You have the business idea, maybe even your first few clients, but the legal side of getting started feels overwhelming. Between entity types, state filings, tax registrations, and compliance deadlines, it is hard to know where to begin or what you can afford to skip. Michigan has specific requirements that apply from the moment you choose a business name, and overlooking them can create problems that are far more expensive to fix later. A Macomb County business law attorney at Keating Law, PLC can walk you through every step and help you launch with confidence.
Choose the Business Structure That Fits Your Goals
Michigan recognizes several business entity types, and the right choice depends on how you plan to capitalize the business, your preferred tax treatment, and how much personal liability you can afford to carry. Understanding the differences before you file any paperwork is critical.
A sole proprietorship is the simplest option. The owner and the business are the same legal entity, which means there is no separation between personal and business assets. If someone sues the business, your home, savings, and personal property are all exposed. General partnerships work similarly for two or more people, with each general partner personally liable for the obligations of the business and the actions of the other partners.
A limited liability company (LLC) creates a separate legal entity that protects personal assets while allowing pass-through taxation. Profits and losses flow to the members' personal returns rather than being taxed at the entity level, and LLCs require fewer ongoing formalities than corporations. That combination makes them the most popular structure for small businesses in Macomb, Wayne, and Oakland Counties.
Corporations offer strong liability protection but come with more regulatory requirements, including a board of directors, annual shareholder meetings, and detailed recordkeeping. C corporations pay corporate income tax on profits, and shareholders pay tax again on any dividends received. Electing S corporation status avoids that double taxation by passing income through to shareholders, but the entity must meet IRS rules, including a 100-shareholder cap and a single class of stock. Nonprofit corporations are also available for charitable, educational, or similar purposes and may qualify for federal tax exemption under Section 501(c)(3) of the Internal Revenue Code.
Register Your Business Name and File With the Right Agency
Where you file depends on the entity you chose. LLCs and corporations file formation documents with the state through the Department of Licensing and Regulatory Affairs (LARA). LLC Articles of Organization (Form CSCL/CD-700) cost $50, and corporate Articles of Incorporation (Form CSCL/CD-500) start at $60 and scale up based on the number of authorized shares.
Before filing, search LARA's business entity database to confirm your name is distinguishable from existing registered entities, and reserve a name for six months by filing an Application for Reservation of Name with a $25 fee if you are not ready to submit your formation documents yet.
Sole proprietors and general partnerships do not register an entity with LARA. If you plan to operate under any name other than your legal name, Michigan law requires you to file a Certificate of Persons Conducting Business Under Assumed Name with the county clerk in every county where you transact business. Fees and forms vary by county, and the certificate must be renewed every five years.
Cover Your Tax, License, and Registration Obligations
Most businesses need an Employer Identification Number (EIN) from the IRS, which serves as the federal tax ID. Applying online is free and takes a few minutes. If you sell taxable goods or certain services, you must also register with the Michigan Department of Treasury for sales tax, use tax, and withholding accounts before you start operating.
Michigan applies a 6% corporate income tax to C corporations and a flat 4.25% individual income tax that captures pass-through income from LLCs, partnerships, S corporations, and sole proprietorships. Some cities, including Detroit, impose a local income tax on top of that. Depending on your industry and location, you may also need professional licenses, occupational permits, or zoning approvals from your city, township, or county. Skipping any of those steps can lead to fines or forced closure even after your state filing is complete.
Set Up Internal Governance and Plan for Annual Compliance
Each entity type comes with its own governance documents and ongoing filings. For LLCs, an operating agreement is not legally required in Michigan, but it is one of the most important documents you can have. The agreement spells out ownership percentages, profit allocation, management authority, and procedures for adding or removing members. Without one, the Michigan Limited Liability Company Act controls those questions by default. For example, an LLC is managed by its members unless the Articles of Organization say otherwise.
Corporations should adopt bylaws, hold and document annual shareholder and director meetings, and consider a shareholder agreement covering ownership transfers, voting rights, and buyout terms. Skipping those formalities can give creditors a basis to pierce the corporate veil and reach owners personally. General partnerships should put a written partnership agreement in place to override Michigan's default rules on profit splits, decision-making authority, and what happens when a partner leaves.
Annual filing obligations also differ by entity:
LLCs file an Annual Statement with LARA by February 15 each year with a $25 fee. If an LLC misses the deadline for two consecutive years, the state sends a notice, and 60 days later the LLC is no longer in good standing. The LLC remains in existence and can keep transacting business, but it cannot obtain a certificate of good standing and loses protection of its name. Restoration requires filing a Certificate of Restoration of Good Standing ($50) along with all overdue annual statements and fees.
For-profit corporations file an Annual Report by May 15 each year with a $25 fee. Late filings carry a penalty of $10 per month or part of a month, capped at $50. If a corporation misses filings for two consecutive years, it is automatically dissolved 60 days after the two-year period ends, with notice from the state at least 90 days before that period expires.
Sole proprietors and general partnerships have no LARA annual filing, but any assumed name certificate filed with a county clerk must be renewed every five years.
All LLCs and corporations must also maintain a resident agent with a Michigan street address to receive service of process and official state correspondence.
Build Your Michigan Business on a Strong Legal Foundation
Starting a business in Macomb County, Wayne County, or anywhere in Michigan involves more than just a good idea. The structure you choose, the agreements you draft, and the filings you make at the outset shape how your business operates, how it is taxed, and how well your personal assets are protected. Getting those decisions right from the start is one of the best investments you can make in your company's future.
Contact Keating Law, PLC to schedule a consultation. Thomas Keating has more than 25 years of experience helping business owners across the Detroit metropolitan area form, structure, and protect their companies.