Michigan LLC add member
To grow your team in Michigan, you can add a spouse or partner to your LLC. To do this, refer to your operating agreement and follow the procedures accordingly. Learn in detail about how to add a new member to a Michigan LLC.
What is an LLC?
Limited Liability Company
LLC is a business entity in the U.S that provides limited liability to its members. It has characteristics from both corporation and sole proprietorship. LLCs are permitted under State statutes of each US state.
Limited liability
Personal assets are protected for people with limited liability when they are sued.
Corporation
A business entity that can issue shares and give limited liability to shareholders.
Members
Owners of an LLC are referred to as members. They own membership interest in the LLC.
Sole proprietorship
Where an individual engages in business activity without formal organization.
Types of LLC
Depends on the number of members and whether it has elected to change its IRS classification.
Single-member LLC
Has only a single member. IRS considers it as a sole proprietorship for tax purposes.
LLC as C-corp
Owners of an LLC are referred to as members. They own membership interest in the LLC.
Multi-member LLC
Has two members. IRS considers it as a partnership for tax purposes.
LLC as S-corp
A special election for a maximum of 100 US shareholders.
Action
Here are step-by-step instructions:
How to add a Michigan LLC member?
Follow these steps:
1. Check your operating agreement
If you have an operating agreement, check the procedure for adding a new member. Follow the voting and transfer procedures accordingly.
2. Default Michigan provisions
If you do not have an operating agreement, you will have to follow Michigan's default rules as mentioned in Michigan Compiled Laws § 450.4501
According to the default provisions, all the existing members of the LLC who are entitled to vote must give unanimous consent to add a new member.
3. File Amended Articles of Organization (optional)
If you have included the names of the members in the original articles of organization, then you may file an amendment to the articles. Otherwise, it is not required to be filed.
4. Get EIN if necessary
Some single-member LLCs don’t require an Employer Identification Number (EIN) from the IRS. If you were one of these, now you will require one after you add a new member. If you already had one, you don’t have to do anything now.
5. Update the Responsible party with IRS
If you want the new member to be the responsible party with the IRS, then you have to file Form 8822-B with the IRS within 60 days of the change. However, if you’re not changing the responsible party, you don’t have to file this.
Notify within
60 days
6. Update your operating agreement
Amend your operating agreement to include the names and details of the new member.
Articles of Organization
In Michigan, Articles of Organization is the form you file with the Secretary of State to form an LLC. It contains the articles of formation for the LLC.
Filing Articles of Organization
There are a couple of ways to file
File it online on LARA Corporations Online Filing System website
Visit
Mail a form to the state department
PDF
Address
Michigan Department of Licensing and Regulatory Affairs
Corporations, Securities & Commercial Licensing Bureau — Corporations Division
P.O. Box 30054
Lansing, MI 48909
Online fee
$50
Online processing time
24 hours
Mailing fee
$50
Mail processing time
3 - 5 days
Operating agreement
Operating agreement is an internal business document that outlines the general rules and policies of the LLC.
Importance
It is not a legally mandatory document. However, it is recommended to have one since many courts, banks and financial institutions use it for verification. It is also nice to clearly outline the duties and relations between multiple members of an LLC—so you avoid any confusion in the future.
Format
There is no ‘required’ format for an operating agreement. You can include anything reasonable in it. In general, it has the following sections:
Basic Business information
Contains name, address, names and details of members, purpose
Member relationship
Contains membership interest, decision making process, powers, duties.
Membership transfer
Contains details on how to add or remove members and managers.
Accounting and tax
Contains details on how company records and distributions are maintained.
Dissolution
How to dissolve, wind up and terminate, due process to follow and exceptions.
Entity name
Every LLC should have a unique name in Michigan. Michigan maintains a list of names of entities in the state. Go through it to check if your chosen name is available.
Search for names
Go to the official website of the Michigan business entity search tool to see if the name you want is available.
Searching fee
Free
Reservation
You can reserve a name for your LLC for a specific duration by paying reservation fees to the Michigan corporations, securities & commercial licensing bureau. You will have to file your LLC formation documents within this period to keep the name. Alternatively, you can directly go ahead with the LLC formation without any reservation. That's fine too.
Reservation fee
$25
Reservation period
6 months
LLC naming guidelines
The name you choose for your LLC must the official naming guidelines.
23 MCL §450.4204
Visit
Here are some of the guidelines in simple language:
- 1
The name of a domestic limited liability company shall contain the words "limited liability company", or the abbreviation "L.L.C." or "L.C.", with or without periods or other punctuation.
- 2
Don’t include terms that indicate that you are doing an activity that you are not authorised to do.
- 3
Your name should be ‘distinguishable’ in the Secretary of State records. Adding a punctuation or ‘the’ does not make it distinguishable.
- 4
Don’t use words that makes it seems like you are a governmental entity or has an affiliation.
Frequently asked questions
Business entities in Michigan
LLC is a flexible choice for small businesses in Michigan. However, in order to add more investors and external shareholders, C-corporations are better suited than LLCs.
Michigan LLC
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