When deciding to form a business in Detroit, Grand Rapids, Ann Arbor, Lansing or elsewhere in Michigan, you should review and evaluate the most recent state laws and regulations that apply to your specific company and, most importantly, seek the advice of a qualified professional who has experience with Michigan corporations like yours. You may want to consider information that could help you determine whether forming a corporation or limited liability company (LLC) in Michigan is right for you.

Business tax climate info stats
#12	4.25%	6.0%	6.0%
Overall rank	Individual income tax	Corporate income tax rate	Combined state & avg. local sales tax rate

Source: https://taxfoundation.org/location/michigan/

Benefits of incorporating in Michigan

Asset protection

Business owners who incorporate in Michigan experience the peace of mind derived from the limited liability protection a corporation provides. Michigan corporations can protect your personal assets, since they cannot be used to satisfy debts and liabilities of the corporation. A Michigan corporation’s limited liability protection also shields its shareholders from any claims arising from lawsuits.

A Michigan corporation’s board of directors and officers enjoy the same limited liability protection as do the corporation’s shareholders.

Tax reduction

Unless you elect to have a special “pass through” tax status with the Internal Revenue Service (IRS) by filing an IRS Form 2553, your Michigan corporation will enable you to shelter and retain more income since a corporation files tax returns and pays its income taxes (at generally lower tax rates than do individuals) while the individual shareholders report and pay personal income taxes only on monies paid them by the corporation. Although shareholders are required to pay taxes on income from dividends paid by the corporation even though income taxes were previously paid by the corporation (called “double taxation”), a Michigan C corporation can facilitate the accumulation of earnings.

Capital acquisition

Forming a corporation in Michigan should make it easier to get additional capital than it would be with some of the other types of businesses. You can issue and sell stock or a variety of other financial instruments as evidence of interest in the corporation and ownership in Michigan corporations can be easily transferred through the issuance or transfer of stock.

Business management

Employees would normally prefer to work for a corporation rather than a proprietorship or partnership and a Michigan corporation has the advantage of being able to attract, motivate and retain quality employees by offering stock option and bonus plans.

Owner benefits

Michigan corporation owners working in the business are employees and are therefore eligible for certain fringe benefits such as group insurance plans, retirement and profit sharing plans, and tax-favored stock option and bonus plans. In addition, the corporation allows owners to reduce self-employment taxes.

A Michigan corporation is a separate legal entity and, in a sense, immortal and perpetual since it does not end with the death of a shareholder owner as do some of the other business types.

Which Michigan business entity type is best?

If you’re a small business owner who has chosen to incorporate in Michigan, you may struggle in deciding which type of incorporation is best. At MaxFilings, we hope to clearly distinguish the advantages and disadvantages of starting an LLC vs. a corporation, whether to classify your business as an S Corp or C Corp, and give you a better idea of which option will provide the best results for your continued financial and operational success.

	LLC	C corp	S corp
Limits personal liability
Ownership structure	Unlimited owners	Unlimited shareholders	No more than 100 shareholders (US citizens or resident aliens only)
All business income/loss passed through to owners each year
Owners pay personal income tax on profits
Business must pay corporate income tax
Recognized outside of the US
Flexible management structure
Annual meeting requirement

Michigan business formation compliance requirements

Corporation name

A Michigan corporation’s name shall contain the word “corporation”, “company”, “incorporated”, or “limited” or an abbreviation thereof. The corporation’s name must be distinguishable from all other entities’ names registered or reserved in accordance with Michigan law. Nothing in the name shall indicate or imply that the corporation is formed for any purpose other than those permitted by its articles of incorporation.

Board of directors

A Michigan corporation’s board of directors shall consist of 1 or more members as fixed by, or in the manner provided in, the bylaws unless such number is fixed in the articles of incorporation. The corporation’s directors need not be shareholders unless required by the bylaws or articles of incorporation, either of which may prescribe additional qualifications for directors.

Corporation officers

The officers of a Michigan corporation shall consist of a president, secretary, treasurer, chairman of the board if desired, 1 or more vice-presidents, and such other officers as may be set forth by the bylaws or determined by the board of directors. The corporation’s officers shall be elected or appointed by the board of directors unless otherwise provided in the articles of incorporation or bylaws. The same person may simultaneously hold more than one office.

Shareholders’ and directors’ meetings

Annual shareholders’ meetings, for the election of directors and other business as may come before the meeting, shall be held as provided in the bylaws. Shareholders’ meetings may be held within or without Michigan as may be provided in the bylaws. If there is no such provision, shareholders’ meetings shall be held at the corporation’s registered office or at such other place as may be determined by the board of directors.

Special shareholders’ meetings may be called by the board or by officers, directors or shareholders as provided in the bylaws; or upon application of at least 10% of the shareholders entitled to vote at a meeting, the circuit court of the county where the corporation’s principal place of business or registered office is located may, for good cause shown, order a special meeting of shareholders to be called and held as prescribed by the court.

Taxes

See the Michigan Department of Treasury website.

*For complete and current information concerning Michigan corporations, visit the state’s official website. The information listed above is not an attempt to present all you need to know when forming a corporation in Michigan but rather to call your attention to some basic information and requirements you may want to know as you submit information to form your corporation or LLC.

Why incorporate with MaxFilings?

MaxFilings is committed to helping business owners just like you. Here are a few reasons why MaxFilings stands out as the resource of choice when forming a Michigan corporation:

Best of all, your satisfaction is 100% guaranteed!