How to Register a Contracting Company in Michigan

Step one: choose and file the entity

LARA's Corporations Division states that a limited liability company "is formed by filing the Articles of Organization with the Bureau", and directs online filers to the state's file-online service. It describes an LLC as a business entity separate from its members whose liability "is limited to the financial contribution made by the member", managed by its members unless the Articles of Organization provide for management by managers. A professional service limited liability company is a separate form reserved for named licensed professions, and construction trades are not among the professions the Division lists for it.

If your company was formed under another state's law, the Division states that a foreign limited liability company "transacting business" in Michigan "must first obtain a Certificate of Authority from this agency", and warns that transacting business "is a technical term" with particular activities set out in the Michigan Limited Liability Company Act that do not by themselves constitute transacting business. An out-of-state contractor planning Michigan work should resolve that question before bidding, not after.

Before you file anything, run the two searches the state itself points at. The State of Michigan business portal links a name-availability search and a search for licences and permits, and the state maintains a State License Search covering state-issued licences by department. Checking name availability first is cheap; discovering the conflict after you have bought signage and vehicle lettering is not.

Official sources: LARA Corporations Division: Limited Liability Company; State of Michigan: Business; State of Michigan: State License Search

Step two: register with Treasury before your first taxable sale

Treasury runs new business registration through Michigan Treasury Online. Its guidance is to create a personal user profile, log in, and complete the registration application. Where the business has a federal Employer Identification Number, Treasury states that "the EIN will also be the Treasury business account number". A business not required by the IRS to have an EIN, or one that has applied but not yet received one, completes the paper version and Treasury assigns an account number; Treasury asks you to "allow 7-10 days for mailing and an additional 2 weeks for processing".

Timing matters if you are trying to open accounts. Treasury states that an online application "is recognized on Treasury's system within 15 minutes" but "can take up to 48 hours to process an electronic application", and suggests confirming processing by trying to connect your MTO user profile to the business account. Treasury also notes that its electronic registration process now runs on the Unemployment Insurance Agency's upgraded web platform, with UIA customer service handling questions about the new system.

On the tax itself: Michigan sales tax is 6 percent of the total price of taxable retail sales to the final consumer, with a 4 percent rate for residential electricity, natural or artificial gas and home heating fuels. Use tax is a companion tax at 6 percent on taxable items brought into Michigan or bought from out-of-state retailers who do not collect Michigan tax, with credit for tax paid to another state. The sales tax licence is valid January 1 through December 31, so it is an annual object in your calendar, not a one-off.

Official sources: Michigan Treasury: New Business Registration; Michigan Treasury: Sales and Use Taxes; Michigan Treasury: Business Taxes

Step three: the licence, which the entity does not give you

A registered company is not a licensed contractor. LARA's Bureau of Construction Codes issues the Article 24 licences separately, and its Licensing Section lists Individual Residential Builder, Maintenance & Alteration (M&A) Contractor, Builder Company, M&A Company, Residential Builder Salesperson and Branch Office licences. A company licence depends on a qualifying officer: LARA states that "you cannot operate without a qualifying officer" and that the company licence "will be placed in Section 2405 Suspension" if the qualifying officer fails to renew their individual licence.

That dependency changes the sequencing. The 60 hours of approved prelicensure education, the application, and the PSI examination all attach to a person, and LARA requires the 60 hours "prior to taking the examination or submitting a license application to the Department". If the individual credential is the long pole, start it before or alongside the entity filing rather than after, or the company will sit formed and unable to trade.

Both the individual and the company licence then renew every three years by May 31 at $150.00 each, with a $20.00 late fee after expiration rising to $35.00 if you have not renewed within 60 days. LARA notes that "not all residential builder licenses renew the same year" and that builder company, M&A company and branch licences cannot renew through Express Pay and must be renewed inside an Accela account. Put both dates in the same calendar as the February 15 annual statement, because they are the two records that quietly kill a company.

Official sources: LARA Bureau of Construction Codes Licensing Section; LARA Prelicensure Education Requirements; LARA BCC License/Registration Renewals

Step four: annual filings, and what happens if you skip them

The Corporations Division is explicit that "every corporation and LLC is required to file an Annual Report for Corporations, an Annual Statement for Limited Liability Companies or an Annual Report and Annual Statement for Professional Limited Liability Companies", and equally explicit that "this is not the same thing as filing your taxes". Limited partnerships and limited liability partnerships do not file. Sole proprietorships and general partnerships "do not register with the Corporations Division and do not file" at all.

The dates and fees are published. LLCs and PLLCs are due February 15 each year after organization or qualification, with online filing opening October 15, and a company formed or qualified after September 30 is not required to file on the February 15 immediately following its formation. Profit and professional corporations are due May 15, with online filing opening January 15. Nonprofit corporations are due October 1, with online filing opening June 15. The LLC fee is $25.00, the corporation fee is $25.00, and the professional limited liability company fee is $75.00 with a $50.00 penalty "if received after the February 15 due date".

The consequence is not a fine, it is the entity. The Division states that "failing to file an annual will result in the dissolution, revocation or not good standing status of your business after a two-year grace period or one year for foreign corporations", and that the practical effects include losing the rights to your business name and assumed names and paying penalty fees to get back into good standing. The Division sends email reminders 90 days before the due date "to the email registered with the business entity", which is only useful if that address is one you actually read.

Official sources: LARA Corporations Division: Annual Reports and Annual Statements

Workers' compensation: the thresholds are lower than most new contractors expect

Michigan's Workers' Disability Compensation Agency publishes the coverage criteria directly. Employers that must carry workers' compensation insurance include "all private employers regularly employing 1 or more employees 35 hours or more per week for 13 weeks or longer during the preceding 52 weeks" and "all private employers regularly employing 3 or more employees at one time", and the agency notes explicitly that the three-employee test "includes part-time employees". Agricultural employers, householders employing domestic servants and all public employers have their own criteria on the same page.

Who counts as an employee is broader than a payroll list. The agency states that an employee is "any person in the service of another, under any contract of hire, express or implied", that "a partner is considered an employee of the partnership", that "a corporate officer is considered an employee of the corporation", and that "a member who is a manager is considered an employee of a limited liability company". The one clean exclusion is that "a sole proprietor (self-employed individual) working in his or her sole proprietorship is never an employee of that business". A two-member manager-managed LLC with one helper is therefore closer to the three-employee line than the owners usually assume.

There are three ways to comply, and doing nothing is not one of them: the agency states that compliance "may be achieved by purchasing insurance, self-insuring, or properly executing an exclusion form", and that an employer below the criteria may voluntarily assume the liability. It also warns that "failure to comply with coverage requirements could result in prosecution and financial penalties". Decide which of the three routes you are on before your first hire, not after an injury.

Official sources: Michigan WDCA: Workers' Disability Compensation Insurance Requirements

Check the official page yourself before you file or sign

Michigan publishes its contractor rules across at least four agencies: LARA's Bureau of Construction Codes for the licence, LARA's Corporations Division for the entity, the Department of Treasury for tax registration and returns, and the Workers' Disability Compensation Agency for coverage. No single page carries all of it, and each one changes on its own schedule.

Before you file an application, sign a contract, or hire anyone, open the specific LARA page for your licence type, confirm the hours, the renewal date and the fee, and keep a dated copy of what you read. LARA publishes a licensing phone line at 517-241-9316 and an email address for the Licensing Section, and it warns that "application fees are non-refundable" and that processing "may be up to 3-5 weeks". A ten-minute call before you pay is cheaper than a non-refundable application filed into the wrong licence type.

Official sources: LARA Bureau of Construction Codes Licensing Section; LARA Bureau of Construction Codes: Residential Builders