How to Move an LLC to Michigan

There are many reasons why a business owner may want to move an LLC to Michigan. This article discusses the use of conversion, known in some states as LLC domestication, to transfer an LLC to Michigan.

What is Michigan LLC Conversion?

Michigan conversion is a legal process for changing an existing out-of-state LLC into a Michigan LLC.¹ An out-of-state business that uses the Michigan LLC conversion process to become a Michigan LLC is still the same entity—with the same assets and liabilities.² The difference is that after the conversion, it is organized under and governed by the Michigan Limited Liability Company Act.³

Michigan’s LLC conversion process can transfer an out-of-state LLC to Michigan or transfer a Michigan LLC to another state.⁴ A Michigan LLC can also use the process to become a different entity type—such as a corporation or limited partnership.⁵

Some states use the name conversion only for the procedure that changes a business’s entity type. A separate procedure—called LLC domestication—transfers an LLC’s legal home to a new state. Michigan law authorizes one procedure (conversion) that can change a business’s legal home state—called its state of formation or domicile—or change it into a different entity type. This article primarily discusses Michigan LLC conversions that transform out-of-state LLCs into Michigan LLCs.

Why Transfer an LLC to Michigan?

Business owners who relocate to a new state often choose to move their businesses, too. An LLC owner who moves to Michigan can use the conversion process to make the business a Michigan LLC. There are multiple potential benefits of a Michigan LLC conversion:

• Reduced filing requirements. Converting an out-of-state LLC to Michigan may result in reduced annual reporting requirements for the business. LLCs that do business in multiple states typically have to file multiple annual reports. If an LLC that converts to Michigan does most of its business in Michigan, it may no longer have to file in the original state. Michigan’s $25.00 annual report fee is lower than most states, so annual fees may be lower, too.
• Tax savings. Michigan’s tax system is mostly favorable for business—ranking just outside the top ten best states. A Michigan LLC conversion may result in tax savings—especially if the conversion moves the LLC out of a high-tax state’s taxing authority. Michigan also scores well for individual tax and cost of living, so owners and employees may also save money.
• Better business laws. Michigan is often rated as one of the Great Lakes region’s best states for businesses. If Michigan law complements the owners’ business plan or management structure, a conversion could help the LLC thrive.
• Convenience. A conversion to Michigan may be a matter of convenience for LLC owners who are Michigan residents. Owners may have improved access to business resources in their home state. And concentrating on only one state’s laws can cut down on legal issues and streamline business planning.
• Professional hiring. A Michigan resident should have little difficulty finding professionals close to home who are familiar with Michigan law. Finding local accountants and attorneys with expertise in another state’s law may be more challenging. A Michigan LLC conversion may make professional hiring easier and allow for closer professional relationships.

What are the Benefits of Michigan LLC Conversion?

The Michigan LLC conversion process is typically the easiest and most cost-effective way to relocate an LLC formed in another state to Michigan. Conversion offers multiple advantages over alternate methods of moving a business to another state.

• Same entity. An out-of-state LLC that completes a Michigan LLC conversion continues to be the same company throughout the process.⁶ The LLC’s taxpayer history stays the same, and it can continue using the same Employer Identification Number (EIN).
• No need for asset transfers. The out-of-state LLC’s assets and liabilities survive the conversion and become the assets and liabilities of the Michigan LLC. There is no need to record new deeds or assign assets to the Michigan LLC.⁷
• Contracts are still valid. An LLC conversion does not affect existing contracts—which remain valid and enforceable. The out-of-state LLC’s contractual rights and obligations become the Michigan LLC’s rights and obligations. There is no need to sign new agreements.
• No business interruption. Day-to-day business can continue during an LLC conversion with no interruption to ordinary operations. If the LLC will do business in the original state after the conversion, it can register in that state as a foreign LLC. If not, the company does not need to register as a foreign LLC. Employment relationships are also unaffected, so the LLC need not release and re-hire employees.
• No need to dissolve. Dissolving an LLC is a burdensome process that sometimes results in substantial legal fees. The Michigan LLC conversion process avoids dissolution of the company since it remains the same company throughout. Winding up and asset distributions are likewise unnecessary.⁸

What LLCs Can Convert to Michigan LLCs?

An LLC can use the conversion process to change its domicile to Michigan only if the LLC’s current state authorizes conversions.⁹ Some states call the statutory procedure for changing an LLC’s domicile a domestication. If the current state has no such procedure, the LLC cannot complete a Michigan LLC conversion.

The out-of-state company should also ensure that Michigan allows LLCs to engage in its field of business. Michigan’s LLC law assumes that LLCs can do anything that a corporation or partnership can legally do—unless another Michigan statute specifically says otherwise.¹⁰ A converting LLC should verify that its business area is legal and not forbidden to LLCs in Michigan before completing a conversion.

An out-of-state LLC that provides professional services in Michigan must form as a professional limited liability company (PLLC). A professional service under Michigan law is a personal service provided to the public that requires a license or comparable legal authorization.¹¹ Professional services include (without limitation) accounting, surgery, podiatry, professional engineering, and law practice.

An out-of-state LLC that offers services that Michigan law considers professional services can convert to a Michigan PLLC. Before doing so, the company must ensure that it and its members have all required licenses and generally comply with Michigan’s PLLC laws.¹²

How Much Does Michigan LLC Conversion Cost?

The conversion process is usually the most efficient method of moving an out-of-state LLC to Michigan. Out-of-state LLCs that convert to Michigan LLCs incur labor costs to service providers, filing fees, and (in some cases) registered agent fees. An LLC owner should weigh the likely costs—and the costs associated with potential alternatives—before starting the process.

The total costs for an LLC conversion are discussed in greater detail in our on LLC domestication cost.

Labor Costs

An LLC that hires a service provider to manage a Michigan LLC conversion for the company must pay the provider for the project. The work consists mostly of organizing the necessary information and preparing the conversion documents; communicating with the members or managers and the state agencies; and filing the documents.

Service-provider costs vary between providers and may depend on the complexity of the LLC. Providers that handle LLC conversions may charge by the hour or offer a flat rate for completing the entire task.

Filing Fees

A converting LLC must pay filing fees for the conversion documents. The Michigan Secretary of State charges a relatively low fee for conversions. The $75.00 total fee includes $25.00 for the Certificate of Conversion and $50.00 for the Articles of Organization. The Secretary of State’s Corporations, Securities & Commercial Licensing Bureau (the Corporations Bureau) combines the two documents into a single form titled Certificate of Conversion (For use by an LLC Converting into a Business Organization). Once officially moved to Michigan, the LLC will incur a yearly fee of $50.00 for filing its annual report.

The LLC’s current state will also charge a filing fee for the document that state requires for LLCs converting to another state. For example, Michigan’s filing fee is $25.00 for LLCs changing domicile from Michigan to a new state.

Registered Agent Fees

Michigan law requires every Michigan LLC to have a registered office and registered agent on file with the Michigan Secretary of State.¹³ The registered agent must be an individual Michigan resident or a business entity with legal authority to do business in Michigan. The registered office must be the registered agent’s residence or business office. An LLC’s registered office and registered agent are publicly available information to allow for service of process on the business.

A commercial registered agent is a service that charges an annual fee in return for serving as a business’s registered office and registered agent. Michigan businesses often opt to hire a registered agent to avoid making a member’s or manager’s information publicly available. Using a commercial registered agent also helps keep the LLC’s legal matters organized and consistent.

A converting LLC that decides to hire a Michigan commercial registered agent lists the registered agent and office in its conversion documents. Michigan commercial registered agents customarily charge around $100.00 – $200.00 per year for providing the service.

How Long Does Michigan LLC Conversion Take?

Michigan’s LLC conversion process typically takes less time than other approaches to moving an LLC to a new state. The parties’ timeline for completing each step determines the precise time needed to complete a conversion.

A Nevada LLC domestication is a relatively short process compared to other methods of changing an LLC’s state of formation. The length of the process mostly depends on each of the parties’ turn-around time. The key determiners are:

• The LLC members’ or managers’ time needed to gather information for the service provider preparing the conversion documents;
• The service provider’s time to review the information and draft the conversion documents;
• The members’ or managers’ time to review draft conversion documents, provide feedback (if any), and approve and sign the completed conversion documents;
• The time needed for the Michigan Corporations Bureau and the original state’s comparable office to receive and process the conversion documents.

State government business offices often offer expedited processing for an extra fee. The Michigan Corporations Bureau’s expedited processing rates start at $50.00 for 24-hour service and go as high as $1,000.00 for same-day review within one hour of receipt.

What Laws Govern Michigan LLC Conversion?

An out-of-state LLC’s conversion to Michigan must satisfy two states’ law: Michigan and the LLC’s current state.¹⁴ It’s important for the service provider or other person who manages the process to be familiar with the rules in each state. Either state may have a requirement that the other state does not have.

Example: Michigan’s conversion law lists topics that must be addressed in a converting LLC’s plan of conversion.¹⁵ The LLC’s current state’s law typically has a similar list. The converting LLC’s plan of conversion must contain every list item included in either list. If the original state requires a plan of conversion to include a term that Michigan does not require (or vice versa), the LLC’s plan of conversion must include that term.

The current state’s law specifically controls the following aspects of an LLC conversion to Michigan:

• Whether the LLC is eligible for conversion;¹⁶
• The standard under which the LLC’s members or managers must approve the plan of conversion;¹⁷ and
• The conversion document(s) that must be filed in the current state to complete the conversion.

Michigan law determines the conversion documents filed in Michigan and the conversion’s effective date and legal effects in Michigan.¹⁸

What is the Michigan LLC Conversion Process?

The Michigan LLC conversion process consists of two components: document preparation and administrative tasks.

Document Preparation

An out-of-state LLC converting to Michigan must prepare several conversion documents—some of which are filed with state offices. An LLC’s conversion documents need to follow both states’ conversion rules.

• Plan of Conversion. A Plan of Conversion that is designed to comply with the requirements of both Michigan law and the law of the state that the LLC is moving from.
• Michigan Certificate of Conversion. The Michigan Certificate of Conversion with all information and any related documents needed for filing with the Corporations, Securities & Commercial Licensing Bureau of the Secretary of State (Michigan Corporations Bureau).
• Conversion Document for Filing in Prior State. Depending on state law, this document may be called articles of domestication, statement of domestication, articles of conversion, certificate of conversion, statement of conversion, certificate of conversion, or a similar term.¹⁹
• Michigan Articles of Organization. The Michigan Articles of Organization for filing with the Michigan Corporations Bureau.
• Michigan Operating Agreement. A state-specific Operating Agreement to properly structure the LLC as a Michigan LLC, provide rules for profit distributions and decision-making, clarify the federal income tax classification, and help provide maximum liability protection.
• Resolution Authorizing Conversion. A resolution approving the transaction and adopting the Michigan organizational documents as the LLC’s governing documents.

Administrative Tasks

Once the LLC’s conversion documents are finalized, the members, managers, or other person handling the conversion must complete a few administrative tasks to make the conversion to Michigan effective.

• Conduct preliminary name search. Check the Michigan Secretary of State’s official records to determine whether the LLC’s name is available in Michigan. (If the name is unavailable, a slight name change may be required to complete the conversion.)
• Obtain signatures on the Certificate of Conversion. The Certificate of Conversion must be signed by the required parties. The Michigan Corporations Bureau requires a manual (wet) signature on the Certificate of Conversion (no e-signing).
• Obtain signatures on the Articles of Organization. The Michigan Corporations Bureau allows the Articles of Organization to be e-signed.
• File the Certificate of Conversion. File the Certificate of Conversion with the Michigan Corporations Bureau. The Certificate of Conversion must be filed by mail or in person (no e-filing). The Michigan Corporations Bureau may allow filing by e-mail with advance approval.
• File the Articles of Organization. File the Articles of Organization with the Michigan Corporations Bureau. The Michigan Corporations Bureau allows the Certificate of Conversion to be e-filed.
• File conversion documents with prior state. File the conversion documents with the Secretary of State or equivalent agency for the state that the LLC is moving from.

What is the Legal Effect of Michigan LLC Conversion?

An out-of-state LLC that completes the Michigan LLC conversion process is still the same entity with the same original date of formation.²⁰ The most important legal change is that after the conversion is effective, the LLC becomes a Michigan LLC governed by the Michigan Limited Liability Act.²¹

Michigan’s LLC conversion law lists the following legal effects designed to minimize business disruption and administrative difficulty.

• Same property rights. The Michigan LLC has the same property rights that the out-of-state LLC had before the conversion. The same entity still owns any real estate or other LLC assets, so the conversion is not treated as a transfer.²² There is no need to create deeds or other transfer documents.
• Same liabilities. All the out-of-state LLC’s liabilities from before conversion stay with the Michigan LLC.²³ The conversion to Michigan does not change any of the LLC’s obligations or affect a member’s or manager’s personal liability—or lack of liability—for LLC debts from before the conversion.
• Intact contracts. The out-of-state LLC’s contracts are still valid and enforceable. The Michigan LLC stands in the pre-conversion company’s shoes—with the same contract rights and obligations as the out-of-state LLC before conversion. Any choice-of-law provisions agreed to by the LLC before the conversion are unaffected.²⁴
• Legal proceedings. Legal and administrative proceedings involving the out-of-state LLC move forward as though conversion had not occurred. If the conversion results in a name change, the company substitutes its new name as a Michigan LLC for its prior name.²⁵
• Consistent ownership interests. When the conversion takes effect, ownership interests in the out-of-state LLC are converted into membership interests in the Michigan LLC—or into cash, property, or company obligations—under the terms described in the plan of conversion.²⁶
• No dissolution. A Michigan LLC conversion is not treated as a dissolution of the out-of-state LLC. The company simply continues its same existence as a Michigan LLC. Conversion does not trigger an obligation to wind up affairs, distribute assets, or pay off liabilities—except to the limited extent that the plan of conversion provides differently.²⁷

1. MCL § 450.4709(1).
2. MCL §§ 450.4709(3)(b)-(c).
3. MCL §§ 450.4101, et. seq.
4. MCL § 450.4708(1).
5. Id.
6. MCL § 450.4709(3)(f).
7. MCL §§ 450.4709(3)(b)-(c).
8. MCL 450.4709(3)(h).
9. MCL 450.4709(1).
10. MCL § 450.4201.
11. MCL § 450.4902(b).
12. See Mich. Limited Liability Company Act, Art. 9 (MCL §§ 450.4901, et. seq.).
13. MCL § 450.4207.
14. MCL 450.4709(1)(a).
15. MCL 450.4709(1)(b).
16. MCL 450.4709(1)(a).
17. MCL 450.4709(1)(c).
18. MCL §§ 450.4709(1)(b),(e), and (f).
19. Fourteen states use the term articles of domestication to refer to the document that must be filed with the state to approve the domestication: Iowa, Massachusetts, Minnesota, Nebraska, New Hampshire, New Jersey, North Dakota, South Dakota, Utah, Vermont, Virginia, Wisconsin, Wyoming, and Indiana. The corresponding document may be called a statement of domestication (Alaska, Arizona, Connecticut, Idaho, Illinois, Mississippi, and Pennsylvania); articles of conversion (Florida, Nevada, North Carolina, Oregon, and Washington) or certificate of conversion (California, Delaware, Georgia, Michigan, Ohio, and Texas). It may also be called a statement of conversion (Colorado, Maine), certificate of domestication (Kansas), request for conversion (Louisiana), or statement/plan of domestication (District of Columbia).
20. MCL 450.4709(3)(f).
21. MCL 450.4709(3)(a).
22. MCL 450.4709(3)(c).
23. MCL 450.4709(3)(b).
24. MCL 450.4709(3)(b).
25. MCL 450.4709(3)(e).
26. MCL 450.4709(3)(g).
27. MCL 450.4709(3)(h).