Everything you need to legally establish an S-Corporation in Michigan — step by step, plain English, no experience required. All information verified from official Michigan LARA and IRS sources.
An S-Corporation is not a standalone business structure you create from scratch. It is a special tax election made with the IRS on top of an already-formed corporation or LLC. Under Michigan law, an S-Corp is not recognized as its own separate entity — it is simply a federal tax designation that changes how your business income is taxed.
The biggest advantage of an S-Corp is tax savings. As an S-Corp, you pay yourself a reasonable salary as a W-2 employee of your own company. You pay payroll taxes only on that salary. Any remaining profits you take as distributions — and those distributions are NOT subject to self-employment tax (15.3%). This split can save a profitable business owner thousands of dollars per year.
Michigan automatically recognizes your federal S-Corp election — you do not need to file a separate state form. However you do need to form a corporation or LLC in Michigan first before making the IRS election.
Follow these steps in order. The S-Corp process has two phases — first you form the legal entity with Michigan, then you make the tax election with the IRS.
Before you can elect S-Corp tax status, you need a legal entity formed in Michigan. You have two options — form an LLC or form a Corporation (C-Corp). Both can elect S-Corp status with the IRS. Here's how to choose:
For most small business owners just starting out, forming an LLC and electing S-Corp status gives you the same tax savings with far less paperwork and complexity. Forming a full C-Corp first is generally only recommended if you have a specific need for corporate stock structure or plan to raise outside investment.
Your business name must be unique in Michigan and meet state naming requirements. Whether forming an LLC or Corporation, the naming rules are similar — the name must be distinguishable from all other registered businesses in Michigan.
If forming a Corporation, your name must include:
Search name availability at mibusinessregistry.lara.state.mi.us. Also check that the matching .com domain, professional email address, and social media handles are all available before committing to a name. Do not file until all four are confirmed available.
Every Michigan corporation and LLC must have a registered agent — a person or company with a physical Michigan address who is available during business hours to receive legal documents on behalf of your business.
Decide who your registered agent will be before you file. Using a professional registered agent service means your personal address stays off public records — only the agent's address appears in state filings.
This is the step that legally creates your business entity in Michigan. The document you file depends on whether you're forming an LLC or a Corporation.
If forming an LLC: File Articles of Organization (Form CSCL/CD-700) — $50 filing fee. See our Michigan LLC Guide for the full walkthrough.
If forming a Corporation: File Articles of Incorporation (Form 502) with LARA — $60 filing fee. You'll need to include your business name, registered agent, number of authorized shares, and incorporator signature.
File online at mibusinessregistry.lara.state.mi.us. You'll need a free MiLogin for Business account. Filing online is faster than mail. Mail filings go to: Michigan Corporations Division, PO Box 30054, Lansing, MI 48909-7554.
If forming a Corporation, the filing fee is $60 — slightly higher than the $50 LLC fee. Expedited processing is available for an additional fee if you need faster turnaround than the standard 2–3 week processing time.
Once your entity is formed, you need an internal governance document that defines how your business operates. This document is not filed with the state — it's a private internal record.
If you formed a Corporation: You need Corporate Bylaws — rules for how the corporation is governed, how directors and officers are elected, how meetings are conducted, and how decisions are made.
If you formed an LLC: You need an Operating Agreement — covers ownership percentages, profit distribution, voting rights, and what happens when a member leaves.
The IRS and banks will want to see your governance documents. For a Corporation, you'll also need to hold an organizational meeting, elect initial directors and officers, and issue stock shares. Keep minutes of this meeting on file — the IRS may ask for them.
An EIN is required before you can make the S-Corp election with the IRS. It's also required to open a business bank account, run payroll, and file business taxes. It's free and instant from the IRS directly.
Apply free at irs.gov — Apply for EIN Online. Available Monday–Friday 7am–10pm Eastern. Never pay anyone to get your EIN — it is always free from the IRS directly.
This is the most important step unique to S-Corps. Filing IRS Form 2553 is what officially makes your business an S-Corporation for tax purposes. Without this form, your LLC or Corporation is taxed as a default C-Corp or pass-through entity — not as an S-Corp.
S-Corp eligibility requirements — your business must:
Download and complete IRS Form 2553 at irs.gov/forms-pubs/about-form-2553. All shareholders must sign the form. Mail or fax it to the IRS — there is no online submission for Form 2553. You'll receive a letter from the IRS confirming your S-Corp election within 60 days.
To have S-Corp status apply to the current tax year, Form 2553 must be filed by March 15 (for calendar year businesses) OR within 75 days of forming your entity. Miss these deadlines and your S-Corp status won't take effect until the following tax year. If you miss the deadline, the IRS does allow late election relief in certain circumstances — consult a CPA.
Once your S-Corp election is approved, you are legally required to pay yourself a "reasonable salary" as a W-2 employee of your own business. This is not optional — the IRS specifically scrutinizes S-Corps where owner-employees take little or no salary and take all income as distributions to avoid payroll taxes.
What "reasonable salary" means:
Set up payroll through a payroll service like Gusto, ADP, or QuickBooks Payroll. Register for Michigan payroll withholding through Michigan Treasury Online at michigan.gov/taxes/mto. Also register for Michigan Unemployment Insurance at michigan.gov/uia.
Determining your reasonable salary and setting up S-Corp payroll correctly is one of the most important — and most scrutinized — aspects of running an S-Corp. The money you save on self-employment taxes is real, but so is the IRS's attention to S-Corps that don't pay themselves enough. Hire a CPA before your first payroll run.
Your S-Corp must have its own dedicated business bank account completely separate from your personal finances. Mixing personal and business money can void your liability protection and create serious tax problems.
Visit any bank or credit union in Michigan and open a business checking account. Popular options include Chase, Huntington Bank, and Flagstar. Online banks like Mercury and Relay offer free business accounts with no monthly fees — excellent for new S-Corps.
S-Corps have more ongoing compliance requirements than LLCs. Here's everything you need to do to stay in good standing with Michigan and the IRS.
Every Michigan corporation must file an Annual Report with LARA by May 15 each year. It updates your registered agent, officers, and directors information. File online at mibusinessregistry.lara.state.mi.us.
File IRS Form 1120-S annually by March 15. Each shareholder receives a Schedule K-1 showing their share of income. Shareholders then report K-1 income on their personal Form 1040 by April 15.
File IRS Form 941 quarterly (due April 30, July 31, October 31, January 31). File W-2 forms by January 31 each year. File Form 940 annually for federal unemployment tax. Michigan payroll returns due via Michigan Treasury Online.
Michigan corporations must hold annual shareholder and director meetings and maintain minutes of those meetings. Keep records of all major business decisions, stock issuances, and officer changes. The IRS may request these records.
Follow these 9 steps and you'll have a legally formed, IRS-recognized S-Corporation in Michigan. Ready to learn about S-Corp taxes or explore other business types?