What counts as transacting business in Michigan, and what does not

The statute requires a foreign LLC to hold a certificate of authority from the administrator before it carries on business in Michigan. It then names things that do not amount to carrying on business, and it prefaces the names by noting that further activities could also fall outside the term. That wording helps an LLC with an unusual fact pattern, and it also means the list sets a minimum, not a boundary.

Michigan treats holding real or personal property, with nothing more, as a safe activity. That sets it apart from states where leasing or owning real estate counts. A holding company whose only link to Michigan is a building it owns, rented to a tenant who manages it, may be outside the statute, but the words without more carry the weight. Collecting rent from many tenants, hiring a property manager and running the building are more than owning, so a landlord LLC with active operations is past the safe list.

An LLC that rents a showroom, store or warehouse in Michigan and staffs it. A worker who runs the LLC's business from a Michigan home office every day. Crews that install its products on Michigan job sites over months. Inventory kept in Michigan and shipped from there continuously. Each does more than the listed activities, though none is certain, because the statute leaves the line unmarked.

Two lines of the statute concern lending. Creating or acquiring debt and security interests is on the safe list, and so is collecting and enforcing them. A separate section lets a foreign LLC make or buy loans that are federally insured or guaranteed, or secured by Michigan mortgages, without a certificate or fees, and failing to hold a certificate does not impair its ownership of those loans.

The LLC cannot start a suit in a Michigan court until it holds a certificate, and the bar reaches a successor and, with exceptions, an assignee. It owes back fees, a civil penalty of $100 to $1,000 per month capped at $10,000, and each person who directs the Michigan work can be penalized personally. The penalty page sets out the amounts.

Run four checks. Is there an office, store, warehouse or staff in Michigan? Does the LLC sell or perform services here repeatedly from a Michigan base? Will its Michigan activity last longer than 30 days? And is anything it does here outside the eleven? One yes is a reason to lean toward the certificate. Four noes lean the other way, but the list is not exhaustive, so a doubtful case is a question for a Michigan lawyer. Once you know, we prepare the filing.