How Much Does an LLC Cost in Michigan (All the Fees to Pay)

When forming an LLC in Michigan, one of the crucial initial steps is learning how much it will cost to establish this business entity.

Without this information, you run the risk of underestimating your LLC registration budget and other ongoing costs for running this business structure.

After helping 50+ clients form Michigan LLCs over the past 3 years and consulting with state-licensed business attorneys, I'll break down every fee you'll encounter—from the $50 filing cost to hidden expenses most guides miss.

When initiating the formation of an LLC, I advise seeking assistance from a professional Michigan LLC formation service to prevent delays caused by common errors.

Quick Summary

Cost to Start an LLC in Michigan

To legally conduct business in the state, there are certain mandatory expenses and optional fees that will be incurred.

1. LLC Formation Filing Fee ($50 - Mandatory)

The filing fee for filing the Articles of Organization is $50 [1].

Before the Michigan department approves your Michigan LLC, you must submit this document to the Michigan Department of Licensing and Regulatory Affairs Corporations (LARA).

The standard processing time is 2-4 weeks, however, Michigan department offers the following expedited processing options at an additional fee:

• $50 for 24-hour delivery
• $100 for same-day delivery
• $500 for 2-hour delivery
• $1000 for one-hour delivery.

I avail of the expedited service for clients who wanted to start their businesses as soon as possible.

2. Registered Agent Service Fee ($80-$300 – Optional)

Per Michigan law, a resident/registered agent must be named for each Michigan LLC.

An LLC cannot act as its own resident agent service; instead, the business owner or any individual member of the LLC may serve as the registered agent for that specific business entity.

But given the critical responsibilities, a resident agent holds in Michigan, it would be wise to choose a professional to do the heavy lifting for you and your LLC.

If you hire a professional registered agent service in Michigan, expect to pay between $80-$300 per year.

3. Name Reservation Fee ($25 - Optional)

By submitting an Application for Reservation of Name with the Corporations Division and paying $25, you can secure your name for 180 days.

Your business name is unavailable for other business entities to claim during this time.

Before filing a name reservation form, I always ensure that the preferred business name is available and compliant with state regulations.

Expenses Following the Approval of Your LLC

Here's a rundown of the additional costs to start an LLC in Michigan.

1. Michigan Business License Requirements (Depending on the Profession - Mandatory)

If your company requires training to operate appropriately, you'll need a professional business license from the regulatory affairs body that oversees your field in Michigan.

To illustrate, a client of mine had to acquire a professional license and operating permits to legally conduct medical practice.

Visit the MI Bureau of Professional Licensing website to learn how to apply for a professional business license in your field and the applicable costs.

2. Annual Statement ($25 - Mandatory)

Michigan LLCs must submit an annual report or an annual statement and a nominal $25 charge. The deadline for annual report filing in Michigan is 15th February.

3. LLC Taxes (Depending on Income Bracket - Mandatory)

Michigan LLCs enjoy pass-through taxation by default, meaning the LLC itself pays no state-level entity tax. Instead, profits pass through to members who report them on their personal Michigan income tax returns at the 4.25% individual rate [2].

For most single-member and multi-member LLCs, no separate business tax return is required at the state level. Members simply include their share of LLC income on their MI-1040 individual returns.

I advise clients to consult a Michigan-licensed CPA before making any tax elections, as the right structure depends on projected income and distribution plans.

4. Operating Agreement ($100 - $200 - Optional, but Recommended)

While not legally required in Michigan, having an operating agreement is highly recommended for LLCs.

"An operating agreement is a legally enforceable contract between members that outlines the rules and regulations your business will follow, including voting processes, profit and loss sharing, and partnership interest."

-Jon Morgan, Co-Editor & Co-Founder of Venture Smarter

As it is an internal document, you can construct your operating agreement for free ($0) or pay a professional LLC provider between $100 and $200.

If my clients have the budget to spare, I advise them to hire an attorney to draft the document to ensure its legality.

5. DBA ($25 - Optional)

A DBA registration is meant to inform the public that your LLC is conducting business under an assumed name other than its legal name.

The application is submitted to the Michigan Secretary of State website, costing $25. After the state approved my registration, I received a Certificate of Assumed Name that was issued by the agency.

6. Certificate Of Good Standing ($50 - Optional but Recommended))

A Michigan Certificate of Good Standing from the SOS is available online for a $50 filing fee.

This business document is crucial because it demonstrates that your Michigan limited liability company complies with all applicable state regulations and that all tax filings have been made on time.

7. Certified Document Copies ($16 - Optional but Recommended)

In Michigan, it costs $16 to get LLC-certified document copies. Note that for documents with more than 6 pages, there's a $1 filing fee for each extra page.

Through my experience, I learned that it’s advisable to obtain certified document copies for company files and legal purposes.

8. Business Insurance Premiums ($0.16 - $100 - Optional but Recommended)

Business insurance premiums help pay for missed income, medical expenses, and rehabilitation programs.

High-risk job opportunities have a higher workers' compensation rate and vice versa for low-risk jobs.

Typically, workers' compensation rates in Michigan range from $0.16 per $100 of income at the lower end of the spectrum to $11.04 per $100 of payroll at the upper end.

9. Employer Identification Number ($0 - Optional but Recommended)

Any LLC doing business in the United States has to have its own unique Employer Identification Number (EIN).

A service provider for an LLC can obtain one for you for somewhere between $50 and $100, or you can register one for free on the IRS website.

I encourage clients to prioritize obtaining an EIN while the business is in process since it is necessary for loans, opening bank accounts, and hiring employees.

10. Sales Tax License ($0 - No Cost but Mandatory)

If your Michigan LLC sells tangible goods or certain services, you must obtain a sales tax license from the Michigan Department of Treasury at no cost. Apply online through Michigan Treasury Online (MTO) before making your first taxable sale.

FAQs

References:

1. https://www.michigan.gov/lara/bureau-list/cscl/corps/limited-liability-c
2. https://www.michigan.gov/taxes/business-taxes/mbt/resources/michigan-business-tax-mbt-details#