Key Takeaways

  • Michigan S corporations must meet IRS eligibility rules (domestic entity, ≤100 shareholders, only one class of stock, and shareholder restrictions).
  • Filing requirements include annual reports with the Michigan Department of Licensing and Regulatory Affairs (LARA) and IRS Form 1120-S for federal taxes.
  • S corporations in Michigan are pass-through entities for income tax but must comply with Michigan Corporate Income Tax (CIT) if applicable.
  • Michigan requires timely annual filings, franchise tax compliance (if applicable), and additional reporting for businesses operating in multiple states.
  • Extensions are available through Form 4 for state purposes, but federal extensions do not automatically apply in Michigan.

Michigan business tax filing requirements are sometimes difficult to follow. It includes Michigan corporation & limited liability company (LLC) annual filing requirements, Michigan business tax, Michigan business income tax extensions, and carrying out business in other states.

Michigan Corporation and LLC Annual Filing Requirements

  • The deadline for paying your business tax is April 30 or the end of the fourth month following the end of the tax year.
  • You are required to file an annual statement for your LLC in the state of Michigan.
  • Annual Statements must be filed each year no later than February 15. However, a new LLC formed after September 30 does not need to file until the following February 15.
  • Your registered agent will receive the pre-printed annual statement form about three months before the due date or you can complete it online.
  • It costs $25 to file a Profit Corporation Annual Report and $20 to file a Non-Profit Corporation Annual Report. The cost of filing an annual statement for a Michigan LCC is $25.
  • The penalty for late filing is $10 per month or part month with a maximum of $50. These penalties are applied from May 16.
  • You can file your annual report online for which a Visa or Mastercard is necessary.
  • The corporation's registered agent will receive the pre-printed report at their registered address.
  • If you do not file for an update then your corporation will be dissolved or withdrawn. Before this happens, the notice of dissolution or revocation and information about the missing updates will be sent to the corporation's registered agent.
  • Profit annual reports must be filed no later than May 15 and Non-profit annual reports must be filed no later than October 1.
  • Online filing is available 90 days before the due date of the report or statement. To access the form you will need your LLC's state-issued entity ID number.
  • To complete the Annual Statement form you need your resident agent's name and address as well as your limited liability company's registered address.
  • As a pass-through tax entity, most LLC's do not pay federal income taxes as responsibility for this falls on their individual members.
  • Although some states apply a separate tax on LLCs for carrying out business there, Michigan does not.
  • If preferred, an LLC company can choose to be taxed as a corporation by filing an IRS Form 2553.

Michigan S Corporation Eligibility Rules

To qualify for S corporation status in Michigan, a business must first form either a corporation or an LLC and then elect S corporation treatment with the IRS by filing Form 2553. To maintain S corporation status, the entity must follow IRS eligibility rules, which include:

  • Being a domestic entity.
  • Having no more than 100 shareholders.
  • Allowing only one class of stock.
  • Permitting only eligible shareholders (individuals, certain trusts, and estates; not partnerships or non-resident aliens).

Failure to meet these requirements can result in loss of S corporation status and taxation as a C corporation.

The Michigan Business Tax

The new law means that business income will be now taxed at 4.95 percent, the tax base being federal taxable income from business activity. Special provisions result in various taxpayers, such as construction contractors and auto dealers, have a reduced tax base as Business Income Tax and Modified Gross Receipt Tax will now be based on sales in Michigan.

A 21.99 percent surcharge is imposed and applies to the Michigan Business Tax liability generated by the Business Income Tax and Modified Gross Receipts Tax before any credit reductions. This will not exceed $6 million for any one taxpayer.

The Modified Gross Receipts Tax of 0.8 percent applies to all of the company's gross receipts excluding any purchases from other firms or tax collected by the business. These purchases include:

  • Inventory that was purchased during the tax year and other depreciable assets.
  • Materials and supplies (this includes repair parts and fuel.)
  • Compensation of staff supplied to customers of a staffing company.
  • Payments by certain contractors to subcontractors.

Michigan S Corporation Tax Treatment

Michigan S corporations do not pay federal corporate income tax. Instead, profits and losses pass through to shareholders, who report them on their personal returns. At the state level, Michigan generally recognizes federal S corporation elections. However, if the corporation has business activity in Michigan, it may be subject to the Michigan Corporate Income Tax (CIT), which applies at a flat 6% rate on income over a certain threshold.

This means that while smaller Michigan S corporations may avoid state corporate taxes, larger ones with substantial income or multistate operations may still face CIT obligations.

Michigan Business Income Tax Extensions

Four-month business extensions can be granted which gives you an additional 4 months after the end of your tax year. You can apply for this by filing Form 4 prior to your original deadline. Payment of your tax balance must still be made on time or penalties will have to be paid even if you are granted this extension. If tax is owed, then this must be paid with your Form 4 application. The Federal tax extension (IRS Form 7004) will not extend the deadline for your Michigan business filing.

Federal and State Filing Deadlines for S Corporations

Michigan S corporations must meet both federal and state filing deadlines.

  • Federal filing: IRS Form 1120-S is due March 15 (for calendar-year filers). Shareholders also receive Schedule K-1 to report their share of income or loss.
  • State filing: Michigan requires annual reports by May 15 for profit corporations and February 15 for LLCs taxed as S corporations.
  • Extensions: Filing Form 7004 with the IRS provides a six-month federal extension. Michigan allows a separate four-month state extension via Form 4, but state tax due must still be paid by the original deadline.

Failure to file on time can lead to penalties, loss of good standing with LARA, and possible revocation of corporate privileges.

Doing Business in Other States

If you carry out business in other states then you may need to register your LLC in those states. You need to find out the rules for the state where you are carrying out business. If you use another state as a business location, hire employees, or advertise your business there, you are likely to be regarded as doing business in that state. To register an out-of-state business, you will probably need a certificate of authority or similar document from that state.

Compliance and Ongoing Responsibilities for Michigan S Corporations

Beyond filing taxes and annual reports, Michigan S corporations must stay compliant with state and federal regulations. Key responsibilities include:

  • Maintaining accurate corporate records and meeting shareholder/board requirements.
  • Filing amendments if the business changes its name, structure, or registered agent.
  • Renewing licenses or permits specific to the industry.
  • Ensuring compliance when expanding operations into other states by obtaining foreign qualification.

Failure to comply with these requirements may result in late fees, loss of S corporation status, or administrative dissolution.

Frequently Asked Questions

  1. Do Michigan S corporations pay state income tax?
    Generally, S corporations are pass-through entities for Michigan income tax purposes, but larger ones may still be subject to the Michigan Corporate Income Tax.
  2. What forms must a Michigan S corporation file annually?
    They must file IRS Form 1120-S, distribute Schedule K-1s to shareholders, and file annual reports with Michigan’s LARA.
  3. Can an LLC in Michigan elect to be an S corporation?
    Yes. An LLC can file IRS Form 2553 to elect S corporation status if it meets eligibility requirements.
  4. When are annual reports due for Michigan S corporations?
    Profit corporations file by May 15, while LLCs taxed as S corporations file by February 15.
  5. What happens if I miss the filing deadline?
    Late filings may result in penalties, loss of good standing, and even revocation of your corporate charter in Michigan.

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