Different Business Entities

Fling at the County Level

Some business organizations, including sole proprietorships and copartnerships, must file their name with the county clerk rather than with the state. The county clerk's office in counties where business will be conducted should be contacted for forms and filing fees.

Sole Proprietorship

A sole proprietorship is a business that is owned by one individual. The owner is personally responsible for all the debts of the business even in excess of the amount invested in the business. If the business operates under a name other than the individual's name, a "Certificate of Persons Conducting Business Under Assume Name" must be filed with the county clerk in every county in which business is transacted. The certificate must include all of the following information:
-Name under which the sole proprietorship will transact business in the county.
-Name and business or residence address of the owner.
-The county or state where business was organized, if not organized in that county.
-Nature of the entity.

Name
The county in which the sole proprietorship is filing reviews the documents submitted and processes these if the documents meet certain standards including name availability. The proposed name of the sole proprietorship may not be available if it is misleading, confusing or deceptively similar to the name of another business entity.

Advantages

1. Easiest to form
2. Low start up costs
3. Owner in direct control

Disadvantages

1. Unlimited liability to owners
2. Lack on continuity
3. Difficult to raise capital

Copartnership

A co-partnership is a legal entity that is jointly owned by two or more persons. The owners are personally responsible for all debts of the business, even debts in excess of the amount they invested in the business. Generally co-partners enter into a written agreement governing the co-partnership- and an attorney should be consulted to prepare such an agreement. When formatting a co-partnership a "Certificate of Co-Partnership" or a "Certificate of Persons Conducting Business Under Assumed Name" must be filed with the county clerk in all the counties in which the business is to be conducted. The Certificate of Co-Partnership must include all of the following information:
1. Name under which the co-partnership will transact business in the county
2. The term of the co-partnership
3. Name and business or residence address of the partners
4. Nature of the entity.

Name

The county in which the co-partnership is filling reviews the documents submitted and processes these if the documents meet certain standards, including name availability. The proposed name of the co-partnership may not be available if it is misleading, confusing, or deceptively similar to the name of another business entity transacting business in that county. If the co-partnership is to operate under one or more names other than its true name, it may also file those assumed items, pursuant to 1907 P.A. 101.

Changes in Business Structure

After the initial "Certificate of Co-partnership" or "Certificate of Persons Conducting Business Under an Assumed Name" has been filed, changes may occur which will require the filing of additional documents such as change of name or address. These changes are filed with the county clerk's office where the original document was filed. If you are doing business in more than one county, you would need to file this information in each county where you originally filed.

Advantages

1. Relatively easy to form
2. Low start up cost
3. Partners can provide additional capital
4. Broader management voice

Disadvantages

1. Unlimited liability to owners
2. Lack of continuity - terminates on death or withdrawal of partner

Filing at the State Level

An existing partnership may register as a limited liability partnership by filing an application with the Corporations, Securities & Commercial Licensing Bureau. To create a limited partnership, corporation, or limited liability company, filing is required with the Bureau. Domestic organizations are those formed in Michigan and foreign organizations are those formed in another jurisdiction but operating within the state. In addition, all filings for foreign limited liability partnership, limited partnerships, corporations, and limited liability companies are made with the Bureau.

Limited Liability Partnership

A limited liability partnership is a business entity that is formed by two or more persons. The owners of the partnership are personally liable for all debts of the business, except those debts resulting from acts committed by another partner or a representative of the partnership not working under the supervision or direction of the partner at the time the acts resulting in liability occurred. The joint and several liability of partners for debts and obligations of the partnership arising from other causes is not limited.

A partnership which has filed a "Certificate of Co-Partnership" or a "Certificate of Persons Conducting Business Under Assumed Name" with the county clerk of the counties in which the business is to be located may register the partnership as a limited liability partnership by filing with the Bureau. Form CSCL/CD-800, to register a limited liability partnership, must include all of the following information:
-Name of the limited liability partnership, which must contain the words "Limited Liability Partnership" or the abbreviation "L.L.P." or "LLP" as the last words or letters of its name.
-The address of the partnership's principal office
-General nature of the partnership's business
-If the partnership is a foreign limited liability partnership, the registered agent and registered office in Michigan upon whom legal service of process may be served.

Name

Since limited liability partnerships are existing entities formed in various counties, names are not checked for availability at the time of registration. The corporations Divisions reviews the application, and if it substantially conforms to the Act, registers the partnership as a limited liability partnership status.

If a limited liability partnership desires to operate under one or more names other than it's true name, a "Certificate of Persons Conducting Business Under Assumed Name" must be prepared and filed with the various counties in which the partnership is transacting business. The name of the limited liability partnership may not be available if it is misleading, confusing or deceptively similar to the name of another business entity in that county.

Registered Agent and Registered Office

A registered agent and registered office must be named in the Application to Register a Limited Liability Partnership if the partnership is a foreign entity. A registered agent is someone who is appointed by the partnership to receive any documents, notices, or demands served upon the company. The registered agent must be an individual of this state, a Michigan corporation, or a foreign corporation with a Certificate of Authority to transact business in Michigan.

Purpose

Any partnership, including limited partnerships, may register as a limited liability partnership. Partnerships may be formed to transact any lawful business.

Advantages

1. Some limited liability to partners
2. Relatively easy to form
3. Low start up cost
4. Partners can provide additional capital

Disadvantages

1. Some liability for partnership debts and general liability for own acts
2. Lack of continuity - terminates on death or withdrawal of partner
3. Divides authority among partners

Limited Partnership

A limited partnership is a partnership formed by two or more persons under the laws of Michigan and having one or more general partners and one or more limited partners. The general partners are liable for all the debts and obligations of the limited partnership, while limited partners are responsible only for debts and obligations of the amount that they contributed. A limited partnership must have at least one general partner and one limited partner. One person may not form a limited partnership by being designated as the only limited and general partner.

In order to form a limited partnership, two or more partners, including all of the general partners, must execute a Certificate of Limited Partnership (form CSCL/CD-401). Existence of the limited partnership begins when the Certificate of Limited Partnership has been filed by the Bureau. A Certificate of Limited Partnership must include all of the following information:
-Name of the limited partnership, which must contain the words "Limited Partnership".
-Resident Agent and Registered Office in Michigan upon whom legal services of process may be served.
-General nature of the partnership's business.
-The term of limited partnership.
-Name and business of residence address of each partner.
-Any agreements between partners regarding terminations, distribution of assets, dissolution and any other matters that the partners may decide to include.

Name

The Corporate Division reviews the documents submitted and files documents that substantially conform with the requirements of the Act. The proposed name of a limited partnership must be distinguishable from the name of other domestic or foreign corporations, limited partnerships, or limited liability companies. The name also may not contain a word or phrase indicating it is organized for a purpose other than is stated in the Certificate of Limited Partnership.

In addition, the name of the limited partnership may only contain the name of a limited partner if 1.) the name is also the name of a general partner or the corporate general partner, or 2.) the business of the partnership had been carried on under that name before the admission of that limited partner. A limited partnership name may not include the words "corporation", "incorporated", or any abbreviation or derivative of those words.

If a limited partnership desires to operate under one or more names other than the partnership's true name, a Certificate of Assumed Name (form CSCL/CD-541) must also be filed. The assumed name must be distinguishable from the name of active limited partnerships, corporations or limited liability companies. The certificate of assume names expires on December 31 of the fifth full calendar year following the year in which it was filed. A preprinted renewal form is mailed to the limited partnership address 90 days prior to expiration.

Prospective partners should wait until their certificate of limited partnership is filed before ordering a purchasing items such as signs, business cards and stationery to avoid problems that may arise due to a conflict with another entity's name.

To determine if a name is available, use the Name Availability program on the Bureau's website at www.michigan.gov/corporations, call the Corporations Division's Business Services Section at (517) 241-6470 or fax your request to (517) 241-0538. The search is a preliminary check and is not a guarantee that the name will be available when your documents are received.

If more time is needed to organize the limited partnership, the name may be reserved by filing an Application for Reservation of Name (form CSCL/CD-540) and paying the required fee. This reservation reserves the name for 120 days and can be extended for two periods of 60 days each.

Resident Agent and Registered Office

A resident agent and registered office must be included in the Certificate of Limited Partnership. A resident agent is someone who is appointed by the limited partnership. A resident agent is someone who is appointed by the limited partnership to receive any documents, notices, or demands served upon the partnership. The resident agent must be an individual resident of this state, a Michigan corporation, or a foreign corporation with a certificate of authority to transact business in Michigan. If a resident agent and registered office are not named in the certificate, the submitter will be contacted to obtain the information.

Purpose

A limited partnership may be formed for any legal purpose under the Michigan Revised Uniform Limited Partnership Act. The key is this section is to provide enough information to determine whether the purpose is legally permitted under Michigan law.