Michigan LLC Operating Agreement
The Michigan LLC Operating Agreement is the core document that is referred to when issues concerning a Michigan limited liability company (“LLC”) need to be resolved.
The LLC Operating Agreement is the most important document for your Michigan LLC.
In the case of a single member LLC, without the formality of an LLC Operating Agreement, the LLC can closely resemble a sole proprietorship, which does not limit your personal liability for business debts of the LLC.
With respect to a multi-member LLC, the LLC Operating Agreement reflects the agreement among the members with respect to the affairs and management of the LLC and governs the relationship amongst the members of the LLC. By having an LLC Operating Agreement, the members will be provided with a clear set of rules that all members have agreed upon greatly reducing the likelihood of disagreement between them in the future. A LLC Operating Agreement will also greatly reduce financial and management misunderstandings, and make sure your business is governed by your own rules -- not default rules created by the state of Michigan.
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The LLC operating agreement does not have to be filed with any state agency. All states, including the state of Michigan will enforce valid operating agreements entered into among LLC members. The operating agreement will only be enforced against the persons who are parties to the agreement. Therefore, it is extremely important that all members of an LLC sign the operating agreement.
Your Michigan Limited Liability Company
LLC Filing Office
Department of Consumer and Industry Services
Corporation & Securities and Land Development Bureau
P.O Box 30054
Lansing, MI 48909-7554
Check Name Availability
Entity or Franchise Level Tax
Michigan imposes its single business tax (SBT) on partnerships and LLCs taxable as partnerships having business activity in the state. A single-member LLC classified as a disregarded entity for federal income tax purposes is not separately subject to tax (i.e., only the single member is subject to tax.).
The SBT is based on the value added to goods and services by the taxpayer. It is essentially based on the gross receipts rather than income. The tax rate is 1.9% of the adjusted tax base. The first $45,000 of the tax base is exempt.
State LLC Act
The Michigan LLC Act is contained in Chapter 450 of the Michigan Complied laws, Act 23 of 1993
Important Statutory Rules
An LLC is managed by its members unless the Operating Agreement states that the LLC is to be managed by one or more managers.
Admission of Members
Unless otherwise provided in the Operating Agreement, new interests in the LLC must be issues with the written consent of all LLC members. Admission of a transferee member must be approved by unanimous written consent of the non-transferring members, unless otherwise specified in the Operating Agreement.
Amending the Operating Agreement
No statutory requirements exist for amending the Operating Agreement. The members may set their own rules for amending the Operating Agreement.
Only members may vote to voluntarily dissolve the LLC, unless otherwise provided in the Operating Agreement.
Transaction Benefiting Manager
A contract or transaction that personally benefits a manager can be approved by a majority of disinterested members after full disclosure is made.
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