Business Formation Lawyer in Michigan
Have an idea for a business? Where do you start transforming that idea into a business? To choose the right kind of business entity, you should be talking with a business lawyer about:
- Ownership: How many owners are there? Are all the owners individuals or are there other business entities involved? Are the owners all US citizens or lawful permanent residents? What is the economic relationship among the owners? Will some of the owners be passive while others are actively running the business? Will some owners need to draw a paycheck?
- Finance: Are you self-funding the startup and working capital needs? Do you plan to borrow any money for the business? Are you trying to raise money by offering ownership to investors?
- Profit distributions: Will the business be cash flow positive soon or will profits be plowed back into the business to fund growth or pay off debt? Do some owners need distributions while others do not? Will the distributions be proportionate to ownership or will some owners be "preferred" and paid before others?
At Lex Novus, our business attorneys will review your business plans with you and advise you on your legal options. From that point on, our business attorneys will guide you through the process, proactively making sure you have all the forms, documentation, and other necessary information and strategies in place for a successful business formation. Contact us today at (248) 581-0987 to schedule a consultation.
How Do You Form a Business in Michigan?
When forming a business, one of the first and most important decisions to make is the structure you will use. A business structure is the legal classification of a business that determines taxes, liability, and other legal rights and responsibilities.
A range of business structures is available, including:
- Sole proprietorship
- General partnership
- Limited partnership
- Limited liability company (LLC)
- Corporation, including S corporation
LLCs and corporations are frequently the choice for small business formation. The advent of LLCs in Michigan in 1993 was largely the end of Michigan general partnerships and limited partnerships though many continue to exist.
LLCs and corporations are formed by filing articles of organization or articles of incorporation with the Michigan Department of Licensing and Regulatory Affairs (LARA).
In an LLC, the members (owners) enter into an operating agreement to define their rights, appoint executives, and detail their responsibilities and economic commitments to each other and the company. In a corporation, an incorporator appoints a board of directors, which then holds an initial meeting to approve bylaws, the issuance of shares to shareholders (owners), and the appointment of officers to run the corporation.
With the company organized or incorporated, and the management identified, the next step is to establish the company's account with the IRS by obtaining an Employer Identification Number. That is usually followed by setting up a bank account for the company.
What is a Check the Box Election?
At one time, the IRS had rigid and complex rules for classifying business entities. Now, it is possible to form an LLC with articles of organization and an operating agreement but choose to be taxed like a corporation. An LLC can even elect to be a small business corporation (an S corporation), if it otherwise meets the requirements. This "check-the-box" election is made by filing specific forms with the IRS.
Contact a Business Lawyer Today
If you are considering starting a new business in Oakland County or anywhere in Michigan, our business lawyer can help you make strategic decisions. Contact Lex Novus, PLC today to schedule a consultation. You can either fill out our online form or call us at (248) 581-0987. We look forward to helping make your new business a successful one.