How to Start a Michigan LLC for a Cannabis Business
A limited liability company (LLC) is defined as a simple business structure. LLCs combine characteristics of a partnership, sole proprietorship and corporation but remains an unincorporated association. In this article, we’ll help you determine if an LLC is right for you, and the basics of how to start an LLC in Michigan.
There are a number of advantages to establishing your cannabis business LLC, but four that especially stand out in the cannabis industry.
Need help determining and establishing the structure of your Michigan cannabis business? Do you need specific guidance about Michigan’s cannabis landscape? Request a consultation now.
Limited Liability
As the name implies, the owners of an LLC have no personal liability for the LLC.
The LLC is responsible for its debts, obligations and legal liabilities.
The business owners may experience loss of their capital contribution, similar to shareholders.
However, their personal assets are usually not at risk.
Flow-Through Taxation
An LLC is not considered separate from its owners for tax purposes; the IRS recognizes such businesses as pass-through entities.
Income received by the business passes through to the LLC’s members.
They report their share of profit or loss on their individual income tax returns.
Additionally, LLCs may be eligible for additional tax benefits available as pass-through deductions.
Easy to Establish
Creating and sustaining an LLC can be less complicated compared to other business entity structures. LLCs aren’t subject to the same required record-keeping, annual meetings and fees needed to maintain corporations.
Establishing your LLC can be a simpler process.
In most states to start your LLC, you must file the Articles of Organization with the Corporations division of your state government and make payment of your filing fee.
However, if you’re unsure about how to start an LLC in Michigan, you could get in touch with an LLC formation service provider.
They can guide you in the right direction.
Need help determining and establishing the structure of your Michigan cannabis business? Do you need specific guidance about Michigan’s cannabis landscape? Request a consultation with a cannabis attorney now.
Flexibility
LLCs are one of the most flexible business types. However, other business structures may be subject to restrictions on ownership or membership.
For example, S-corporations may not have shareholders that are corporations.
However, LLCs aren’t subject to the same restriction on the type or number of members.
Additionally, they don’t need to operate with a fixed management structure.
The owners have the option to determine their own formal structure. They also can further determine the day-to-day business operations.
LLC profit distribution doesn’t need to follow ownership interests.
Furthermore, corporations must pay distributions based on the number and types of shares held.
Ready to Start an LLC in Michigan?
There are advantages and disadvantages to any business structure.
The adaptable LLC format may be best suited for your cannabis business.
A thorough assessment of your business goals will help determine the best entity structure to fit your cannabusiness needs.
Need help determining and establishing the structure of your Michigan cannabis business? Do you need specific guidance about Michigan’s cannabis landscape? Request a consultation with a cannabis attorney now.
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