Entrepreneurs often ask about the basic requirements for launching a new business in Michigan. There are some basics, like choosing the right organizational form. Then there is the documentation and filing or registration required to establish that form with the State of Michigan and the federal government. Next step — business documents: you need to develop consistent business forms, employment contracts, and more that protect your interests and navigate your relationships with vendors, customer base, employees, and sales representatives.
Do you need an attorney to start a business in Michigan? Well, consider what we have learned from our decades of work with Michigan businesses.
Conserving finances is a reasonable concern of all entrepreneurs and investors. And it is usually the primary concern motivating attempts at do-it-yourself business formation. It is important, however, not to have a short-sighted view of how the need for legal services can affect your bottom line.
The question is: will inconsistent, incomplete, or cookie-cutter free business forms lead to more expensive problems down the road? Much litigation and piecemeal help from attorneys later can be prevented by starting your business on a solid legal footing now. Moreover, a business attorney who helps in the right way from the beginning offers you a distinct advantage: getting to know your business from the ground up allows an attorney to act quickly and cost-effectively if issues do arise in the future, from lawsuits to the need for new contracts or the review of proffered agreements.
We encourage you to consult with HCFA Lawyers about how our respected business attorneys can put our years of experience to work in creating a seamless startup for your organization. We can significantly reduce the time, effort and worry you would otherwise have to devote to the legal details, so you can focus on running the new endeavor that inspired you in the first place. Contact us or learn more below about how we can help.
HCFA's small business lawyers have advised and assisted countless small and mid-sized businesses on choosing the most advantageous organizational form and correctly filing with the State of Michigan. We work with businesses most industries, including but certainly not limited to:
Some of the more common organizational forms include Michigan corporations, LLPs, LLCs, partnerships, limited partnerships, and professional service corporations.
A corporation consists of a business entity distinct from its members or owners. The members or owners are shareholders, but the business is usually run by directors or officers elected by the shareholders. The way the corporation is run depends on laws, bylaws set out in the Articles of Incorporation, and resolutions of the shareholders. A corporation is subject to double-taxation, meaning that the business itself is taxed as well as the shareholders when they received profits as dividends. However, another feature of a corporation is that usually corporate liability is limited to the business entity itself, and members are not exposed personally to corporate liability.
Filing — To form a corporation in Michigan, you must file Articles of Incorporation with the Michigan Department of Licensing and Regulatory Affairs Bureau of Commercial Services. The Articles must include the name of the corporation, provide the name of an appointed registered agent and registered office, the nature or purpose of corporation’s business, the duration of the corporation, number and class of shares to be issued, name and addresses of the incorporators, any ancillary agreements regarding termination, distribution of assets, dissolution, and other matters.
General partnerships are comprised of two or more people joining together to operate and manage a business for profit.
Filing — General partnerships form easily, but you should have a formal agreement so that everyone is on the same page. Each partner is liable for all the debts incurred in the business. Although formation does not require special filings, you still need to file an assumed name certificate with the county clerk's office in the counties in which your business is located.
Limited Liability Partnerships are formed by at least two people. The partners of a limited liability partnership are jointly and severally liable for all debts and obligations incurred by the LLP except for those that result from the actions of another partner or a representative of the LLP who acted outside the scope of the LLP. LLPs are not subject to double taxation.
Filing — First, LLPs must file a “Certificate of Copartnership” or “Certificate of Persons Conducting Business Under an Assumed Name” with the county clerk in the counties where the LLP is located. Next, a LLP must file an application to register with the Michigan Department of Licensing and Regulatory Affairs Bureau of Commercial Services. The application must include the name of the LLP, address of the LLP’s principal office, nature of the LLP’s business, and in certain cases the name and address of a registered agent.
A Limited Liability Company is its own type of business organization, but it has some of the features of an LLP and a corporation, allowing for the tax benefits and operational flexibility of a partnership while providing the limited liability benefits of a corporation. An LLC is owned by members and usually managed by them, but the business itself is distinct from the members. This means that in general liability incurred from the business is limited to the financial contributions the members make to the business.
Filing — You must file Articles of Incorporation for the organization with the Michigan Department of Licensing and Regulatory Affairs Bureau of Commercial Services. In the Articles, you must properly provide the name and address of your LLC, include the name of an appointed registered agent and registered office, state the proposed LLC's purpose and duration, and pay any related filing fees.
A limited partnership is created by two or more individuals, with at least one general partner and one or more limited partners. General partners bear liability for all debts and obligations for the limited partnership and also control management and operations of the business. Limited partners only bear liability for the amount they contributed to the partnership and have little to no management power. For tax purposes, limited partnerships entail each partner paying taxes on their proportionate share of the profits, which pass through to each partner. One of the benefits is that these partnerships, much like general partnerships, are not doubly taxed because the business entity is not separately taxed.
Filing — You must file a Certificate of Limited Partnership with the Michigan Department of Licensing and Regulatory Affairs Bureau of Commercial Services to create a Limited Partnership. It must include the name of the partnership, the general character of the business, location where records will be kept, name and address of appointed registered agent, terms and conditions for assignment or termination of membership, and terms of dissolution.
Professional corporations are made up exclusively of licensed professionals who may form a corporation as long as they follow certain regulations and uphold ethical standards. PCs have some features in common with corporations. Professionals in a PC are protected from vicarious liability much like in a corporation. However, the professionals are not free from personal liability for individual actions and must act ethically.
Common PCs involve attorneys, architects, engineers, public accountants, and physicians.
Filing — To form a PC, you must have one or more licensed professionals. You must file Articles of Incorporation with the Michigan Department of Licensing and Regulatory Affairs Bureau of Commercial Services.
HCFA Lawyers advise, counsel, and support small and mid-sized businesses in Troy, Oakland County, metropolitan Detroit and throughout Michigan. We know that if you are starting a business, you are concerned about costs. Our startup attorneys provide you with attentive and thorough legal services designed to protect your legal interests and your bottom line. Contact us today by calling 248-247-3300 or by using our online form.