How to Register a Corporation in Michigan?
Michigan situated in the Great Lakes region is becoming increasingly popular for its business climate. A survey has revealed that new and existing companies recommend the state as a good destination to start and operate successful businesses. If you are planning to incorporate in Michigan then this guide will be extremely helpful as it provides an insight into the various processes involved in new business formation. The guide will cover areas like benefits of incorporating in Michigan, naming of Michigan Corporation, various licenses and permits, annual requirements of the state, and opening a bank account among others.
Entrepreneurs prefer to register a corporation in Michigan due to the flexibility of conducting business in the state. There are several factors including overall pro-business climate and infrastructure that play a key role in this endeavor apart from the various benefits of incorporating in Michigan. The state has a stable and growing economy and offers a wide range of small business incentives including tax credits. Some of the top corporations in the state include Stellantis North America (formerly Chrysler), General Motors Corporation, Airflow Sciences Corporation, Altair Engineering Inc., Lear Corporation, and Northwest Broadcasting, Inc., among others.
What is a Michigan Corporation?
A traditional C Corporation is also known as a business or profit corporation and it is one of the popular legal structures in the USA. If you are planning to form a corporation in Michigan then it is important to understand the entity structure. In terms of taxation, the owners or shareholders of a C Corporation are taxed separately from the company. If you are wondering how to form a corporation in Michigan then the process will depend on the type of corporation you want to form. The various types of corporation that can be formed in the state are:
- Profit Corporations
- Foreign Corporations
- Nonprofit Corporations
- Secretary of State Corporations
- Professional Service Corporations
- S Corporation
- Ecclesiastical Corporations
- Close Corporations
- Certified B Corporations™ (B Corps™)
What are the benefits of incorporating in Michigan?
There are several benefits of incorporating in Michigan and these can vary from the advantages of the entity structure to various benefits offered by the state. Some of the most common benefits are:
- Limited liability protection – This is one of the salient highlights or advantages of forming a C Corporation. It refers to the fact that once you incorporate in Michigan; the debts, liabilities, and obligations of the company will be separate from the owner and hence the owners cannot be held personally responsible towards the same.
- Unlimited Shareholders – One of the top benefits of incorporating in Michigan is that your corporation can have unlimited shareholders. Shareholders play a key role like electing the Board of Directors of a said company. In a C Corporation, almost anyone can own shares and thus enjoy ownership and this includes non-U.S. citizens and even other business entities.
- Preferred by VC Investors – If you plan to register a corporation in Michigan then the good news is that most VC investors prefer a corporation as compared to other business structures. This is because VC’s enjoy more flexibility investing and also because of the way it is taxed.
Starting a Michigan Corporation
Michigan is ranked as one of the top 10 pro-business states and is also becoming popular amongst entrepreneurs due to the access to the new as well as expanded corporate facilities. The state has a culture of innovation supported by strong industrial infrastructure and business incentive programs. The question is how to form a corporation in Michigan as there are several processes involved. So, let’s look at the various state requirements for new business along with important areas to consider.
1. Name Michigan Corporation
In order to form a corporation in Michigan, you will need to first identify and reserve a business name. In fact, naming a new corporation is considered as one of the most important processes. A business name helps in creating an identity for the said company amongst prospective customers as well as competitors. It is always recommended to choose a name that connects with the product or services offered although you can get innovative as well. There are certain naming guidelines of the state that you will need to follow and they are:
- The chosen name should contain “corporation”, “incorporated”, “company”, and “limited” or the abbreviation like “corp.,” “inc.,” “co.,” or “ltd.,” pursuant to MI Comp L § 450.1211 (2020).
- The business name should be distinguishable from the names of any other business entity that exists in the records of the Department of Licensing and Regulatory Affairs including that of limited partnerships, LLC’s and other corporations.
- The chosen name should not have any restricted words as mentioned by the state.
Once you have identified a business name; you need to conduct a name availability search or business entity search. If the chosen name is available then you have to file the Application for Reservation of Name with the Corporations Division along with a fee of $10. The name can be reserved for a period of six months. In order to understand how to form a corporation in Michigan, you need to first start by reserving a business name.
2. Appoint Michigan registered agent
There are many requirements that you will need to fulfill when you register a corporation in Michigan. One such requirement is that of hiring a registered agent in the state. According to the Michigan Compiled Laws, MI Comp L § 450.1241 (2020), you will be authorized to conduct business in the state if you continuously maintain a registered agent. IncParadise can be your Michigan registered agent as we have knowledge of the state laws and the processes involved for new business incorporation. We can assist you with all new business incorporation requirements and also help you with annual maintenance requirements in accordance with the state laws.
3. Hold an organizational meeting
When you incorporate in Michigan, one of the foremost requirements is that of an organizational meeting. This type of meeting is normally held for appointing officers, appointing directors, and issuance of shares in the said corporation. An organizational meeting is also held to fulfill other purposes like approving bylaws, setting up minute books, accepting the corporate seal, and even for setting up business bank accounts among others.
4. File Michigan articles of incorporation
If you are wondering how to form a corporation in Michigan then the most important step is to file incorporation documents with the state. You will be required to prepare and submit the Articles of Incorporation pursuant to MI Comp L § 450.1202 (2020). You can incorporate online or file the articles by mail with the Michigan Division of Licensing and Regulatory Affairs (LARA), Corporations Division. The fee for filing Articles of Incorporation will vary according to the number of authorized shares issued e.g., the fee would be $50 if you issue anywhere between 1 to 60,000 shares.
Alternatively, IncParadise can assist with the filing of your Articles of Incorporation with the state. We are one of the top incorporation specialists in Michigan and with our help, you will be able to ensure complete compliance with state regulations and this will help save valuable time.
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5. Prepare bylaws for Michigan Corporation
When you register a corporation in Michigan, one of the key areas is the preparation of bylaws. The bylaws are necessary as they set forth the rules that will govern a for-profit corporation in the state. Corporate bylaws provide an outline on the various policies as well as procedures in relation with the company like appointing officers and directors, holding organizational meetings, handling any conflict of interest, and dissolving the company among others. The bylaws have to be adopted pursuant to MI Comp L § 450.1223 (2020) and § 450.1231 (2020). Unlike Articles of Incorporation, bylaws are not required to be submitted with the corporation division.
6. Get EIN for Michigan Corporation
Whether you register a Michigan Corporation online or offline, there are some annual requirements that every business needs to be compliant with. One such annual requirement is that of business taxes and in order to file taxes in the state, you will need to apply for and obtain an Employer Identification Number (EIN). It is a unique 9 digit number that is assigned by the Internal Revenue Service (IRS) to business corporations. It is also known as the Federal Employer Identification Number (FEIN) and is helpful for filing of business or corporate taxes in the state.
7. Open a bank account for Michigan Corporation
When you start out by forming a new business or a corporation, there are several areas that are critical to the overall success of the business like financial planning. One of the key areas of financial planning is setting up a business bank account. You can open a bank account before or after you incorporate in Michigan. There are many reasons and benefits of applying for a checking account like:
- Keeps personal and business transactions separate
- Ensures clean record-keeping and proper filing of taxes
- It can help you to be legally compliant
- Helps in providing financial security
- Makes your business appear more professional to vendors and customers
- You will be able to accept credit card payments
8. Comply with other tax and regulatory requirements
Once you form a corporation in Michigan, you will be required to file taxes each year. The type of taxes you may be required to file will vary according to the business structure and activity. As a corporation, the most important tax in the state is the Michigan Corporate Income Tax (CIT). Apart from this, your company depending on the business activity and employees may have to file sales & use tax, withholding tax, and other forms of miscellaneous taxes and fees. One of the benefits of incorporating in Michigan is that the state offers several tax incentive programs, which may provide quite some relief.
There is another important annual requirement that you will have to fulfill. The state requires every corporation to file an annual statement by May 15 each year. The filing fee for the same is $50.
Know more about starting a Michigan Corporation
If you want to register a corporation in Michigan then as a new business owner you will need information and resources that will aid in the process of setting up a new business. You can form different types of corporation and once you form a business there are other state annual requirements to comply with. Hence, we have created a special section of “Frequently Asked Questions” for addressing some of the queries that you may have as a new business owner.
How do I form a C Corporation in Michigan?
A C Corporation is known as a traditional corporation and you will be required to file Articles of Incorporation pursuant to MI Comp L § 450.1204 (2018). You can also register a Michigan Corporation online using the Corporations Online Filing System (COFS). There is an optional expedited service available where-in you will need to pay additional fee for expedited review and filing.
How do I form an S Corporation in Michigan?
An S corporation is a type of tax designation and is recognized as a legal entity. You will need to first incorporate in Michigan as a traditional corporation and then elect to be taxed as an S corporation. You will need to apply for and obtain an EIN before you can proceed further. The form required to elect S Corporation status is Form 2553, which is available with the Internal Revenue Service (IRS). The election of an S Corporation is governed by section 1362 of the Internal Revenue Code.
How do I form a Nonprofit Corporation in Michigan?
If you want to know how to form a corporation in Michigan, especially a non-profit then you will have to be compliant with the Michigan Nonprofit Corporation Act. You will be required to file Articles of Incorporation pursuant to MI Comp L § 450.2202 (2014). The filing fee for a non-profit is $20 and if you need to expedite the process then there will be an additional fee.
How much does it cost to start a corporation in Michigan?
If you want to form a corporation in Michigan then there will be starting costs associated with the formation. The cost may vary depending on the type of corporation and whether it is a domestic or foreign company. There are three cost categories for a corporation and they are:
- Business Name – The cost associated with name reservation, name registration, or filing DBA
- Cost of Incorporation – This includes filing fees for the Articles of Incorporation and cost of expediting if any
- Business Licenses – This is considered as a variable cost as fee for licenses and permits depend on the business activity, location, and industry.
How do I look up a corporation in Michigan?
One of the important steps towards identifying and reserving a business name is searching for name availability. You can look up a corporation in Michigan, you will need to conduct a business entity search in the LARA Corporations online filing system. This is an exhaustive database containing the name of domestic and foreign entities registered with the state. You can conduct the search using an individual name, business name, and filing number.
How to register a foreign corporation in Michigan?
If you already own a company in any state other than Michigan and want to expand in this state then you need to apply for foreign qualification. This is a process by which you will be able to register a Michigan Corporation online. You will be required to file a Certificate of Authority pursuant to MI Comp L § 450.2002 (2019). You can submit the certificate online, through mail or in-person. You may also require a certificate of good standing depending on the laws of the home state.
Does a Corporation need a business license in Michigan?
Yes. If you are planning to register a corporation in Michigan and want to transact business in the state then you will require proper licenses and permits. The type of licenses and permits required will vary according to business activity and location. You may also require occupational licenses. You can subscribe to our Business License Research Report service, which provides detailed information on different aspects of licensing in the state.
How do I dissolve a corporation in Michigan?
There are several benefits of incorporating in Michigan but at any given point in time, if you want to dissolve your corporation then there is a specific process for the same. The dissolution process will be governed by 2019 Michigan Compiled Laws, Chapter 450 – Corporations, Act 284 of 1972 Business Corporation Act, 284-1972-8 Chapter 8 Dissolution. There are three ways of dissolution in the state and they are:
- Dissolution by Incorporators or Directors
- Dissolution by Action of Board and Shareholder
- Action by Attorney General for Dissolution
You will be required to file a Certificate of Dissolution along with a fee of $10. It has to be filed with the Michigan Department of Licensing and Regulatory Affairs, Corporations, Securities & Commercial Licensing Bureau, Corporations Division.
Ready to Start a Michigan Corporation?
You can form a wide variety of business structures in Michigan and one of the most popular is that of a traditional corporation also known as C Corporation. There are several benefits of incorporating in Michigan vis-à-vis other forms of business structures. If you are thinking of incorporating a domestic or foreign entity in the state then IncParadise can assist you with the registration process.
IncParadise is one of the top Michigan registered agents and we have helped with more than 10,000 new business formations. We also offer a wide variety of additional services in the state like foreign qualification, and EIN assistance among others.