Why form a Michigan Corporation?
Opening a Michigan corporation forms a separate entity from the owners of that company. Therefore, when a business is named in a lawsuit, it is the corporation, not the owners named and legal provisions exist to protect the owners, directors, shareholders, and employees from personal liability.
Tips on naming your corporation
Every Corporation formed in Michigan must have its legal designator as “Corporation”, “Incorporated” or its abbreviation “Corp.” or “Inc.”. The name of the Corporation must be deemed distinguishable form any other Corporation or LLC filed or reserved by the Secretary of State. The Secretary of State will also ignore differences in the use of spaces, capitalization, and/or special characters. Differences in the use of punctuation or the use of designators such as Corp, LLC etc will be ignored and will not be distinguishable. The corporation shall not contain a word or phrase that indicates or implies that it is incorporated for a purpose other than a legal business purpose.
Corporate Debts - Who is Liable?
A Michigan Corporation, if operated correctly, is a separate legal entity from its owners. If the company has a debt it can not pay or a claim from a lawsuit, the Michigan corporation is responsible for that debt and not the owners. This is not the case for a sole-proprietorship, a limited-partnership, or a general partnership, where the owners are directly responsible for the debts and obligations of the company. In Michigan, if you plan on having a store, employees, or sell goods you need to be protected by rights afforded to either an LLC or a Corporation. If anybody is to become seriously injured as a result of being in your store, working in your store, or using the items your sell, your company could find itself in a serious lawsuit. You must keep in mind, that you will be held responsible for any debts or obligation that you personally guarantee.
Annual Reports
Michigan Corporations are required to file an Annual Report beginning with the first year after incorporation. The Michigan Corporations Division will forward a pre-printed report directly to the listed registered agent.
This Annual Report can note any changes to the directors and officers, business purpose, addresses, registered agent, etc.
If a Michigan corporation neglects to file the required Annual Report, the corporation will be automatically withdrawn and dissolved under the Corporation Act. Prior to dissolution, the Corporations Division will again forward notice to the registered agent.
Setting up a Michigan subchapter S corporation?
Once the state of Michigan has approved your corporation, and registration is complete, S corporation election is done by filing Form 2553 (PDF), Election by a Small Business Corporation. Note, not all Michigan corporations will be eligible to obtain S corporation status.
|
