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.