![Michigan LLC Operating Agreement Template [PDF]](/_next/image?url=%2Fimages%2Fdocuments%2Fplaceholder-general.png&w=3840&q=75)
The Michigan limited liability company (LLC) operating agreement is a legal document that outlines the rules on how the business is going to be managed and records the ownership of each partner within the LLC.
The LLC operating agreement, or business operating agreement, also provides details on each member’s contribution to the company and their percentage of ownership interest in the company.
Considering that federal and state law provide a very broad legal framework for LLCs, the members of the LLC are free to regulate their mutual relationships according to their needs.
Is an Operating Agreement Required in Michigan?
No, the operating agreement is not a required document when establishing an LLC in Michigan. However, many parties still decide to create an operating agreement to optimize their business and prevent misunderstandings between the company members.
4 Main Types of Operating Agreements
This section presents the four most commonly used operating agreement types in Michigan:
Types of Operating Agreements
Single-member LLC operating agreement: Here, there is only one member of the LLC, and the operating agreement outlines how the company will be operated without regulating the relationship between the members.
Multi-member LLC operating agreement: Used in situations where there are multiple members of the LLC to regulate their mutual relationship and determine how the main operations within the company will be conducted.
Member-managed LLC operating agreement: Here, the members who want to actively participate in the decision-making process use this type of operating agreement to determine the rights and duties of each member of the company.
Manager-managed LLC operating agreement: This type of operating agreement enables members of the LLC to delegate their decision-making powers to the professional manager, who will make day-to-day decisions on their behalf.
Laws and Legal Requirements for LLC Operating Agreements in Michigan
The status of LLCs in Michigan is regulated by the Michigan Limited Liability Company Act.
Moreover, this act includes a couple of provisions that regulate the status of operating agreements in Michigan:
Laws and Legal Requirements
§ 450.4215: Operating agreement unenforceable
§ 450.4308: Operating agreement – Distribution; violating operating agreement; liability of members or managers; presumption of assent; knowledge of violation; contribution; commencement of proceeding
How to Form a Limited Liability Company (LLC) in Michigan
To form a limited liability company in Michigan, you should follow the steps below:
How to Form a LLC in Michigan
#1. Choose a Business Name For Your LLC
Before registering your LLC in Michigan, you must make sure your name is distinguishable from other registered business names. If you choose a business name that is too similar to another registered business name, that may result in your application being rejected.
Therefore, you can do a business entity search and make sure your business name is distinguishable.
#2. Choose the Type of LLC
In Michigan, you can choose between registering a domestic LLC and a foreign LLC.
A domestic LLC is a company that is established in Michigan, while a foreign LLC is a company that is initially established outside Michigan but that also operates in Michigan and, therefore, must be registered.
#3. Nominate an Agent
You should choose a person who will be in charge of receiving notifications and documents from government agencies and other third parties on behalf of the LLC. It can be an individual with a registered address in Michigan or an entity registered in Michigan.
#4. File the Formation Documents
If you are forming a domestic LLC, you should submit the Articles of Organization. You can submit them online or by filling out Form CSCL/CD-700.
However, if you are forming a foreign LLC, you should submit the Application for Certificate of Authority to Transact Business in Michigan. You can do it online or by filling out Form CSCL/CD-760.
After completing this step, you should also file a Certificate of Good Standing from the jurisdiction where the company was initially established.
#5. Pay the Required Fee
The filing fee is $50 for both the domestic and foreign LLCs.
#6. Create your LLC Operating Agreement
After completing your company registration, you should also create an operating agreement. Although this step is not mandatory, creating the operating agreement will help you formalize many processes in your business entity and optimize its operation.
#7. Apply For an Employer Identification Number (EIN)
By obtaining the Employer Identification Number, you will be able to open a bank account and hire employees. You can obtain this number online or by completing Form SS-4.