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TLDR

• According to a 2021 Crunchbase report, “[n]o state has seen its venture money increase in the last five years as much as Michigan.”
• Further, Michigan is small business-friendly, with  886,557 million small businesses, making up 99.6 percent of all companies in the state. Additionally, these small businesses employ 1.9 million people.
• Before registering, though, it’s a good idea to map out your business, including your location, your ideal customer, and your marketing and sales approach, to name a few topics. You can do this by drafting a business plan.   
• In Michigan, you can choose from several different types of business structures. One of the more prevalent business types is the sole proprietorship. You also have a choice between a co-partnership, limited partnership (LP), limited liability partnership (LLP), limited liability companies (LLCs), and corporations. 
• When picking a name for an LLC, corporation, or limited partnership, you’ll need to distinguish it from other business names already registered with the state.
• You’ll submit your formation forms to Michigan’s Department of Licensing and Regulatory Affairs. For new entities, the State of Michigan provides sample forms for your use or review.
• Depending upon your chosen entity for your startup, you will have your initial filing fee payment, any additional annual filings, and any taxes. For example, you must pay a $50 filing fee for registering an LLC. For limited liability partnerships, the filing fee is $100. In addition, you’ll need to file annual reports for your entity, which also requires filing fee. Additionally, most Michigan startups must apply for specific business licenses, such as a transaction privilege tax license, a withholding tax registration, a regulatory license, or a local business license.
• If you founded a startup in a state other than Michigan but want to conduct business in Michigan, you’ll have to register your business as a foreign entity.

Michigan continues its run as a hotbed for startups, entrepreneurs, and founders. According to a 2021 Crunchbase report, “[n]o state has seen its venture money increase in the last five years as much as Michigan.” Want proof?

Since 2016, venture investments have increased almost 886 percent, growing from $300 million to nearly $3.1 billion in 2020. And, amid the pandemic, the Wolverine State saw its venture investment dollars increase triple-fold since 2019.

With life sciences, B2 software, and consumer-facing tech startups leading the way, founders are flocking to Michigan for cheaper cost of living and top talent (and, of course, investment capital).

Further, Michigan is small business-friendly, with  886,557 million small businesses, making up 99.6 percent of all companies in the state. Additionally, these small businesses employ 1.9 million people.

As you’re launching your startup and exploring where to locate your new business, this article will explore registering your business in Michigan.

When Do You Need to Register a Business in Michigan?

When you register a business in Michigan, you'll need to satisfy several requirements, allowing you to start your company legally and compliantly. Before registering, though, it’s a good idea to map out your business, including your location, your ideal customer, and your marketing and sales approach, to name a few topics. You can do this by drafting a business plan.   

To help guide you in drafting your business plan, you can check in with the U.S. Small Business Administration or SCORE, which focuses specifically on small businesses and startups. The Michigan Small Business Development Center also offers numerous resources for Michigan founders when starting a new business in addition to resources specifically for entrepreneurs. Once you’ve identified some of the basics about your startup’s operation, it is time to register your business.

Below, we've broken the Michigan requirements into an easy step-by-step process.

Determine Your Business’s Entity Structure

Before you register your startup in Michigan, you must first determine your organization's legal entity structure. When deciding upon your start-up’s structure, it’s a good idea to discuss your options with your accountant or attorney, as they can advise you in detail about the ownership, management, and tax benefits and drawbacks of each structure.

In Michigan, you can choose from several different types of business structures. One of the more prevalent business types is the sole proprietorship. If you operate as a sole proprietorship, you do not have to formally file your startup in Michigan. Instead, any profits or losses are reported on your personal tax return.

You also have a choice between a co-partnership, limited partnership (LP), limited liability partnership (LLP), limited liability companies (LLCs), and corporations. All of these entities must be filed with Michigan’s Department of Licensing and Regulatory Affairs.

An LLC is a “business formed by an organizer who may, but need not be a member. It is a business entity separate from its members and liability is limited to the financial contribution made by the member.” 

A corporation, on the other hand, is “an association of persons, created by law and existing as an entity with powers and liabilities independent of those of its members.”

You can visit Michigan’s Department of Licensing and Regulatory Affairs for additional information on other entities.

Choose Your Business’s Name

In addition to choosing your startup’s structure, you'll also have to choose a name. When picking a name for an LLC, corporation, or limited partnership, you’ll need to distinguish it from other business names already registered with the state. You can check for available names by visiting Michigan’s business entity search database.  

Note that for sole proprietorships and co-partnerships, the founder should “file their names with the county clerk in the county in which their business is located, and also in any other county in which they transact business or have an office.” Additionally, the name cannot be “the same as or so similar to a name already on file with the county as to cause confusion or deception.”

Reserved Names

Suppose you’re not ready to register your business in Michigan, but you want to preserve your startup's name. In this case, you can reserve a business name. The length of time you can reserve a startup’s name varies depending on the type of business entity selected.

For LLCs, you’ll need to pay a filing fee of $25 for a reserved name. For corporations or limited partnerships, the filing fee is $10.

DBA or Assumed Names

Note that reserving a startup name is not the same as registering a “doing business as” or DBA name. DBA names are also called assumed names. For corporations, limited partnerships, and limited liabilities, you’ll need to file a Certificate of Assumed Names, along with a $25 filing fee for LLCs and a $10 filing fee for corporations and limited partnerships.

Identify Your Registered Agent

Next, after choosing your startup’s name, you need to identify a resident agent (often referred to as a registered agent in other states). A resident agent is “someone who is appointed by the company to receive any documents, notices, or demands served upon the company.”

To qualify as a resident agent, the agent must be a “Michigan resident, a Michigan corporation, a foreign corporation with a certificate of authority to transact business in Michigan, a Michigan limited liability company or a foreign limited liability company authorized to transact business in this state.”

Submit Your Formation Forms

Finally, after completing the above steps, it's time to submit your formation forms to Michigan’s Department of Licensing and Regulatory Affairs. For new entities, the State of Michigan provides sample forms for your use or review.

For example, if you choose to register as a for-profit corporation, you will file an Articles of Incorporation application along with a filing fee. The filing fee depends on how many authorized shares your startup offers.

For Michigan startups registering as an LLC, you will file an Articles of Organization application along with a $50 filing fee.

How Much Does It Cost to Register a Business in Michigan?

Depending upon your chosen entity for your startup, you will have your initial filing fee payment, any additional annual filings, and any taxes. For example, you must pay a $50 filing fee for registering an LLC. For limited liability partnerships, the filing fee is $100.  

You’ll need to file annual reports for your entity, which also requires filing fee.

Additionally, most Michigan startups must apply for specific business licenses, such as a transaction privilege tax license, a withholding tax registration, a regulatory license, or a local business license.

The Michigan Department of Treasury provides resources for entrepreneurs and founders on taxes and fees owed by businesses as well as information on how to register with the department. Note that to understand how much your startup will cost, you should consult with a qualified accountant familiar with Michigan’s tax rules.

How to Register a Business in Michigan that Started in Another State

If you founded a startup in a state other than Michigan but want to conduct business in Michigan, you’ll have to register your business as a foreign entity. Whether a business is a domestic or foreign entity depends upon where the startup was formed and which state governs its management and operation.

For example, a startup that is registered in Michigan is a “domestic” startup. However, if you have a Delaware registered startup but want to conduct business in Michigan, your business would be considered a “foreign” startup.

In Michigan, a foreign startup entity must file an Application for Certificate of Authority with the state. With the application, all foreign entities must “include with the application a certificate setting forth that the corporation is in good standing under the laws and jurisdiction of its incorporation, executed by the official of the jurisdiction who has custody of the records pertaining to corporations and dated not earlier than 30 days before filing the application.” 

Benefits of Registering a Business in Michigan

There are many benefits associated with registering your startup in Michigan. Let’s look at some top ones:

• Michigan’s access to capital for entrepreneurs is top-notch.
• There’s an increased focus on small businesses in the state.
• Housing is very affordable in the state, which is essential for many entrepreneurs.
• Michigan offers numerous resources for founders, including the Michigan Economic Development Corporation and Invest Detroit.

Limitations Associated with Registering a Business in Michigan

There aren’t that many limitations associated with registering your startup in Michigan. However, here are a couple of points to keep in mind:

• Ah, lake effect snow.
• And the tourist season in the summer gets rather crowded

We can help!

At AbstractOps, we help early-stage founders streamline and automate regulatory and legal ops, HR, and finance so you can focus on what matters most—your business. If you're looking for help registering your Michigan startup, we can get your documentation ready, overall shepherding this process to ensure it's done right. Get in touch to learn more! 

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Note: Our content is for general information purposes only. AbstractOps does not provide legal, accounting, or certified expert advice. Consult a lawyer, CPA, or other professional for such services.