Michigan S Corporation Formation

If you wish to form a Michigan S Corporation, you will register your corporation just as you would to form a C Corporation. Then, once filed as a corporation, you will file additional paperwork with the IRS to obtain the “S” tax status.

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Steps to Forming an Michigan S Corporation

Articles of Incorporation must be submitted to the Department of Assessments and Taxation of the Secretary of State of Michigan. These are your formation documents, and they become public record upon filing. Your Articles must include the following:

  • The name of your S Corp: You will select a name for your corporation. This name must be available for use, and it must include a corporate ending (or an abbreviation of a corporate ending). It’s usually a good idea to perform a business name search for availability prior to filing; ClickAndInc.com can take care of this for you so that you’ll know whether you’ll need to select a different name.
  • Purpose: You may either keep the default statement provided, “The transaction of any or all lawful businesses for which corporations may be incorporated under the Michigan Business Corporation Act,” or you may expand on the statement to include a more specific business purpose.
  • Stock/Nonstock: A for-profit corporation is a stock corporation; it issues shares of stock. A corporation without shares is a nonstock corporation.
  • Registered agent: Your corporation must have a contact person on file with the state who can accept correspondence and service of process. This person must provide a physical address, and not a PO box.
  • Incorporator: The name and address of the person responsible for drafting the Articles should be listed. This person’s signature must appear on the form; you may list multiple incorporators, but must have at least one.

If any of the above information about your business changes, you must file an amendment to the Articles. It is very important that the state have accurate and up-to-date information about your business.

Let ClickAndInc.com form your S Corporation in Michigan for you. Or, take a look at sample Articles of Incorporation.

Further Responsibilities of an Michigan S Corporation

You are required to file an Annual Report, which should be returned to the Secretary of State. Failure to comply with this requirement may result in the state revoking your status.

After your Articles of Incorporation have been filed, you have 75 days to file an S Corp Election Form (form 2553) with the IRS. This form will give you S Corporation status and allow you to be taxed accordingly.

If any of the information provided in your Articles changes after your filing, it’s important that you file an Article Amendment so that the state has current information for your business on file at all times.

More Information about an Michigan S Corporation

Your S corporation:

  • Can have up to 100 owners/shareholders, but no more
  • May deduct the cost of benefits provided to employers (such as parking permits, health insurance, and so on)
  • Has a board of directors, which oversees the policies of the corporation
  • Cannot have more than one class of shares
  • Issues limited liability for owners
  • Must be owned by US citizens or resident aliens
  • Is taxed as owners’ income, not as a separate entity
  • Allows business losses to be deducted on the owners’ individual tax returns
  • Must pay payroll tax

For S corporations, only the salary paid to the owner-employee is subject to employment tax. The remaining income that is paid as a distribution is not subject to employment tax under IRS rules. Therefore, an owner of an S corporation stands to realize substantial employment tax savings. However, the salary you give yourself must not be artificially low; if the IRS finds your salary unreasonable, they may reclassify some of the distribution funds as salary and require you to pay taxes on it.

Michigan Startup Quicklinks

For information on other types of businesses in Michigan, please explore the links below.