How to Pay Taxes for a Limited Liability Corporation in Michigan

By Elizabeth Rayne

As a limited liability company in Michigan, you have tax obligations to the state and the IRS. Tax obligations for LLCs vary, depending on whether you sell or rent goods, or have employees. After registering to pay state taxes and determining the taxes for which your LLC is responsible, your business taxes may be paid online via the Michigan Department of Treasury website or by mail.

Registration for Michigan Taxes

New businesses in Michigan should use Form 518, Registration for Michigan Taxes, to register to pay taxes. Indicate whether you sell tangible property and if you're liable for sales tax or if you lease property, which requires payment of a use tax. Michigan also taxes tobacco and motor fuels; if your business sells these products, the Department of Treasury suggests you register to pay for those taxes as well. The Michigan Department of Treasury recommends Form 518 to be mailed at least six weeks before you begin doing business in the state.

Employer Obligations

If your LLC employes personnel, register to pay employer-related taxes, such as unemployment insurance. You may also be required to withhold both federal and state income tax from their pay. After registering to pay state taxes, the state will send you personalized tax returns to report any withheld income. At the end of the year, file Form 165 with the state to report the full amount withheld, and include copies of the W-2 forms distributed to each employee and IRS.

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Federal Taxes

Michigan requires businesses to complete federal tax returns before state returns. To file a federal return for your LLC, decide how you want to classify your company. The IRS does not recognize LLCs as a business entity, but instead requires you to classify your business as a corporation or partnership for tax purposes. To file as a corporation, you will be responsible for corporate income tax. Corporations report income on Form 1120, Corporation Income Tax Return. To file as a partnership, the IRS recommends your LLC consist of at least two members. Partnerships report income on Form 1065, Return of Partnership Income.

Michigan Tax Payments

File an annual Single Business Tax Return and pay the Michigan Business Tax if your LLC earns gross receipts exceeding $350,000. Further, if you are responsible for sales or use tax, you may be responsible for annual, quarterly or monthly returns, depending on the amount of your tax liability.

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References

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Is a Business License Needed to Form an LLC?

A limited liability company, or LLC, is a form of business organization popular among individuals looking to start a new business. Starting an LLC simply requires filing a document, generally called an “articles of organization," with your state’s business registration entity. While obtaining a business license is not a requirement for starting an LLC, you may need to register your LLC with your state’s tax agency and obtain occupational licenses before operating your LLC as a business.

How to Start an LLC in Michigan

To form a limited liability company (LLC) in Michigan, you must file articles of organization with the Michigan Department of Labor & Economic Growth. Although the articles of organization is a short form and requires little information, you will need to complete several other steps to ensure you have met and complied with all of the state filing and tax requirements.

How to Reduce Taxes Using an LLC

If you receive a 1099 for nonemployee compensation, or operate a sole proprietorship or partnership, you are probably paying too much in taxes. You may be able to minimize self-employment tax liability by utilizing the flexibility of an LLC's tax treatment. If you are not already organized as a business entity, doing so will allow you to write off certain expenses related to the business.

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