How to Form an S Corporation in Michigan

Introduction

The process of forming an S corporation in Michigan is similar to that of forming a C corporation. An S corporation is formed under Michigan law as a voluntary association of two or more persons with the intent to conduct business. To form an S corporation in Michigan, you must fulfill the following requirements and steps.

Choose a Name for Your Business

The second step is to choose a name for your business. You’ll want to make sure the name isn’t already in use by another company and that it’s distinguishable from other names. The name can’t be misleading or contrary to law.

Appoint a Registered Agent

In Michigan, you must appoint a registered agent. A registered agent is a person or entity that is authorized to receive legal and tax documents on behalf of the corporation.

Registered agents are not required in Michigan, but they are recommended. You can hire an attorney or CPA as your registered agent for a small fee (around $50). If you decide not to use a registered agent, then you have to keep all legal documents related to your business at your home address in Michigan; otherwise, any paperwork sent by law enforcement officers will be returned as undeliverable mail because it cannot be delivered without an address where the letter can be sent.

File the Articles of Incorporation

Articles are filed with the Michigan Department of Licensing and Regulatory Affairs (LARA). You’ll need to file the following documents:

• Articles of Incorporation
• Corporate Bylaws (if you choose to have them)
• Statement of Information (Form 1125-I). This form must be filed annually.

Prepare Corporate Bylaws

• What are bylaws?

Bylaws are the rules and regulations that govern the operations of your corporation. They outline the duties of officers, shareholders, directors and officers. They also explain how meetings are held, record keeping responsibilities and corporate finances.

• What should be included in bylaws?

Bylaws typically include articles on incorporators (the people who formed the corporation), registered agent (the address where legal notices can be served) along with other operational details such as how often you will hold meetings; what happens if you have no quorum at a meeting; what happens if there is not enough money to pay bills; etc…

Set up an Organizational Meeting

To form an S corporation in Michigan, you need to hold an organizational meeting for your directors. At this meeting, you will appoint directors and hold an election for those positions. Next, you’ll file a certificate of incorporation with the state.

There are three types of business organizations: sole proprietorships, partnerships and corporations. Corporations are legal entities that offer protection from potential lawsuits by other people or companies who claim that they were injured by your business activities. The goal is to limit personal liability while making sure the company continues operating even if one or more owners want to exit the venture.

Issue Stock Certificates to Shareholders

Stock certificates are a legal document that proves your ownership of the company. You must issue stock certificates to every shareholder who holds shares in your corporation.

The process of issuing stock certificates involves several steps:

• Signing and notarizing the certificate
• Filing the signed certificate with the state
• Issuing each shareholder his or her own certificate

Obtain an Employer Identification Number (EIN)

An Employer Identification Number (EIN) is a tax ID number used to identify business entities and individuals. It is also used to open a bank account, file taxes, and apply for permits.

The IRS requires you to have an EIN if:

• You are an individual that owns a business or will be paying wages
• Your business has employees
• You own a corporation or partnership with another person(s) in which the other party is not taxed as an S corporation

Determine Permit and Licensure Requirements

You’ll need to check with your county clerk’s office, state department of licensing and state department of revenue to determine whether you need a permit or license to operate an S corporation. In addition to being able to form an S corporation, the company must meet certain qualifications outlined by these agencies. These may include the type of business you’re running and whether it’s involved in any specific industries (such as gambling) that require additional licenses or permits.

Open a Corporate Bank Account

The next step is to open a corporate bank account. Make sure that you have a signatory on the account, and make sure it’s the right kind of bank account for your business. You’ll need both a business checking account and savings account.

Takeaway:

• An S Corporation is a popular choice for small businesses.
• An S Corporation has fewer tax liabilities than other forms of business ownership, such as a sole proprietorship or partnership.
• S Corporations are easy to set up and maintain. You can form an S Corporation online through the Michigan Department of Licensing and Regulatory Affairs (LARA).
• If your business needs to dissolve, you may be able to simply close up shop instead of filing for bankruptcy or dissolving in court like you would with a C corporation.

Conclusion

The process of forming an S corporation in Michigan is not complicated, but it does require some time and effort.