Tag: mi business lawyer

What is a Michigan Registered Agent?

October 30, 2011 /

As a Grand Rapids, MI business lawyer, this is a question I’ve been asked quite a bit.  Due to the large number of corporations and limited liability companies (LLCs) formed in Michigan every year, it is important to know the requirements of a registered agent.  Why?  Because whether you form a Michigan corporation or a Michigan LLC, you are required to appoint a registered agent.  The law for requiring one for Michigan corporations is here, and the law for requiring one for Michigan limited liability companies is here.

A registered agent can be an individual Michigan resident, or a domestic or foreign corporation (or LLC) authorized to transact business in Michigan.  The registered agent of a Michigan corporation or LLC (I’ll refer to it as the “Company”) is the Company’s agent for the purpose of service of process.  Service of process is the procedure used to give legal notice to the Company of a court or administrative proceeding against it.  In other words, it’s how a Company is notified that it is being sued or that someone is bringing an administrative action against it.

Of course, to “serve process” on a Company, the Company is also required to have a registered office.  Both the name of the registered agent and the street address (and mailing address if different than the street address) of the registered office must be included in the Articles of Organization (if the Company is a LLC) or Articles of Incorporation (if the Company is a Corporation).

Michael Lichterman is a relationship-based business attorney who leverages his business, marketing and legal knowledge to help business owners and entrepreneurs create a Foundation for Business Success™.  This goes beyond merely drafting a set of documents – it’s about  proactively preparing the business and the business owner for continued growth while remembering the “human side” of running a business.  He best serves small business owners (less than 50 employees) and entrepreneurs.  He takes the “counselor” part of attorney and counselor at law very seriously, and enjoys creating life long relationships with his clients  and their businesses – many of which have become great friends.

What Are Michigan Articles of Organization?

September 4, 2011 /

You may have read my previous post on LLC Operating Agreements and thought, “that’s not the first step, is it?”  Well, no, it’s not.  The first step in legally forming a business should be to meet with a Michigan business lawyer to get the critical advice and help you need to make sure you get the full, legal benefits of forming the business.

The first documentation step in forming a Michigan Limited Liability Company (LLC) is to draft and file Articles of Organization (the “Articles”).  Filing the Articles means that the business entity officially “exists.”  Although the Michigan Limited Liability Company Act (the “Act”) doesn’t require a particular form for the Articles, it does set out what information is required in the Articles. For example:

  • The name of the LLC,
  • The purpose(s) for which it is formed,
  • The street and mailing address for the LLC’s registered agent,
  • Whether the LLC will be managed by a manager or by the members, and
  • How long the LLC will last.

Generally, I favor using the form from the State of Michigan Department of Licensing and Regulatory Affairs (click here for the form). Don’t let the simplicity of the form fool you.  There are many important decisions that need to be discussed and decided with a Michigan business lawyer before knowing whether or not the state form is sufficient for your particular business.  And in certain cases it is better to use custom-drafted Articles rather than the form, to make sure your goals and objectives for the business are accurately represented.

Have questions about getting your business “off the ground?”  Want to make sure that your existing business was set up to give you the maximum protection and help reach your full potential?  Call us at 616-827-7596 and schedule your business needs analysis meeting to have added peace of mind.

Michael Lichterman is a relationship-based business attorney who leverages his business, marketing and legal knowledge to help business owners and entrepreneurs create a Foundation for Business Success™.  This goes beyond merely drafting a set of documents – it’s about  proactively preparing the business and the business owner for continued growth while remembering the “human side” of running a business.  He best serves small business owners (less than 50 employees) and entrepreneurs.  He takes the “counselor” part of attorney and counselor at law very seriously, and enjoys creating life long relationships with his clients  and their businesses – many of which have become great friends.

What Is a Michigan Benefit Corporation?

August 21, 2011 /

Short answer – nothing . . . yet.  You see, as a Grand Rapids, Michigan business lawyer I try to keep my “ear to the ground” when it comes to the future of business law – both here in Grand Rapids, Mi and nationally.  There seems to be a growing national trend for state business laws to allow a “Benefit Corporation.”  Five states already have such laws and Michigan is one of six states currently considering enacting B Corporation laws.

Generally speaking you can currently form two types of Corporations in Michigan – for profit or non profit.  Yes, there are more, but those are the two most common.  For profit Corporations can then elect to be treated as either a C Corporation or an S Corporation for tax purposes.  Please note that you don’t “form” a C Corporation or S Corporation – that is a tax election (and a topic for a future blog post).

Benefit Corporations would function the same as C Corporations in terms of taxation, but would give businesses the fiduciary duty to consider non-financial interest when making decisions and require accountability through annual reporting.  This is mainly accomplished and carried out by appointing a “Benefit Director.”  The driving cause behind the Benefit Corporation is providing a way for business Corporations to further environmental, sustainability and other goals without running afoul of Director fiduciary responsibilities.

You see, Directors are legally obligated to act in the best interest of the Corporation’s shareholders.  This could leave them open to the threat of lawsuit from one or more shareholders if they make a decision that is more mission driven (e.g. good for the community with potentially little or no benefit to the shareholders).  Forming as a Benefit Corporation would not only allow for those types of “greater good” decisions but also hold them accountable via a Benefit Director and Benefit Officer(s), annual reporting and a shareholder right to enforce a higher standard of action.

If you are interested in reading the proposed legislation, you can find it here: Senate Bill 359, Senate Bill 360, House Bill 4615, and House Bill 4616.

I can see this being of particular interest here in West Michigan.  We have a remarkable reputation for incorporating sustainability into our businesses and lives and for having a focus on the “greater good.”  I’m looking forward to monitoring developments on Benefit Corporations in Michigan and will post again with any updates.

Michael Lichterman is a relationship-based business attorney who leverages his business, marketing and legal knowledge to help business owners and entrepreneurs create a Foundation for Business Success™.  This goes beyond merely drafting a set of documents – it’s about  proactively preparing the business and the business owner for continued growth while remembering the “human side” of running a business.  He best serves small business owners (less than 50 employees) and entrepreneurs.  He takes the “counselor” part of attorney and counselor at law very seriously, and enjoys creating life long relationships with his clients  and their businesses – many of which have become great friends.

Business Membership Plans and How It Can Protect Your Business

July 10, 2011 /

As many of my readers and business clients know, I bring a very unique background to being a Michigan Business Attorney.  A degree in Finance, Vice President of a commercial equipment leasing company, small business owner and entrepreneur.   This background and my own personal view on true client service caused me to step back and look at the way Michigan small businesses worked with their business lawyer.

Guess what?  I didn’t like it.  The most common model is based on the “billable hour.”  I’ve experienced that both as a client (at the leasing company) and as an attorney.  Yes, it’s true, I billed by the hour when I first opened my firm . . . it was all I was taught and all I knew.  I quickly realized that billing by the hour is a lose – lose situation.  When you’re billed by the hour you don’t want to talk with your attorney.  Trust me, I know because I didn’t want to when I was a client.  And it felt a little bit like giving the attorney a “blank check” because the bill would be for however much time it took.  Sure there were estimates, but it wasn’t set in stone.  I wanted to have a relationship with my clients, and I knew I couldn’t do that billing by the hour.

Then there was the flat-fee model.  A specific dollar amount for a specific transaction.  It still felt cold and impersonal.  The reason was that it was “just a transaction.”  Again, I wanted to have an ongoing relationship with my clients and many of them expressed an interest in something more than the “one off” transaction.  Why?  Because we’ve seen first hand the incredible value provided by ongoing counsel from a business lawyer (thankfully it was at a time that I wasn’t paying the bill!).  Even with a flat fee for the services, once the transaction was over it was a case of “well, if you need anything else, just give me a call.”  That was it!

I can tell you from personal experience that the followup call was rarely made.  Why?  Well, the simplest reason was the owner was busy running the company and it didn’t come to mind.  Another common reason was fear of the cost involved for making that call.  I knew there had to be a better way.  So I thought about what I would have wanted as a business owner who wanted to help ensure the longevity of my business: ongoing guidance, value and a reasonable fee.

The result?  The Lichterman Law Business Membership Program.  Sounds awfully official doesn’t it?  The aim of the business membership program is to provide small business owners and entrepreneurs with the ongoing legal guidance they need and want at a monthly flat rate they can afford.  Membership levels range from our base Counsel Plan all the way up to our Pinnacle Plan.  Each membership level is designed to provide small business owners with the most commonly needed business legal services.  The best part (according to current business members) is the as needed phone and email access included in every plan level . . . and the kicker is that the phone/email access is not limited in any way.

The best part about our Business Membership Program is that it is the result of years of research, talking with dozens of business owners and business advisers about what they need and value most.  It’s no surprise that many of those owners have or are current business membership participants.  It truly is created for business owners, by business owners.

Despite offering business membership plans for the past few years, you probably haven’t heard much about it.  That’s because we are very selective in who we offer business membership plans to so that we can provide the unsurpassed level of client service for which we are known.  We’ve had so many business owners tell us to spread the word, that we finally decided to unveil it more publicly (starting with this and future blog posts).

You can get started by reading more about our philosophy by clicking here.  Then call at 616-827-7596 to find out if you qualify for a business membership plan.  Remember, we take a limited number of monthly membership clients and it is first come, first served, so call quick.  We’ll even provide a 2 hour small business needs analysis meeting at no charge if you mention this blog post.  Why wait?

Michael Lichterman is a relationship-based business attorney who leverages his business, marketing and legal knowledge to help business owners and entrepreneurs create a Foundation for Business Success™.  This goes beyond merely drafting a set of documents – it’s about  proactively preparing the business and the business owner for continued growth while remembering the “human side” of running a business.  He best serves small business owners (less than 50 employees) and entrepreneurs.  He takes the “counselor” part of attorney and counselor at law very seriously, and enjoys creating life long relationships with his clients  and their businesses – many of which have become great friends.

What is a Michigan Limited Liability Company (LLC)?

January 9, 2011 /

As a Grand Rapids business lawyer, great folks routinely call our office and say “I need to form an LLC.”  When I ask them why, the answers range from “because I want to start a business,” to “my buddy started one and said it was the best way,” to “my CPA suggested I form one.”  This lets me know that there is some confusion among business owners and entrepreneurs about what, exactly, a LLC is.

As you can tell by the title of this post, LLC is the abbreviation for Limited Liability Company.  The law on Michigan LLC’s can be found here.  In short, a LLC is a form of legal business structure under which you can operate your business.  Some other well-known forms of business structure are corporations and partnerships.

Michigan LLCs are typically more flexible in their formation and operation than corporations and typically provide a greater level of liability protection than a partnership.  The “owners” of a LLC are called “Members.”  There can be as little as one Member (referred to as a single-member LLC or SMLLC) and up to as many Members as you want (collectively referred to as multi-member LLCs or MMLLCs).

LLCs, like corporations, offer a certain level of liability protection for the owner’s personal assets if certain legal and practical steps are taken.  This, combined with the flexibility mentioned above, is why many business owners choose to formally operate as a LLC.

This brief explanation would not be complete without mentioning everyone’s favorite topic…taxes.  By default, LLCs are taxed as a “pass through entity.”  That means that the profits and losses “pass through” the entity down to the owner(s) personal tax return…the LLC does not pay the taxes, the owner(s) does.  Although that is the default, there are elections that can be made to be treated differently for tax purposes.

It is important to keep in mind that a LLC is not always the best way to form your Michigan business.  The considerations mentioned above are just the “tip of the iceberg.”  Starting a Michigan business without talking with a relationship-based Michigan business attorney could cost you (and your business) dearly down the road.

Looking to start a business or want to make sure your business has the correct foundation for continued success?  Call us at 616-827-7596 for a comprehensive Small Business Strategy Session.  Mention this blog post and we’ll waive the strategy session fee (a $1,250 value!).

Michael Lichterman is a relationship-based business attorney who leverages his business and legal knowledge to help business owners and entrepreneurs create a foundation for success™.  This goes beyond merely drafting a set of documents – it’s about  proactively preparing the business and the business owner for continued growth while remembering the “human side” of running a business.  He best serves small business owners (less than 50 employees) and entrepreneurs.  He takes the “counselor” part of attorney and counselor at law very seriously, and enjoys creating life long relationships with his clients  and their businesses – many of which have become great friends and trusted confidants.

How Should I Sign Business Documents?

December 5, 2010 /

It depends on whether you are right handed or left handed.  Ok, not really.  This is a question I hear on a regular basis and an important one to make sure you do correctly.  Many Michigan business owners form their company as a Corporation or a Limited Liability Company (LLC).  They do this because they want to protect their personal assets from business liabilities, among many other reasons.  Many Grand Rapids business owners have read stories about lawsuits against a company and “piercing the veil” to access the owner’s personal assets.  That is definitely something to avoid.

A key component in avoiding “veil piercing” is to make sure you treat your business as just that . . . a business . . . separate and apart from you, the owner.  And how you sign documents on the company’s behalf can reinforce that notion.  I generally recommend the following: [Your Name], as [Your Title] of [Business Name].  For example, “John Doe, as Member of Masters of the Universe LLC.”

This clearly sets out that you are signing the document in your business capacity, not your personal capacity.  I also recommend always including the abbreviation for the type of business entity – LLC or Inc. – at the end so that you are putting the other parties to the document on notice that the business name is not just a sole proprietorship.

Sure, signing this way can take a little extra time and room on the paper, but it’s time (and room) well spent if it help reinforce your business entity’s existence and protect your personal assets from business liability.  If you need to make sure your Grand Rapids small business is working like a “well oiled” machine, call us at 616-827-7596 for a small business “tune up.”  Mention this blog post and we’ll waive the typical “tune up” fee ($950 value!).