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Starting a business in Michigan is an exciting but intricate process that demands not only vision but also careful legal guidance. At Lah Law, our experienced Michigan business formation attorneys are here to support entrepreneurs and business owners through the complex process of launching their ventures.
With a thorough understanding of Michigan’s legal requirements for business formation, our attorneys are well-equipped to provide strategic advice that ensures your company’s foundation is compliant, resilient, and tailored to your long-term goals.
From helping you choose the most advantageous entity type, whether that be an LLC, corporation, or other structure that maximizes liability protection and tax benefits, to drafting essential documents that establish clear operational guidelines, our approach is detailed and customized. We recognize that every business is unique, and we take the time to fully understand your vision, industry, and challenges, allowing us to deliver solutions that mitigate risk while positioning your company for long-term growth and success.
Whether you’re a first-time entrepreneur or formalizing a new business venture, our Michigan business formation attorneys are ready to help you navigate the path to success.
Sole Proprietorship – The simplest and most straightforward business form in Michigan, where the business owner is personally responsible for all debts and liabilities. No formal filing with the state is necessary to establish a sole proprietorship, but the owner may need to register a “Doing Business As” (DBA) name and obtain local licenses or permits.
General Partnership – In Michigan, a general partnership is automatically formed when two or more individuals engage in business for profit. Similar to sole proprietorships, general partnerships do not require state filing, but partners are personally liable for the business’s debts and obligations.
Limited Liability Company (LLC) – Michigan LLCs provide flexibility and protection, shielding members’ personal assets from business debts. LLCs in Michigan benefit from pass-through taxation and face fewer compliance requirements compared to corporations. Registration with the Michigan Department of Licensing and Regulatory Affairs (LARA) is necessary to form an LLC.
Corporation (C Corp) – A Michigan corporation is a separate legal entity, offering liability protection to its owners (shareholders). Corporations can issue stock and are subject to corporate income tax. Incorporation requires filing Articles of Incorporation with the Michigan Department of Licensing and Regulatory Affairs.
S Corporation – An S Corp in Michigan is a tax designation that allows a corporation to pass income directly to shareholders, avoiding double taxation. To qualify as an S Corp, the business must first be registered as a corporation with the state, followed by electing S Corp status with the IRS.
Professional Corporation (PC) or Professional Limited Liability Company (PLLC) – Designed for licensed professionals such as doctors, lawyers, and architects in Michigan, these entities offer liability protection with specific restrictions. They must be registered with the Michigan Department of Licensing and Regulatory Affairs and must comply with professional governance standards.
Nonprofit Corporation – Michigan nonprofit corporations are established for charitable, educational, religious, or scientific purposes. These entities can apply for tax-exempt status and must file with the Michigan Department of Licensing and Regulatory Affairs, adhering to strict guidelines to maintain their nonprofit status.
Cooperative (Co-op) – Michigan cooperatives are businesses owned and operated by a group of individuals for their mutual benefit. Co-ops are common in agriculture, retail, and services, and they operate democratically. Registration with the state and compliance with Michigan cooperative statutes are required.
Limited Partnership (LP) and Limited Liability Partnership (LLP) – Michigan recognizes LPs and LLPs, where LPs have at least one general partner with unlimited liability and one limited partner whose liability is limited to their investment. LLPs provide liability protection to all partners and require registration with the state.
Starting a business in Michigan involves several legal steps to ensure compliance with state laws and regulations. Here’s an overview of the process:
Decide on the most appropriate business structure for your needs. Common structures in Michigan include sole proprietorships, partnerships, limited liability companies (LLCs), and corporations. Each structure has different implications for liability, taxation, and operational flexibility.
Choose a unique name for your business that complies with Michigan’s naming regulations. If forming an LLC or corporation, you’ll need to check the Michigan Department of Licensing and Regulatory Affairs (LARA) business entity database to ensure your chosen name is available.
Most businesses will need to obtain an EIN from the IRS for federal tax purposes, especially if hiring employees. An EIN is also necessary for opening a business bank account and filing state and federal taxes.
Depending on your business activities and structure, you may need to register for various state taxes. For example, register for sales tax with the Michigan Department of Treasury if you sell goods or certain services. If you have employees, register for employer taxes, including unemployment insurance tax.
The licenses and permits you need depend on your business type and location. This may include local business licenses, professional licenses, and health or safety permits. Make sure to check with both state and local authorities for compliance.
If you plan to hire employees, ensure compliance with Michigan employment laws, including those related to hiring, wages, benefits, safety, and nondiscrimination.
LLCs, corporations, and other business types are required to file annual reports with LARA to remain in good standing with the state. This ensures your business continues to comply with Michigan’s regulations.
Maintaining accurate records of your business’s financial transactions is crucial for tax purposes and legal compliance. Keep detailed records of all income, expenses, and contracts.
Check with your city and county governments to understand any additional local requirements, such as business licenses, zoning regulations, or other permits that may apply to your specific location and industry.
Navigating the legal aspects of starting a business in Michigan can be complex, but with proper preparation and understanding of the requirements, the process can be streamlined. Our business formation attorneys specialize in Michigan business law and can help ensure your new venture complies with all state and federal regulations.
At L.A.H. Law, our Michigan business formation attorneys understand the distinct challenges that businesses face throughout their lifecycle, from initial startup to growth, expansion, and eventual sale. With experience advising Michigan-based companies across various industries, our attorneys are well-versed in providing the legal support necessary for entrepreneurs to thrive. We understand the importance of comprehensive legal services, timely responses, and flexible fee structures that cater to the unique needs of growing businesses.
For startup businesses, we provide legal counsel on the most suitable business formation structures, navigating minority-owned business issues, compliance with Michigan and federal laws, securing initial funding, and managing contracts and negotiations with clients, vendors, and employees. As your business grows, we assist with alternative financing options, property acquisitions, business development strategies, and intellectual property protection, including trademarks and copyrights. We also provide guidance on the sale of businesses and handle dispute resolution efficiently.
Our attorneys go beyond just helping clients with entity selection and business formation. We partner with you to foster the growth and development of your company for long-term success in Michigan’s competitive business environment.