Advantages of Incorporating a Business in Michigan
Is there any advantage for a startup company Michigan? The state with 64,980 inland lakes is considered to be the center of the U.S. automotive industry with three major automobile companies headquartered within the Detroit metropolitan area. Today, Michigan is ranked among the top 10 states that offer an excellent business climate to start-ups and new businesses. The sector industry in terms of growth, expansion, and payroll jobs is the Manufacturing sector followed closely by the financial activities sector, Information, Construction, and Other services sector (nonprofit organization, and personal services).
Business Growth Incentive for New Businesses
As one of the top registered agents in the state, we can help you to register a new business in Michigan as this will ensure you are able to take advantage of the business climate and leverage state provided incentives and grants. Let’s take a quick look at why Michigan is the right destination for establishing a business:
Advantage#1: The benefits of Incorporation or LLC formation
- Michigan Corporate Income Tax (CIT) Credit: It is also known as MBT certificated credits and corporations and can derive tax credits under this program on their corporate income tax. There are a variety of credits applicable under this including federal contracts credit, brownfield redevelopment credit, and hybrid technology research and development credit among others.
- Independent life: When you register a new business in Michigan as a Corporation, it will enjoy an independent life. This means that the incapacitation or death of a stockholder will not have a negative impact on the business operations.
- Changes in Ownership: One of the advantages of a start-up company Michigan is that changes in ownership are made possible through sale, purchase, and gifting of stock. This can take place without disturbing the ability of the corporation to conduct its business.
- Industrial and Hi-Tech Tax Abatement (PA 198): If you register a new business in Michigan as an LLC then you can qualify for several tax abatement and credit programs including the “Industrial and Hi-Tech Tax Abatement” program. As a part of these programs, tax incentives are available to LLC firms that enable renovation as well as expansion of aging facilities and also build new facilities.
- Limited Liability: As an owner of a Michigan LLC, you will be able to enjoy limited liability protection quite similar to what a corporation enjoys.
- Flexible Profit Distribution: A start-up company, Michigan LLC has the benefit of being able to select different ways of distribution of profits unlike a partnership where the distribution is 50-50.
Advantage#2: Business Incentive Programs
Once you register a new company in Michigan, the business entity will be able to qualify for several incentive programs that include loans, funds, grants, tax credits and much more. Some of the top incentive programs include:
- Michigan Development Corporation Renaissance Zone: This is a Business Incentive Program where business entities are certified as Eligible Next Michigan Business (ENMB) will be able to benefit from tax exemptions on real property taxes, local corporate income tax, personal property taxes, and utility users tax for a period of 10 years.
- Brownfield Redevelopment: This is a business incentive program that aims at promoting the revitalization of environmentally distressed areas in a city. You can qualify for this program after you register a new business in Michigan. This program promotes “Tax Increment Financing” for environmental as well as non-environmental activities.
- New Personal Property Tax Exemption: As a part of this business incentive program, a business entity involved in research and development, manufacturing, wholesale trade, mining, and operations can be eligible for tax abatement on personal property taxes in specifically targeted areas.
Once you register a new company in Michigan, there are several other programs that you can benefit from and these include Neighborhood Enterprise Zone, MEDC Business Development Program-BDP, Private Sector Gap Financing Tools, Community Ventures Program, New Markets Tax Credits, Small Business Alternative Credit, and Michigan Pre-Seed Capital Fund among others.
Are there any Disadvantages of Incorporating in Michigan?
Michigan provides a very good business climate and plenty opportunities for small and medium sized businesses. This is not all; there are several state, city/county, and federal incentives that a start-up company in Michigan can benefit from but are there any disadvantages that can hamper business growth? There are a few disadvantages and they vary according to the type of business entity you plan to form. For instance, the processing of a corporation requires more documentation as compared to an LLC. The disadvantages are almost inconsequential as compared to the advantages the state offers.