Home How Much Does It Cost to Start an LLC? How Much Does an LLC Cost In Michigan? Fees & Taxes in MI

How Much Does an LLC Cost In Michigan? Fees & Taxes in MI

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Last updated February 17, 2023

Written by Dmytro Kondratiev

Editor, lawyer

Disclosure: We earn a commission from some partner links. Commissions do not affect our editors' opinions or evaluations.

Michigan now serves as a hot spot for businesses, thanks to its increased per capita personal income which has driven the state economy.

Besides that, there has been an increased emphasis on small businesses, allowing entrepreneurs to grow their businesses fast. These benefits are far more evident in LLCs as they boast better incentives compared to other entity options.

We look at the LLC fees in Michigan as well as the cheapest way to start an LLC in Michigan to help you know how much you will incur.

How Much Does an LLC Cost in Michigan?

If you are looking at how much it costs to register an LLC in the state, it will amount to $50. This basic fee covers the registration paperwork and informs the state of your existence. Thus, the cheapest way to start an LLC in Michigan would be to pay this fee and call it a day.

However, there are many other LLC fees in Michigan that are crucial to the running of your business. So, as much as the $50 can get your entity up and running, you will likely incur some other LLC costs in Michigan.

For example, if you hire a professional LLC formation company, you could incur service fees in addition to the $50.

The Michigan LLC Online Filing Fee: $50 One-Off Fee

Did you know that you have the option to file your company online? Doing so will set you back $50 just like you would pay if you were to mail or fax in your application.

This fee is standard for all LLC types and is payable at the final stage before you complete your application.

This LLC cost in Michigan is payable only once. After the state okays your application, you will not need to pay the $50 again. However, you will be subject to other fees as shown below.

Annual LLC Fee in Michigan: $25/ Year

The state will require you to remain compliant with its laws. And one way for it to ensure this is by requiring you to file an annual report where you will detail the key operations and changes in your business. The cost is $25 each year at the time of filing the report.

Must you file this report and pay the LLC annual fees in Michigan? Why, yes! Not only does this help you remain compliant but it also:

Provides you with an avenue to alert the state about changes to your business;
Ensures that you do not get your business shut down.

Thus, if you want to enjoy a good relationship with the state, ensure you file this report and pay the applicable $25 Michigan LLC annual fee each year after you have formed your business.

Resident Agent Michigan LLC Fees: Varies

The state cannot communicate directly with your business and thus needs an intermediary who can process such communications. This person can be you, an employee, a friend, or even a third party. The state allows anyone to take up this role if they:

Are aged at least 18 years old;
Have a physical and mailing address in the state;
Can receive correspondence during official working hours.

While hiring a friend or employee can also work and comes at zero costs, many people prefer hiring third parties. That’s because they are more specialized in dealing with such communications, take the bulk of work off your plate, and afford you privacy.

The cost of hiring a professional resident agent varies based on the company as well as the packages you choose. It’s best to determine what services you need from such a resident agent to know just how much LLC fees in Michigan this decision will cost.

LLC Business Enterprise Tax: Varies

Usually, when entrepreneurs question Michigan LLC fees, their focus is often on taxes. So, what is payable to the state?

It’s important to note that taxes are quite varied and depend on the nature and setup of your business. So, the final cost and percentages can be quite different from one person to the other. Examples include:

Local, state, and federal income taxes;
Self-employment and payroll taxes;
Business, sales & use, and property taxes.

Thus, one business may be liable to pay payroll taxes because it has employees while one that does not have employees will not be subject to such payments.

Moreover, your tax structure plays a role in how much you pay the government. That’s because sole proprietorships, partnerships, and corporations have different tax requirements.

So, how much is an LLC in Michigan? The only way to know how much you will pay in taxes is to consult a tax expert or hire an accountant. That can help you project your expenses for years to come.

Cost to Form a Foreign LLC (FLLC) in Michigan: $50

Let’s start with the definition of an FLLC – this is a business that already exists in another state, but you want to expand it to MI. In that case, you can do so by filing the registration paperwork in MI at a cost of $50.

Once your application goes through, the state will hand you a certificate of authority, which will allow you to transact in the state.

You will also be liable to pay taxes and file the annual report just like any other domiciled business operating in the state. Thus, your Michigan LLC cost will be similar to what we have covered above.

Cost to Form a Domestic LLC in Michigan: $50

A domestic LLC is one whose original registration takes place in its home state, i.e., has not been registered anywhere. For example, if you start a bakery in Michigan and register it in Michigan, yours would be a domestic business.

So, how much does an LLC cost in Michigan? Your paperwork will cost as much as that of an FLLC, amounting to $50. This fee is a one-off and will not recur.

However, if you make mistakes and have to repeat the process, you will pay an additional $50 as each registration fee is non-refundable.

Cost to Form a Professional LLC (PLLC) in Michigan: $50

If you’re a professional, creating a PLLC upholds your credentials and makes you more marketable to your target audience. Plus, it affords you some protection against claims of professional negligence. The following professionals should register a PLLC:

Doctors, physicians, and veterinarians;
Dentists;
Nurses;
Engineers;
Lawyers and attorneys;
Public accountants;
Builders and electricians.

MI laws allow you to create such an entity if you have the license to prove you are qualified to undertake such business operations.

The PLLC Michigan LLC fee stands at $50, which is like what you would pay for the other LLC types covered above. Just like in the above cases, you will only pay this fee once, after which you will only pay the annual LLC fee in Michigan.

Business Entity Income Tax: Varies

LLC owners can choose how they wish to get taxed. Those that register as corporations are subject to a 6% flat tax rate on their taxable income. This money is payable to the Department of Treasury.

Please note that your business may be subject to local taxes based on your county and municipality. In that case, you will need to check with the local authorities or hire an accountant to help you work out what you may owe.

Consider this LLC in Michigan cost as you start your business and figure out how you can lower your expenses.

Business License Renewal Fee: Varies

A license is a permit to undertake certain activities in MI. Given the range of permits available in the state, the best way to know what applies to you is to check with the local authorities. They can point you to the right licensor.

Not all businesses will require a permit so your business may pay $0 LLC cost in Michigan. Other businesses deal with sensitive services and will require permits, e.g., hospitals.

Please note that acquisition costs are not standard as they depend on the nature of the activities being licensed. Moreover, the renewal costs are also not set as they depend on the licensor – renewal is also not guaranteed as you must pass some checks.

Other LLC Filing Costs

Will your business incur any other costs once you have paid the above main expenses? If you ever need additional services, you will need to fork out more cash as follows:

LLC Name Reservation: $25

If you are not ready to file your registration paperwork and don’t want to run the risk of losing the name, you can reserve it for $25. The reservation will be valid for up to six months from the point of reservation.

“Doing Business As” (DBA) Name: $25

If you would like to use another name besides the one on your registration paperwork in your line of business, you can file a DBA. This name will be an identifier tied to your main name and will set you back $25.

Certified Document Copies: $16

Suppose you want to use your registration paperwork for official business. In that case, obtaining certified copies will be in your best interests. The state issues such copies at $16. If you want more than 7 pages, you will need to pay $1 for each additional page.

Certificate of Good Standing: $10

All businesses that comply with MI state laws can get a copy of their certificate of good standing at a cost of $10. Please note that this is only applicable if you have paid the annual fees and fulfilled your LLC requirements per state laws.

FAQ

Is owning an LLC in Michigan worth it?

Many business owners have moved to MI owing to the favorable tax laws, a spike in economic growth, and a pool of resources. Moreover, the incentives offered by the state have allowed entrepreneurs to cut back on operational costs, thus allowing them to break even fast.

Does an LLC in Michigan have no income tax?

Tax structures in MI come down to how you classify your business. If you elect as a corporation, you will need to pay a 6% income tax to the state. LLCs in other classes do not have to pay these Michigan LLC costs.

Do you have to renew your LLC Every year in Michigan?

The annual report is a requirement of all LLCs operating in the state. It does not renew your business per se but instead, it alerts the state on what you are doing and helps you remain compliant. Not filing this report can render you non-compliant and can have the state shut down your operations.

How much is it to get an LLC in Michigan?

The LLC filing fee in Michigan is $50 for all LLC types. However, once you factor in other costs such as annual fees and taxes, you may end up paying much more than this. But if the focus is on the initial fees, $50 is the base rate.

Can I pay myself a salary from my LLC?

Sure! LLC structures allow you to choose how you want to get paid by your business. You can choose to take wages, salaries, shares, or other terms of payment from the business as laid down in your operating agreement. This structure applies to both sole and shared LLCs.

What is the cheapest way to get an LLC?

The base formation rate is $50. Thus, the cheapest way to get your business running would be to pay this formation fee, represent yourself in communication between you and the state, and avoid hiring people to help with taxes and other operations. Please note that this also comes with added work and may not be the best route for you.

Can my LLC pay for my cell phone?

Per tax laws, you can deduct expenses incurred in the line of business. Thus, if you have acquired and used your cell phone to conduct business, your company can pay for it.

Can you write off car payments for an LLC?

Just like with other expenses incurred when dispensing business duties, you can write off car payments as deductible expenses. The extent to which you do so depends on how much you use the car for business purposes.

Do LLC businesses get tax refunds?

Only LLCs elected as C corporations can pay direct income taxes and they are thus the only entities entitled to tax refunds. If you wish to start enjoying such privileges, you can change your company’s tax classification and reduce your cost of LLC in Michigan.

Can you write off gas receipts on taxes?

Suppose you incur utility bills such as gas in the line of business. In this case, you can write them off as deductibles. You should be able to prove that the expense directly relates to conducting business.

Can I write off my Internet if I work from home?

As the WFH culture increases, more people are writing off the home internet as a business expense. You can also do so if you rely on the internet to run your business.

Can I file my LLC and personal taxes separately?

Tax classification plays a vital role in how you pay your taxes. In LLCs, you pass the filings to the members. But in corporations, you can separate the taxes and you thus must decide how to classify your business to know whether to separate your filings.

How long does it take for an LLC to be approved in Michigan?

Online filings take an average of two weeks while those mailed or faxed take about 4 weeks. Thus, the time depends on your filing method despite the cost to form an LLC in Michigan being the same.

Does an LLC need a business license in Michigan?

Not every business needs a license to operate in the state. The need or lack thereof of such a permit will depend on the nature of your business. Thus, check with local authorities on what applies to your case and the associated costs to start an LLC in Michigan.

What is an example of an LLC business in Michigan?

General Motors is one of the most notable businesses operating in MI, boasting over 150,000 employees!