might need to get workers' compensation insurance.[23]
You can get workers' insurance policies through the following:[23]
- Compensation Advisory Organization of Michigan
- Private Insurance Carrier
- Self-insurance
If you have no plans to hire employees soon, your LLC may still benefit from business insurance that covers expenses from unexpected events and damaged property.
When shopping around for business insurance, consider the specific risks your LLC faces. Prioritize getting the right coverage for your specific needs and get quotes from multiple providers.
Business Website
A business website and social media presence are dedicated online spaces for your LLC. They're essential for marketing, customer engagement, and brand visibility in today's digital world.
Hire a professional web developer if you want a highly customized and unique website. Or you can do it yourself using a website template through popular content management systems like WordPress and Wix (around $15 to $20/mo).
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.
Bottom Line
You can start an LLC in Michigan for free if you qualify for fee waivers. These fee waivers are available for veteran-owned LLCs. And they waive the mandatory fees for filing your paperwork.
Unfortunately, if you're not qualified, there's no avoiding the filing fees. Plus, there are other fees that you'll have to budget for that come with starting an LLC.
LLC formation services that offer free packages can make your work easier without adding to the cost. But you can also do the paperwork yourself so you can avoid extra fees altogether.
Starter - $0 + State Filing Fees
- Includes 1 optional free year of Worry-Free Compliance that renews at $199/year
- Standard filing speed
- 100% accuracy guaranteed
- Other services are available with additional costs
References
- ^ Michigan Department of Licensing and Regulatory Affairs. Waiver of fees for veterans, Retrieved 02/13/2024
- ^ State of Michigan. Filing Fees, Retrieved 02/13/2024
- ^ State of Michigan. Application for Reservation of Name, Retrieved 02/13/2024
- ^ State of Michigan. Restricted Words, Retrieved 02/19/2024
- ^ Michigan Department of Licensing and Regulatory Affairs. Articles of Organization, Retrieved 02/13/2024
- ^ Internal Revenue Service. How to Apply for an EIN, Retrieved 05/05/2024
- ^ ZenBusiness. Products & Pricing, Retrieved 05/05/2024
- ^ Michigan Department of Licensing and Regulatory Affairs. Annual Filings, Retrieved 05/05/2024
- ^ State of Michigan. Limited Liability Company Filing Information, Retrieved 02/19/2024
- ^ Internal Revenue Service. Self-Employment Tax (Social Security and Medicare Taxes), Retrieved 02/13/2024
- ^ Internal Revenue Service. Federal income tax rates and brackets, Retrieved 02/10/2024
- ^ Michigan Department of Treasury - Taxes. Income Tax Rate Change Overview, Retrieved 02/13/2024
- ^ State of Michigan. What cities impose an income tax?, Retrieved 02/13/2024
- ^ City of East Lansing. Income Tax, Retrieved 02/13/2024
- ^ City of Flint. Income Tax Forms, Retrieved 02/13/2024
- ^ City of Grand Rapids. Income Tax Department, Retrieved 02/13/2024
- ^ State of Michigan. Sales and Use Tax, Retrieved 02/13/2024
- ^ Financial Crimes Enforcement Network. Beneficial Ownership Information Reporting, Retrieved 02/13/2024
- ^ Financial Crimes Enforcement Network. Beneficial Ownership Information Reporting, Retrieved 02/10/2024
- ^ City of Grand Rapids. Business Licensing, Retrieved 02/13/2024
- ^ City of Detroit. Licensing and Permits - Buildings, Safety Engineering, and Environmental Department, Retrieved 02/13/2024
- ^ Michigan Department of Treasury. Who Needs A Sales Tax License?, Retrieved 02/13/2024
- ^ Michigan Department of Labor & Economic Opportunity. Employer Insurance Requirements, Retrieved 02/13/2024
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.
Note: This website is made possible through financial relationships with some of the products and services mentioned on this site. We may receive compensation if you shop through links in our content. You do not have to use our links, but you help support CreditDonkey if you do.
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