How to Start an S-Corp in Michigan


Steve Goldstein
Steve Goldstein
Business Formation Expert
Steve Goldstein runs LLCBuddy, helping entrepreneurs set up their LLCs easily. He offers clear guides, articles, and FAQs to simplify the process. His team keeps everything accurate and current, focusing on state rules, registered agents, and compliance. Steve’s passion for helping businesses grow makes LLCBuddy a go-to resource for starting and managing an LLC.

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Start an S-corporation in Michigan

Michigan, popularly known as The Great Lakes State, offers a bunch of benefits for business owners, especially the state capital Lansing has a lot to offer to the rising entrepreneurs in the state. If you want to start a business in Michigan, you must choose an appropriate corporate structure. You can have a corporation or a sole proprietorship or set up an LLC in Michigan. There are a few guidelines that you should be aware of when it comes to starting an S-Corporation. In Michigan, S-Corporation is businesses’ most common corporate structure, especially start-ups. It was developed in order to give companies limited liability protection while preserving the advantages of being a distinct legal organization.

In this article, you will learn about how to start an s-corporation in Michigan. You will also learn whether an s-corporate business structure suits your business. Please read all the points carefully before starting your business in Michigan.

What is an S-Corp in Michigan?

An S corporation (S-corp) is not a type of corporate entity, unlike a limited liability company (LLC) or other business structures. It’s a tax classification that might result in significant financial savings for both corporations and LLCs but in different ways. S-corp is similar to LLC, except that the IRS treats it as a corporation for tax purposes.

If you want an S corp status for your business, you can always form an LLC to protect your personal assets from business debts. It takes some basic steps to have a successful s-corporation in Michigan. S-Corps do pay corporate income taxes, but they are still treated as disregarded companies for federal tax purposes.

S-corps pay corporate taxes that LLCs do not have to pay. If you want to have an S-corp status, then we would recommend you have an LLC instead. This will protect your personal assets from your business liabilities and you don’t have to pay any corporate taxes.

LLCBuddy Editorial Team

Limitation and Requirements of S-Corp in Michigan

As you have decided to have an S-Corp structure for your business, you must know the limitations and requirements to qualify for S-Corp status. We have listed some important points to consider following for your reference-

  • Be a domestic corporation.
  • Not be an ineligible corporation, such as specific financial institutions, insurance providers, or domestic corporations engaged in overseas sales.
  • Have just one type of stock.
  • Have a maximum of 100 shareholders or members.
  • Have only permitted individuals, certain trusts, and estates as stockholders or members.

If you are qualified for the limitations and requirements, you can apply for an S-Corp in Michigan.

How to Start an S-Corporation in Michigan?

To create S-Corp in Michigan, you must follow the below guidelines that include forming a business name, hiring a Resident Agent, filing your Articles of Organization, creating an operating agreement in Michigan, requesting an EIN, filing a form 2553.

Step 1: Register a Business Name in Michigan

After you have decided on the idea to start an S-Corp in Michigan, deciding the name for your corporation is significant. Legal procedures should be taken into account when choosing your partnership name. Choose a business name that will enable you to develop a strong brand identity.

If you want to set up an LLC, there is a complete guide on Michigan LLC name guidelines for a proper LLC name. Here are some guidelines you must follow while naming your S-corp.

  • Avoid profanities
  • The name should be available, and no other entity should have the same name in Michigan.
  • Limit of restricted words that need a license in Michigan, for example, doctors, attorneys, etc.
  • Do not use a business name that sounds like a government agency or entity (like “police,” “county,” and “state”)

Step 2: Hiring the Michigan Resident Agent

The next step in starting an S-corp in Michigan is hiring a Michigan Resident Agent, a person that accepts legal paperwork on behalf of your business. This person or business will receive important tax forms, legal documents (such as subpoenas), all notices of lawsuits, and other official government correspondence in Michigan. Forming an LLC and an S-corp will be easier if you have Resident Agent in Michigan.

Step 3: File Your Michigan Articles of Organization

The Articles of Organization is an important document to start your limited liability company (LLC). Michigan Articles of Organization is a simple document that contains the business name and address as well as the name and address of the person who received lawsuits on behalf of the organization. In order for the “Articles of Organization” to be filed, you need to pay a filing fee to the state. In Michigan, the filing fee is $50.

In California, along with the Articles of Organization, you must send the Statement of Information to file your company. The statement of information is a mandatory document in California, but other states do not have this document.

Step 4: Creating an Operating Agreement in Michigan

After you have filed your Articles of Organization in Michigan, the next step is to create an LLC operating agreement in Michigan. The Michigan LLC operating agreement is essential and necessary since it will cover your corporation’s important documentation and rules. The operating agreements usually include the following-

  • Article I: Organization
  • Article II: Management and Voting
  • Article III: Capital Contributions
  • Article IV: Distributions
  • Article V: Membership Changes
  • Article VI: Dissolution

After creating the LLC operating agreement, you can benefit in several ways since it will discuss how decisions for the business will be made, including management and member voting structure. For more details about how an operating agreement works, please check Operating Agreement.

Step 5: Request for EIN in Michigan

After documenting the operating agreement, you should get or request an Employer Identification Number (EIN). An EIN will serve as the tax ID for your general partnership. EIN can be obtained from the Internal Revenue Service (IRS). It is a 9-digit number similar to Social Security Number. EIN, however, is distinct from SSN. It is only used for business-related activities, particularly for submitting general taxes. The form must be completed and uploaded to the IRS website.

The application of an EIN in Michigan can be through the following:

  • Apply Online- You can apply for EIN online, the most desirable and fastest method for users.
  • Apply by Fax- Another method of obtaining EIN is to fax Form SS-4 (PDF) after entering all the correct information to (855) 641-6935.
  • Apply by Mail- The EIN application Form SS-4 can be filed via mail. The processing time frame to receive the mail is 4 weeks.
  • Apply by Telephone-International Applicants – International applicants may call 267-941-1099 (not a toll-free number) from 6 a.m. to 11 p.m. (Eastern Time) Monday through Friday to obtain their EIN.

If you would like to be assisted in getting an EIN in the Internal Revenue Service, we can get your EIN for you. Our EIN service is quick and hassle-free. For more details about EIN for your business, check why you need EIN.

Step 6: File Form 2553 for Your S-Corp Business in Michigan

Once you have obtained your EIN and Articles of Organization to form an S-Corp, you must file Form 2553, Election by a Small Business Corporation, to apply for S-corp status. Filing a form 2553 should be done 75 days after the formation of your S-Corp, or not more than 75 days after the beginning of the tax year in which the election is to take effect.

If your LLS-Corp has passed the deadline of 75 days, you must also file Form 8832, Entity Classification Election, in order to opt to be taxed as a corporation. Then you would send Form 2553 and Form 8832 jointly by certified mail from the USPS. In Michigan, you can send your form 2553 to the Department of the Treasury Internal Revenue Service Center – Kansas City, MO 64999 Fax: 855-887-7734.

Advantages of Starting an S-Corporation in Michigan

Filing an S-Corp in Michigan has numerous benefits and advantages.

  • Writing Off Losses: With S-corp, owners can deduct business losses from their individual income statements. If the company loses money in the first few years, it may balance its other sources of revenue. Even so, understand the shareholder loss limitations set by the IRS.
  • Pass-Through Taxation: Starting an S-Corp is the widely known advantage in forming this kind of business structure since an s-corp uses a pass-through taxation structure. The company does not pay twice the tax in this kind of taxation. Because of this structure, most start-ups and entrepreneurs in Michigan apply for an S-Corp LLC.
  • Qualified Business Income Deduction: A qualified business income, or QBI, is the total of all qualified items of income, gain, deduction, and loss from any qualified trade or business, including S-Corp. With this, S corp owners may deduct up to 20% of their eligible earnings under the Tax Cuts and Jobs Act.

FAQs

What is an S-Corporation in Michigan?
An S-Corporation in Michigan is a type of business entity which is formed under the laws of the state and offers limited liability protection to the owners and shareholders while also allowing them to pass their profits and losses through to their personal income tax returns.
How do I form an S-Corporation in Michigan?
To form an S-Corporation in Michigan, you must file Articles of Incorporation with the Michigan Department of Licensing and Regulatory Affairs. Additional requirements may include setting up a registered office and appointing a registered agent, filing a Statement of Information, and obtaining federal and state tax ID numbers.
What are the benefits of forming an S-Corporation in Michigan?
Forming an S-Corporation in Michigan offers several benefits, including limited liability protection for the owners, pass-through taxation, and the ability to raise capital through the sale of stock.
What documents are required to form an S-Corporation in Michigan?
The documents required to form an S-Corporation in Michigan are the Articles of Incorporation, a Statement of Information, and any other documents required by the state.
Are there any fees associated with forming an S-Corporation in Michigan?
Yes, there are fees associated with forming an S-Corporation in Michigan. These fees are generally paid to the state, and may include filing fees, annual report fees, and business registration fees.
Do I need an Operating Agreement for my S-Corporation in Michigan?
Yes, an Operating Agreement is recommended for an S-Corporation in Michigan. The Operating Agreement outlines the rights and responsibilities of the shareholders, directors, and officers, and helps ensure that the business is operated in accordance with state laws.
Do I need to register my S-Corporation with the Michigan Department of Treasury?
Yes, you must register your S-Corporation with the Michigan Department of Treasury. This will ensure that the business can collect and remit applicable taxes to the state.
Do I need to obtain a federal tax ID number for my S-Corporation in Michigan?
Yes, you must obtain a federal tax ID number for your S-Corporation in Michigan. This number is typically obtained through the Internal Revenue Service.
Do I need to obtain a state tax ID number for my S-Corporation in Michigan?
Yes, you must obtain a state tax ID number for your S-Corporation in Michigan. This number is typically obtained through the Michigan Department of Treasury.
Do I need to hold annual meetings for my S-Corporation in Michigan?
Yes, you must hold annual meetings for your S-Corporation in Michigan. These meetings are used to review the financial performance of the business and discuss any changes or updates to the business plan.
What are the tax implications of forming an S-Corporation in Michigan?
The tax implications of forming an S-Corporation in Michigan depend on the type of business, the amount of profits or losses, and the number of owners or shareholders. Generally, S-Corporations are subject to federal and state income taxes, as well as payroll taxes and self-employment taxes.
What is an S-Corp in Michigan?
An S-Corp in Michigan is a type of business entity that is formed under the laws of the state of Michigan. It provides limited liability to its owners and taxation as a pass-through entity, meaning that all profits and losses are passed through to the owners who then report them on their personal returns.
How do I form an S-Corp in Michigan?
To form an S-Corp in Michigan, you must file Articles of Incorporation with the Michigan Department of Licensing and Regulatory Affairs. You must also register the corporation with the Internal Revenue Service, obtain an EIN (Employer Identification Number), and receive approval of the company’s name from the Michigan Department of Licensing and Regulatory Affairs.
What are the advantages of forming an S-Corp in Michigan?
The advantages of forming an S-Corp in Michigan include limited liability protection for the owners, pass-through taxation, and tax savings from deductions and credits available to business entities.
What are the requirements to form an S-Corp in Michigan?
The requirements to form an S-Corp in Michigan include filing Articles of Incorporation with the Michigan Department of Licensing and Regulatory Affairs, registering the corporation with the Internal Revenue Service, obtaining an EIN (Employer Identification Number), and receiving approval of the company’s name from the Michigan Department of Licensing and Regulatory Affairs.
How much does it cost to form an S-Corp in Michigan?
The cost to form an S-Corp in Michigan depends on the type of filing and the services used. Typical costs range from $100 to $1,000, depending on the complexity of the filing.
What are the ongoing requirements for an S-Corp in Michigan?
The ongoing requirements for an S-Corp in Michigan include filing an annual report with the Michigan Department of Licensing and Regulatory Affairs, filing taxes with the Internal Revenue Service, and holding annual meetings for the shareholders.
What are the state tax requirements for an S-Corp in Michigan?
An S-Corp in Michigan must file an annual report with the Michigan Department of Licensing and Regulatory Affairs, and the corporation is subject to the state’s corporate income tax. The corporation must also file a tax return with the Internal Revenue Service and is subject to federal taxation.
Are there any additional fees for an S-Corp in Michigan?
There may be additional fees associated with an S-Corp in Michigan, such as filing fees for the annual report, tax preparation fees, and other applicable taxes and fees.
How long does it take to form an S-Corp in Michigan?
It typically takes several weeks to complete the process of forming an S-Corp in Michigan. The exact timeline will depend on the complexity of the filing and the services used.
What is the difference between an LLC and an S-Corp in Michigan?
An LLC in Michigan is a type of business entity that provides limited liability protection and pass-through taxation. An S-Corp in Michigan is also a type of business entity that provides limited liability protection, but with the added benefit of federal taxation as a pass-through entity.
What type of businesses are eligible to form an S-Corp in Michigan?
Most types of businesses are eligible to form an S-Corp in Michigan, including C-corporations, sole proprietorships, and limited liability companies (LLCs). However, there are some restrictions, such as certain types of businesses that are not eligible to form an S-Corp in Michigan.
Who is eligible to form an S-Corp in Michigan?
Any individual or business entity that meets the legal requirements of an S-Corp in Michigan is eligible to form an S-Corp. This includes individuals, sole proprietorships, partnerships, limited liability companies (LLCs), and C-corporations.
What documents are required to form an S-Corp in Michigan?
The documents required to form an S-Corp in Michigan include Articles of Incorporation, an EIN (Employer Identification Number), and an application for approval of the corporation’s name.
Who is responsible for the day-to-day operations of an S-Corp in Michigan?
The owners of an S-Corp in Michigan are responsible for the day-to-day operations of the business. This includes the hiring of employees, the management of finances, and the filing of taxes.
Is it necessary to hire an attorney to form an S-Corp in Michigan?
It is not necessary to hire an attorney to form an S-Corp in Michigan, but it is recommended to ensure that all of the necessary documents are properly filed and that the business is in compliance with all state and federal regulations.
Is it necessary to have a separate bank account for an S-Corp in Michigan?
It is not necessary to have a separate bank account for an S-Corp in Michigan, but it is recommended in order to keep the business’s finances separate from personal finances.
Are there any restrictions on the number of shareholders for an S-Corp in Michigan?
There are no restrictions on the number of shareholders for an S-Corp in Michigan. However, the Internal Revenue Service (IRS) does restrict the number of shareholders to 100 or fewer.
How do I change the address of an S-Corp in Michigan?
To change the address of an S-Corp in Michigan, you must file an amendment to the Articles of Incorporation with the Michigan Department of Licensing and Regulatory Affairs.
How do I change the owners of an S-Corp in Michigan?
To change the owners of an S-Corp in Michigan, you must file an amendment to the Articles of Incorporation with the Michigan Department of Licensing and Regulatory Affairs.
How do I dissolve an S-Corp in Michigan?
To dissolve an S-Corp in Michigan, you must file Articles of Dissolution with the Michigan Department of Licensing and Regulatory Affairs and submit all applicable taxes and fees.
What is the difference between an S-Corp and a C-Corp in Michigan?
An S-Corp in Michigan is a type of business entity that provides limited liability protection and pass-through taxation, whereas a C-Corp in Michigan is a type of business entity that provides limited liability protection but is subject to both state and federal taxation.

Also Read

Why Michigan S Corporation is So Important

Among the various choices, why is the Michigan S Corporation so important? One of the main reasons is the favorable tax treatment that S Corporations receive. Unlike C Corporations, whose profits are subject to double taxation at both the corporate and individual level, S Corporations are not taxed at the corporate level. Instead, the profits “pass through” to the shareholders who report the income on their personal tax returns. This can result in significant tax savings for owners of Michigan S Corporations.

Furthermore, Michigan S Corporations offer limited liability protection to their shareholders. This means that the personal assets of shareholders are generally protected from the debts and liabilities of the corporation. This can provide peace of mind to shareholders, especially in industries where lawsuits are common or liabilities are high.

In addition to tax benefits and liability protection, Michigan S Corporations also offer flexibility in terms of ownership. S Corporations can have up to 100 shareholders, and they can be individuals, trusts, or certain kinds of tax-exempt organizations. This flexibility allows for a diverse ownership structure, which can be appealing to investors and potential partners.

Moreover, Michigan S Corporations provide a sense of credibility and legitimacy to a business. The S Corporation designation can signal to customers, investors, and suppliers that the company is well-established and serious about its operations. This can help attract new business opportunities and foster trust with stakeholders.

Another key benefit of Michigan S Corporations is the ability to retain earnings within the business. While C Corporations are required to distribute profits to shareholders in the form of dividends, S Corporations have more flexibility in terms of reinvesting earnings back into the company. This can be advantageous for businesses looking to expand, invest in new equipment, or hire additional employees.

Overall, the Michigan S Corporation is a vital structure for businesses looking to maximize tax benefits, protect personal assets, and foster credibility and flexibility. Whether you are a small family-owned business or a growing startup, the advantages of the S Corporation structure are undeniable. Consider speaking with a qualified business advisor or attorney to see if forming a Michigan S Corporation is the right choice for your business. By taking advantage of the benefits of the S Corporation structure, you can set your business up for success and growth in the long run.

Conclusion

In conclusion, starting an S-corp in Michigan is a strategic choice for entrepreneurs seeking the benefits of limited liability and favorable tax treatment. One can successfully establish an S-corp by following the outlined steps, including selecting a unique name, filing the Articles of Incorporation, obtaining necessary licenses, and adhering to state-specific regulations. Ultimately, this corporate structure offers a strong foundation for business growth and protection, making it a worthwhile consideration for those looking to launch a venture in Michigan.

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