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

Delina Chantel Yasmeh
Published by Delina Chantel Yasmeh | Author
Last updated: February 29, 2024
FACT CHECKED by Lou Viveros, Growth & Transition Advisor
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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 danger of underestimating your LLC registration budget and other ongoing costs for running this business structure.

Through my experience as a Mergers and Acquisitions specialist and after consulting business experts in the state, we’ll provide a complete overview regarding the cost of forming an LLC in Michigan.

When initiating the formation of an LLC, it's advisable to seek assistance from a professional Michigan LLC service to prevent delays caused by common errors.

Quick Summary

  • An LLC in Michigan costs $50 to submit the Michigan Articles of Organization to the Licensing and Regulatory Affairs.
  • Upon approval of the LLC, additional expenses arise from licenses and permits, annual reports, registered agent service, taxes, and other documents.
  • Michigan offers an alternate tax rate of 1.8% instead of the usual 6% average corporate tax.
  • I helped several clients open an LLC in Michigan. It is the preferred state of most business owners due to the low cost of opening and maintaining an LLC.


Cost to Start an LLC in Michigan

A company owner calculating the cost of an LLC in Michigan

To legally conduct business in the state, there are certain mandatory expenses and optional fees that have to be shouldered.

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)

A company owner consulting a Michigan Registered Agent

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. Professional Business Licenses (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)

A company owner computing annual statements

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)

According to the proposed policy as shown by the Michigan Department of Treasury, business earnings will now be subject to taxation at a rate of 4.95%, with state-taxable income from company operations serving as the tax base [2].

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.

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.

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.

A company owner doing paperwork for business insurance premiums

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.

A company owner doing paper work for an employer identification number

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.

FAQs

Is There A Penalty For Paying My Taxes Late In Michigan?

Yes, there is a penalty for paying your taxes late in Michigan. The charges amount to 5% of the taxes due for two months.

How Much Does an LLC Cost Per Year in Michigan?

An LLC costs $25 per year in Michigan for filing the annual report. However, if you hire a registered agent service, you may also have to pay their yearly fees.

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#

About The Author

Author
Delina Chantel Yasmeh, J.D./Tax LL.M, specializes in Mergers and Acquisitions at Deloitte and PwC, managing billion-dollar transactions. Educated in Accountancy at California State University and holding advanced degrees from Loyola Law School, she is highly skilled in tax law. Delina also dedicates time to pro bono work for women and children.
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Growth & Transition Advisor
LJ Viveros has 40 years of experience in founding and scaling businesses, including a significant sale to Logitech. He has led Market Solutions LLC since 1999, focusing on strategic transitions for global brands. A graduate of Saint Mary’s College in Communications, LJ is also a distinguished Matsushita Executive alumnus.
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