Doing Business in Michigan

Doing business in Michigan can be quite promising from the point of view of stable growth and future expansion. Michigan boasts of a strong economy with the Real Gross Domestic Product (GDP) at $567.94 billion. The state has a pro-business climate driven by a wide variety of Michigan small business incentives. Michigan has also received from the Standard & Poor’s (AAA) the highest credit rating amongst the 15 states with AAA ratings. The state is also home to several Fortune 1000 companies as well as industries such as finance, technology, insurance, real estate, manufacturing, logistics, service, film, transportation, communications, and trade shows. The progressive income tax structure along with tax credits and other tax-related benefits makes it easier for entrepreneurs to start a new business and achieve sustainable growth.

Why do businesses prefer doing business in Michigan?

Doing business in Michigan is a very enjoyable experience due to the several advantages that the state offers. The state has a robust infrastructure and strong supply chain management. Several companies headquartered in the state are now listed in the Fortune 500 list including ExxonMobil, Walmart, and Amazon. New businesses can also check the availability of Federal and Michigan small business grants to help provide the initial financial boost required. Let us take a look at some of the advantages of conducting business in this state.

• Emerging Startup Ecosystem – The state of Michigan is considered to be one of the newest startup ecosystems in the USA. The Global Startup Ecosystem Report (GSER) has revealed that Michigan is considered the best high-tech hub emerging in the Midwest. The city has been conferred with the title of an emerging high-tech hub and is ranked among the top 10 startup ecosystems in Detroit and Ann Arbor. Startups will not only be able to apply for Michigan small business grants but can also bid for a venture capital investment. The venture capital share in the state of Michigan has had a jump of 866 percent between 2016 ($300 million) and 2020 ($3.1 billion). The state is also home to several accelerators and incubators for startups and entrepreneurs like Ann Arbor SPARK, Automation Alley, and NextEnergy among others.
• Diverse Talent Pools – One of the top requirements for any new business is a skilled, reliable, and committed workforce, and Michigan offers all of these and much more. It is home to some of the top universities and colleges such as the University of Michigan, Ann Arbor, Michigan State University in East Lansing, Wayne State University in Detroit, and Michigan Technological University in Houghton, among others. Whether you plan to establish a software startup, want to explore transportation services, or start a new business in the temperature-controlled logistics industry, Michigan’s diverse talent pool will not disappoint you. The state has successfully created a strong talent pipeline overseen by the Michigan Economic Development Corporation (MEDC), which makes doing business in Michigan highly profitable.
• Grant Programs – Every business requires a strong financial plan and some form of funding to give the startup the initial boost it requires. This is where Michigan small business grants can be helpful as they are different from loans. You have to pay a loan back, but grants are not paid back. The most important is the MI Business Grant Program administered by the Department of Treasury. Some of the other grant programs in the state include Michigan Small Business Relief Program, the Michigan Small Business Restart Program, Entrepreneurship & Innovation Program, and the International Trade Program among others.

Incentive Programs in Michigan

When you form a startup in Michigan there are several benefits for you to enjoy including a wide variety of Michigan small business incentives programs. These programs have been created to target first-time entrepreneurs as well as existing small and medium-sized enterprises (SMEs). Here is a list of some of the most popular and top incentive programs in the state.

Michigan Business Development Program (MBDP)

If you are planning to start a company and are searching for Michigan small business funding options, then the Michigan Business Development Program (MBDP) might be just right for you. This program is administered by the Michigan Economic Development Corporation (MEDC) on behalf of the Michigan Strategic Fund (MSF). The primary objective of this funding program is to enable business growth by encouraging investment in the state and offsetting costs. A business can apply for this type of funding through the creation of qualified new jobs as well. You can receive funding in the form of Michigan small business grants, direct loans, or other categories of economic assistance. The maximum amount available under this program is $10,000,000.

Critical Industry Program (CIP)

The Critical Industry Program (CIP) is a Michigan small business funding program that provides qualified investments to qualified companies. Here, a qualified investment refers to a loan, grant, or other economic assistance towards a project undertaken by the company applying for funding. This Michigan small business grants program is administered by the Michigan Economic Development Corporation (MEDC) on behalf of the Michigan Strategic Fund (MSF).

Strategic Site Readiness Program (SSRP)

The Strategic Site Readiness Program (SSRP) is administered by the Michigan Economic Development Corporation (MEDC). This is a type of Michigan small business incentives program that provides financial incentives to eligible businesses or applicants. The activities eligible for this incentive program can vary from land acquisitions to infrastructure improvements, creation of wastewater infrastructure, improvement of buildings, building construction or demolition, and environmental remediation among others.

Jobs Ready Michigan

The Jobs Ready Michigan program has been created specifically to meet the growing talent needs of small businesses, which are expanding in the state or planning to relocate to Michigan. This is a flexible program and is highly responsive toward the specific talent requirement of companies, thus making doing business in Michigan effortless. The program addresses the various costs associated with the recruitment and training of individuals in occupations that are considered high-skill, high-demand, or high-wage. If your company is planning to create jobs in the state then you will be eligible to apply for this Michigan small business grants program.

State Essential Services Assessment (SESA)

This is a different type of Michigan small business incentives program. The program has two parts: the State Essential Services Assessment (SESA) Exemption, and the Alternative State Essential Services Assessment (SESA) Incentive. The exemption program is primarily for projects planned or operational in eligible distressed areas (EDAs). The alternative SESA incentive program focuses on projects undertaken in other areas (non-distressed areas). The SESA exemption can be to 100 percent exemption for a maximum period of 15 years. The alternative SESA incentive is equal to a maximum of 50 percent exemption for a period of up to 15 years. The SESA incentive program makes doing business in Michigan quite advantageous.

Michigan Community Revitalization Program (MCRP)

The MCRP is one of the top Michigan small business incentives programs and is made available to small businesses by the Michigan Strategic Fund (MSF). The focus of the Michigan Community Revitalization Program (MCRP) is to encourage as well as promote redevelopment of brownfield and historic preservation sites along with structural renovations of sites located near high-impact corridors and in traditional downtowns. This program may require businesses or applicants to pay an application fee or any other expense, which is incurred during administering of the award. The proposed incentive amount can be less than or more than $1,000,000.

Funding Support Programs in Michigan

The Michigan Economic Development Corporation has created several programs that focus on Michigan small business funding. One of the key factors that contribute to operating a business successfully is access to capital. Most small to medium-sized businesses require some form of capital, and this is made possible through MEDC Capital Access. MEDC Capital Access is made up of several other programs and their primary objective is to help small businesses throughout the state receive loans from banks as well as lending institutions. Some of the programs within MEDC Capital Access include the Collateral Support Program, the Loan Participation Program, and the Capital Access Program.

Growing MI Business Grant program

The Growing MI Business Grants Program by the Michigan Department of Treasury provides funding to businesses in different industries. This Michigan small business grants program aids in the creation of a process by which small businesses can receive a specific percentage of the financial losses incurred by the entity. It is calculated based on the said entity’s entire timeline of operation. The total amount of funds available to eligible businesses is $409 million. Some of the business categories eligible under the Michigan small business funding program include entertainment venues, recreational facilities, exercise facilities, food establishments, and public lodging establishments among others.

Michigan Small Business Survival Grant Program

The Michigan Small Business Survival Grant program supports the funding needs of various businesses in the state that have been disproportionately impacted by COVID-19. This Michigan small business grants program makes grants available of up to $20,000 for businesses that closed down due to the Covid-19 impact. It also awards grants of up to $15,000 to businesses that are operational or partially closed. The grant is disbursed through nonprofit economic development organizations (EDO) in the state like Invest UP, Target Alpena, Middle Michigan Development Corporation, Lansing Economic Area Partnership, and Ann Arbor Spark among others.

Ready to Start a Business in Michigan?

Every new startup or business requires some form of financial assistance during its formation and operational stage, this helps them to execute their business goals in a better way. The state offers several kinds of assistance through the Michigan small business incentives programs specifically for small and medium enterprises across diverse industries. If you want to start a new business in this state then there are plenty of funding programs you can take advantage of after registering or incorporating your company.

Michigan Business Tax

Most business entities are required to file tax returns at the federal level as well as the state level. If you have registered a company in Michigan then some form of business taxes may be applicable. A Michigan business tax calculator will help you in determining your taxes but before that, you will need to understand the various taxes required by the state. The Michigan business tax rates, as well as the filing processes, will be different from those in other states of the USA. It is also important to note that foreign entities would be required to file taxes in their home state (state of formation) as well as Michigan or other states of operations.

What taxes do businesses pay in Michigan?

The state of Michigan is considered to be one of the top states for new and expanded corporate facilities. It is currently ranked number 3 with the most popular being the Detroit-Warren-Livonia metro area. The state offers some remarkably aggressive film incentives, which have generated economic activity amounting to $430 million. The state also has a fairly good business tax climate that attracts entrepreneurs to the state.

Corporate Income Tax (CIT)

The Corporate Income Tax (CIT) has a flat rate of 6% and has to be filed by profit corporations in the state of Michigan. This is one of the important Michigan Corporation taxes and will not be applicable if the apportioned gross receipts are less than $350,000. There is a formula for this type of tax and is currently based on an entity’s sales in the state, divided by its total sales everywhere. The CIT has replaced the Michigan Business Tax (MBT) since 2012. It is important to note that certain tax credits or tax incentives like the Small Business Alternative Tax Credit program help in providing some relief.

Sales and Use Tax

The sales and use tax is an important Michigan business tax and will be paid to the state or local governing body depending on the jurisdiction in which the said business is operating. Normally, a business owner or entity involved in the selling of taxable goods or services has to collect this tax from purchasers or consumers and pass it forward to the appropriate state or local tax authority. This tax is administered by the Michigan Department of Treasury. The base tax rate for Michigan sales tax is 6% and the local tax is also 6%.

Withholding Tax

The withholding tax is a type of Michigan business tax that is levied at the Federal and state level. It is also known as the payroll withholding tax and the current tax rate in the state is 4.25%. The Department of the Treasury, Internal Revenue Service requires employers to withhold employment taxes from their employees. The employment taxes have several components including federal income tax withholding, Medicare taxes, and Social Security taxes. The IRS provides a withholding table also known as Percentage Method Tables for Income Tax Withholding for withholding allowances and applicable taxes. You can also use a Michigan business tax calculator to determine your withholding taxes at the Federal and state level.

Are you thinking of forming a new company in Michigan?

How are Michigan Businesses taxed?

If you are planning to form a new business in Michigan then one of the foremost annual requirements is filing your business tax returns. The state does not have any franchise tax or privilege tax but there are several other forms of small business taxes. The type of Michigan business tax and the tax rates may vary according to the type of entity structure and the location of the said company. It is also important to note that Michigan LLC tax filing requirements will vary from that of a corporation or a sole proprietorship. You may be required to file more than one type of tax return. Let us look at the various entities and their tax obligations in Michigan.

Taxes for an LLC

If you are planning to start a limited liability company in Michigan, then for taxation purposes it will be considered a pass-through entity. This simply means that the LLC will not be required to file federal or Michigan LLC taxes. Since an LLC is a flow-through entity, the income will pass through to the owners and other members. Normally, in such a situation, members have to file personal income tax and the state has a Flow-Through Entity (FTE) Tax.

Taxes for a C Corporation

If you are thinking of incorporating a Michigan C corporation then your company will be subjected to the Michigan Corporate Income Tax (CIT). The tax rate is a flat 6 percent and it replaced the earlier applicable Michigan Business Tax (MBT) in 2012. The CIT Michigan Corporation taxes takes into account the business income of a C corporation along with certain additions as well as subtractions before apportionment and business loss deduction after apportionment.

Taxes for S Corporation

If you elect an S Corporation tax status in Michigan then one of the benefits is that you will not be required to file Michigan Corporate Income Tax (CIT). However, if an S corporation is an insurance company or a financial institution then it will be subjected to CIT. An S Corporation may also be required to withhold on the shareholders and hence be subjected to withholding tax. One of the important Michigan corporation tax filing requirements is that an S Corporation will be required to submit Form 518 for Michigan Business Tax Registration to file taxes in the state.

Taxes for a Sole Proprietorship

A sole proprietorship is one of the easiest forms of business to start in Michigan. A sole proprietorship is run by a single owner and hence is required to file individual income tax. The tax rate is 4.25 percent and you will have to use the 1040 form to file this return each year. A sole proprietorship may also be required to file sales tax depending on the business activity.

Taxes for Partnerships

If you form a Michigan partnership company then the applicable Michigan business tax would be quite similar to that of sole proprietorships. Partners in the company will be required to file their individual tax returns based on the income they have earned through the said business. Apart from this, if your company is based in Detroit then you will be required to file the City Partnership Tax, which is normally due on the 15th day of the 4th month after the tax year ends. This tax has to be filed by partners although the partnership can elect to pay the taxes on behalf of all the partners.

Ready to Incorporate Your Michigan Company?

You can form different types of entities in Michigan from a Sole Proprietorship, to a Limited Liability Company, or a C Corporation. You can also elect for S Corporation status. There is an exhaustive process for new business formation and you will also need to file all applicable taxes each year. IncParadise, one of the top incorporation service providers in the state can provide you with meaningful assistance. We can help to register your LLC or corporation in Michigan.

Michigan Foreign Qualification

Every state has its own set of advantages that play a key role in attracting entrepreneurs and businesses. The state of Michigan also has several advantages although its business climate is the primary reason behind the increase in Michigan LLC foreign registration. The availability of an abundant workforce is also an important reason why entrepreneurs want to shift their business to this state. There are several top industries including the core industries that have a faster and more stable growth rate like the mobility and automotive manufacturing industry and semiconductor industry. A Michigan foreign business registration will also open the doors to various state business incentives and grants that your company can benefit from.

What is a Michigan foreign qualification?

If you are thinking of expanding your operations to Michigan then you will have to follow the process of foreign qualification in Michigan, which is governed by the Michigan Compiled Laws. This qualification process doesn’t require you to form a new business or register a company all over again. When you opt for Michigan foreign business registration, you will also be able to operate your company in your home state (state of original registration) as well as the new state (Michigan).

Example: You have formed a domestic LLC in Colorado by filing articles of organization. Colorado will be considered as your home state. You are now thinking of expanding your business to Michigan. If you want to move your business completely then you will have to close your Colorado LLC and start a new LLC in Michigan. If you want to operate in both states then you can apply for Michigan LLC foreign registration. This process will provide you with the authority to transact business in the new state as well.

Doing business in Michigan

When a limited-liability company or a business corporation, or any other type of entity is operating in any other state apart from its home state (state of registration) then they are considered a foreign company. Such a company can operate only when they undergo the process of foreign qualification in Michigan. Each state has its own laws when it comes to foreign qualifications, and hence before you can register your business, it is important to understand what doing business in Michigan refers to.

• If a company is defending, maintaining, or settling any legal proceeding
• If an entity has a bank account in the state
• If a business holds meetings in the state
• If a firm is selling its products or services through an independent contractor
• When a company creates or acquires indebtedness, security interests, and mortgages in personal or real property
• If a business secures or collects debts
• When an entity is transacting business in interstate commerce

Michigan Foreign Qualification Process

If you have already registered an LLC or a business corporation in another state but want to conduct business in Michigan then you will need to undergo a Michigan foreign corporation registration. It is important to note that all out-of-state businesses require authority to transact business in the state. If you operate a business without obtaining the required authority then the said business would be considered to be breaking the Michigan Compiled Laws for Foreign LLCs or Corporations. There will be consequences for transacting business without authority including severe penalties. Let us look at the process of a Michigan foreign entity search and registration for LLCs and corporations.

Michigan Foreign Corporation Registration

If you are already operating a corporation in another state and want to expand your operations to Michigan then you will need to apply for a Michigan foreign corporation registration. This is also known as the process of foreign qualification and will be governed by the 2021 Michigan Compiled Laws, Chapter 450 – Corporations, 284-1972-10 Chapter 10 Foreign Corporations. You will have to obtain the authority necessary to transact business in this state and there are certain steps to follow. The steps for a Michigan foreign entity search and registration are:

1. Business Name

The first step towards a Michigan foreign corporation registration is determining a business name and registering it. The corporate name should comply with state laws and should contain words like “corporation,” “incorporated,” or abbreviations like “Inc.,” “corp.,” and “co.” Once you have chosen a name, it is important to conduct a Michigan foreign entity search also known as a name availability search. This will ensure your chosen name is available for registration.

2. Registered Agent

Whether you are forming a new business or incorporating a foreign entity, there are certain state guidelines you have to follow. A Michigan foreign business registration will be possible only if you continuously maintain a registered agent in the state pursuant to MI Comp L § 450.1241 (2021). We at IncParadise are one of the top Michigan registered agents and have helped several domestic and foreign entities to incorporate in this state.

3. Certificate of Authority

The most important step towards a Michigan foreign corporation registration is to get the necessary authorization to transact business in the state. You will need to file the Application for a Certificate of Authority pursuant to MI Comp L § 450.2002 (2019). This application has to be submitted to the Michigan Department of Licensing And Regulatory Affairs, Corporations, and Securities & Commercial Licensing Bureau along with a fee of $60. The fee includes 2 components, which are a non-refundable fee of $10 and an initial franchise fee of $50. You can submit the application using the COFS (Corporations Online Filing System) as well as by mail or in person.

Do you want to register a foreign Corporation in Michigan?

Michigan foreign LLC registration

If you are already operating a limited liability company in another state and want to expand your business to the state of Michigan then one of the best options is foreign qualification. This process is also known as Michigan LLC foreign registration and will help you to transact business in the state without the need to register a new LLC. A Michigan foreign entity search and registration will be governed by the 2021 Michigan Compiled Laws, Chapter 450 – Corporations, Act 23 of 1993 Michigan Limited Liability Company Act (450.4101 – 450.5200) – Article 10. The process for foreign qualification is as follows:

1. Business Name

One of the first requirements for a Michigan LLC foreign registration is a business name. You have to select a name in accordance with the naming regulations of the state. A Michigan LLC name should contain words like “limited liability Company”, “limited company” or abbreviations like L.L.C or LLC. The chosen name should also be available and you can guarantee this is possible by conducting a name availability search also known as a Michigan foreign entity search.

2. Registered Agent

One of the important aspects of any new business formation including a Michigan LLC foreign registration is the service of process, which is executed by a registered agent in the state. According to MI Comp L § 450.4207 (2019), a foreign limited liability company has to continuously maintain a registered agent in the state. A registered agent services offered by IncParadise will not only help fulfill state requirements like service of process but also assist with other annual compliances like filing of annual reports. IncParadise is one of the top Michigan registered agents and has helped with several foreign business registration in this state.

3. Certificate of Authority

A foreign limited liability company that wishes to transact business in this state will need to go through the process of a Michigan foreign business registration or foreign qualification. You will need to apply for and obtain a certificate of authority pursuant to MI Comp L § 450.5002 (2021). The document to be submitted is known as an Application for Certificate of Authority to Transact Business in Michigan and it has to be submitted to the Michigan Department of Licensing and Regulatory Affairs, Corporations, Securities & Commercial Licensing Bureau, Corporations Division. The filing fee is $50 (non-refundable) and you can utilize the expedited service by paying an additional fee. The Michigan LLC foreign registration will require you to submit a Certificate of Good Standing acquired from the home jurisdiction or the state of formation.

Want to form a foreign LLC in Michigan?

Need Any Assistance in Applying for Michigan Foreign Qualification?

Michigan is one of the top states when it comes to the business climate, an experienced workforce, and low cost of operations. Whether you form a domestic entity or apply for a foreign qualification in Michigan there are numerous state benefits including business incentive programs and grants. As one of the leading registered agents in Michigan, IncParadise can assist you with the process of foreign corporation registration or foreign LLC formation.

Doing Business As or DBA in Michigan

Michigan is home to several small businesses, startups, and large enterprises that operate under a variety of entity structures including LLCs, sole proprietorships, and partnerships. Whatever the entity structure, you will need to name your to register and become operational. When a new business is set up, it can use the owner’s legal name like Jenny Baker LLC. Alternatively, the company can proceed with filing a DBA in Michigan like Jenny’s Truffles and Cakes. If you are wondering how to look up a DBA in Michigan, then there is a process that you would need to follow, but first, it is important to identify the conditions under which you can use a DBA.

What is DBA in Michigan?

When we say DBA, it refers to ‘doing business as.’ A DBA (Doing Business As) is a registered business name, which is not the legal name of the owner and one can operate their company under such a name. You need to register a business name and similarly, filing a DBA in Michigan is also necessary. It is also known as an assumed name, trade name, and fictitious name. Normally, when an individual starts a business, by default their name is taken as the name of the entity. In such a scenario, if the said individual doesn’t want to use their legal name and instead chooses another name then he/she will have to fill out a Michigan DBA online application.

Example: If Sophie Smith wants to start a software business then by default the business name will be her own name. If Sophie wants to name her business as “Sophie’s Software Systems” then she will need to apply for a Michigan DBA online. When she registers the DBA, her full name will not be legally attached to the business name.

• The Business Structure – Sometimes the business structure plays a key role in defining the business name. If you start a small business and the entity structure is a sole proprietorship or partnership then you can use your own name or legal name. If you don’t want to use your own name then filing an assumed name certificate in Michigan becomes important. A DBA name can also be used by other entity structures like corporations and LLCs.
• Combination of Names – As an individual or business owner, you can use your own name, the name of partners, or a combination of the owner’s name and the product or services being offered. If Susan Shaw and Jane Stewart start a business in wedding planning then the name of the business could be Shaw & Stewart wedding planners or Susan & Jane wedding events. Such a name would not require you to apply for a Michigan DBA online or offline.
• Flexibility – If you’ve already formed an LLC or a profit corporation and want to operate multiple businesses then all you have to do is use fictitious names or assumed names instead of creating a new entity. This is possible by filing the assumed name certificate in Michigan. This option helps to minimize the cost of forming a new business.

Filing DBA in Michigan for an LLC and Corporation

A DBA (doing business as) is known as an assumed name in Michigan and is governed by the Michigan Compiled Laws. If you are planning to form a limited-liability company or a profit corporation in the state then one of the first things to do is select a business name. You can start your company using the owner’s legal name or opt for an assumed name or fictitious name. There is a specific process for filing a DBA in Michigan which includes searching for the name availability. The process as well as the fee may be different from the business name reservation process.

Do a Michigan DBA Name Search

If you are planning to register an assumed name in Michigan then the first step is to select a proper name and then conduct a DBA name search. As a business owner if you are asking yourself how do I look up a DBA in Michigan then the following ways will guide you:

• You can conduct a “Search for a business entity” using the online system of the Michigan Department of Licensing and Regulatory Affairs (LARA). This is a part of the corporation’s online filing system and will provide the option to search through an extensive database of businesses registered or incorporated in the state.
• You can also search for trademarks or federally registered names using the trademark database also known as Trademark Electronic Search System (TESS).

File a Michigan Assumed Name Certificate

Once you have chosen an assumed name for your business after having conducted a trade name search, the next step is to apply for a Michigan DBA online or offline. The registration of an assumed name is an important process as it will help in notifying the general public regarding the existence of such an entity, and the fact that it is conducting its business under the said DBA. The registration of the Michigan trade name is applicable for both domestic and foreign entities.

• 2407 N Grand River Ave
  Lansing, MI 48906
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Register your Michigan DBA with ease!

Managing a Michigan DBA

Once you apply for a Michigan DBA online or offline, it will facilitate the ability to transact your business within the state using the said assumed name or DBA. Each state has its own laws and regulations concerning trade names or DBAs. These laws are also applicable for the renewal, changing, or canceling of an assumed name or DBA in the jurisdiction or state where you are planning to conduct your business. Let’s look at the various processes applicable to managing Michigan DBA online applications.

How to renew Michigan DBA?

An assumed name or DBA (Doing Business As) name is valid till December 31 of the 5th full calendar year following the date of name registration. So if you filed your assumed name certificate in Michigan on January 16, 2023, then it will expire on December 31, 2027. The form for a renewal is the same as the registration form, i.e., Certificate of Assumed Name. The renewal fee will be the same as the registration fee, which is $10 for corporations and $25 for limited liability companies.

How to change a Michigan DBA?

After filing a DBA in Michigan, changing the assumed name is possible, but the process will require you to contact the county in which the business is located or is operating from. You will have to file a DBA or assumed name change request with the office of the county clerk. Once you have applied for a name change, you will need to update the information on all official documents like the corporation bylaws or LLC operating agreement, business bank accounts, business licenses and permits, and you will also need to notify the IRS of name change.

How to cancel a Michigan DBA?

If you want to cancel or withdraw a Michigan assumed name or DBA at any given point in time, then it is possible through a different process. You will be required to submit the Certificate of Termination of Assumed Name with the Michigan Department of Licensing And Regulatory Affairs, Corporations, and Securities & Commercial Licensing Bureau. There is a non-refundable fee of $10 for corporations and $25 for limited liability companies.

Need Any Assistance in Filing a Michigan DBA?

The process to apply for a Michigan DBA online or offline requires you to provide accurate information while being compliant to state DBA laws and federal trademark laws. The process of conducting an assumed name search can be quite confusing and demanding. IncParadise can gladly assist you with this process. We have expertise and knowledge regarding Michigan Business Regulations and can help you with the Michigan DBA online application.

Sole Proprietorship in Michigan

Michigan is home to over nine hundred thousand small businesses within highly diversified and advanced industries, from cutting-edge manufacturing to next-generation transportation and automotive manufacturing. The state provides a strong infrastructure, an extensive transportation network, a highly educated and efficient workforce, technology hubs and cluster industries, and small business grants among others. If you file a sole proprietorship in Michigan then you will be able to maximize your profitability by utilizing a range of state resources.

What is a sole proprietorship in Michigan?

If you are wondering how you can start a sole proprietorship in Michigan, then first it is important to understand what type of entity you want. A sole trader or proprietorship is the easiest business structure that you can establish. This is mostly due to a lack of state laws and government regulations related to the formation of the entity. It is also known as an unincorporated business, meaning the owner is responsible for all profits earned and liabilities incurred. It has a different tax structure compared to LLCs or corporations and doesn’t require the filing of federal forms.

Important features of sole proprietorship in Michigan

Small business owners prefer to file sole proprietorships in Michigan due to the salient benefits and features this type of entity has. Some of the key features are:

• One of the top features is that this type of entity has minimal formality. This type of entity has few state reporting requirements and fewer documents are required to start a sole proprietorship in Michigan.
• It is beneficial, especially for small businesses like home-based entities, bakeries, small retail outlets, and consultants among others.
• A key feature of a Michigan sole proprietorship is that unlike with a partnership or corporation, you will not be required to share the profits.
• The business structure of a sole proprietorship is quite simple as it has a single owner.
• When you file a sole proprietorship in Michigan, all decisions regarding management, finance, and operations will be made by the owner.
• The tax structure of a sole proprietorship is different from that of other structures. It has to be filed through the owner’s income tax return.
• The process of dissolution or closure of a Michigan sole proprietorship is also quite simple.

Steps to Start Sole Proprietorship in Michigan

If you are thinking about how to start a sole proprietorship in Michigan then you need first start by identifying the different requirements for a new entity. You will be required to focus on several details like finances, management, and operations. You will also need to understand the various requirements in Michigan like obtaining business licenses and tax IDs. Let’s look at some of the features that will help you run the business smoothly once you file for a sole proprietorship in Michigan.

1. Prepare a business plan

First-time business owners prefer to start a sole proprietorship in Michigan because of the simplicity of the business structure. If you want to establish this type of entity structure then one of the focal points to start with is creating an elaborate business plan. There are certain benefits to making an operational plan as it will help you identify the key strengths and weaknesses of your company. A solid business plan will provide a clear view of budgeting and other financial requirements, customers and markets, competition, sales and marketing, and also state compliances and requirements. The components of a strategic plan will vary depending on the type of business activity, structure, location, and objectives. Some of the most common features of a general business plan are:

• Executive Summary
• Company Description and Objectives
• Entry and Strategy
• Product and Services
• Target audience and competitors
• Short-term and Long-term goals
• Marketing Plan and Sales Tactics
• Financial Plan and Projection

2. Choose a Michigan business name

When you start a sole proprietorship in Michigan, one of the first requirements is choosing a business name. The name you choose for your business can build a brand or can even lead to the failure of the company. It is important to understand that a business name will communicate the nature of the business and its objectives to customers, competitors, and industry partners. Here are some easy tips to follow while choosing a business name:

• Keep the business name as simple as possible and make sure that it is easy to spell.
• The company name should represent your product or service like “Sarah’s Bakery”.
• It is important to balance creative names with relevance.
• You can use the free business name creator tools that are available on the internet.
• Check to make sure that the chosen name is copyright free.
• Conduct a trademark search for the chosen name.
• If you want to take your company online then check for domain name availability.

3. File the Assumed business name certificate

If you want to file a sole proprietorship in Michigan then you need to select a name first. There are two types of names that your company can have:

• Your full legal name can be used as the company name
• You can register an assumed business name or DBA

For example: Your name is Jason Hicks and you want to start a Michigan sole proprietorship as an IT Consultant. You can use your own name like ‘Jason Hicks IT Consulting.’ Alternatively, you can choose to use a name like “Hick’s consulting”. In such a scenario, Hick’s Consulting will be considered as an assumed business name or DBA. You will be required to conduct a name availability search.

Do you want to start a sole proprietorship in Michigan?

4. Get EIN

An EIN or Employer Identification Number is an important requirement for most businesses as it aids with filing taxes. It is also required for opening business banking accounts. Once you file a sole proprietorship in Michigan, you will need to file all the income and expenses using an individual tax return. This tax return is normally filed using the Social Security number (SSN) but you may need an EIN in certain scenarios. You will need to apply for an Employer Identification Number if your company meets the following criteria:

• The sole proprietorship hires employees
• If you have a Keogh plan
• The company opens a business bank account
• If you are required to file excise tax returns
• When you convert or change the entity structure from sole proprietorship to partnership or LLC
• Filing Chapter 7 (liquidation) or Chapter 11 (reorganization) bankruptcy

5. Obtain necessary licenses and permits

If you are thinking of setting up a sole proprietorship company in the state of Michigan then there are several requirements that you need to be compliant with. One of the most vital requirements apart from the assumed name certificate in Michigan is obtaining the appropriate business licenses and permits. The relevant licenses and permits will help keep your business operational. Business licenses in the state can be categorized as under:

• Industry-based business licenses
• City or County licenses and permits
• Professional or occupational licenses
• Regulated licenses
• Zoning permits
• Other local permits

6. Open a bank account for your Michigan business

A bank account is one of the most important requirements for individuals and businesses when it comes to providing financial security and money management. One of the common mistakes committed by sole traders or proprietors is that they operate the business using their personal account and this makes filing their taxes very complicated. The advantage of having a business bank account is that it will keep your personal income and expenses separate from your business gains and expenses. There are several other benefits to having such bank accounts, like the flexibility in terms of accepting debit and credit card transactions from customers. You can open a business bank account before or after you start a sole proprietorship in Michigan.

7. Report and pay taxes

When you start a sole proprietorship in Michigan, there are certain state regulations and compliances that you need to meet. Keeping up with your taxes is another critically important annual state compliance to keep in mind. A sole proprietorship or sole trader is operated by a single owner therefore, the tax structure is different from the tax structure of corporations or LLCs. Normally, such an entity does not have any business tax and instead, the owner has to file personal income tax. In the state of Michigan, the individual income tax rate is 4.25 percent. Apart from this, depending on the business activity, you may be required to file a sales tax of 6 percent.

Ready to Start a Sole Proprietorship Business in Michigan

You no longer have to worry about how to start a sole proprietorship in Michigan as it is one of the simplest business structures. Unlike several other forms of businesses, a Michigan sole trader entity is not required to register with the state. However, there are several state requirements including annual compliances that such a business would have to fulfill to operate and enjoy a good standing with the state.

Business License in Michigan

Every business operating in any state in the nation is required to obtain some form of license or permit. If you start a company in Michigan then you will need to obtain a Michigan business license. There are many types of licenses that may be applicable and the licensing requirement in this state would be different from other states. A business license or permit can be issued to individuals as well as to both domestic and foreign businesses. The importance of a Michigan business license lies in the fact that without it, you will not be able to operate your business or facilitate transactions in the state. Michigan has its own specific licensing laws, regulations, fees, and renewal requirements. An individual or a company may require one or more licenses or permits to operate in the state.

What business license do I need in Michigan?

Michigan is home to an abundant workforce and offers a wide variety of business resources for those planning to form a startup in the state. First, you will need to apply for and obtain a Michigan business license to make your company operational. Licenses can vary according to business activity and location. Therefore, it is important to conduct a Michigan business license search. It is important to note that there are no general licenses in the state and not all businesses require licenses and/or permits.

Steps to Apply for a Michigan Business License

The process of conducting a Michigan business license search can be quite arduous especially when it comes to identifying the type of permits specific to your business. Hence, we have created a list of Michigan business licenses and permits as well as requirements, so it becomes easier for you to understand how they can be obtained.

1. Search for necessary Michigan general business licenses

One of the most common types of business licenses is a general license, and it is applicable in several states. The state of Michigan doesn’t have the provision for a single general operating license or permit for businesses. The primary Michigan business license is one based on the industry your business is classified under. Let’s look at an example to understand this:

Example: You are planning to establish a transportation network company in Michigan. You will be required to apply online in order to obtain a Michigan business license. You will need to use the Michigan Commercial Licensing, Enforcement and Regulation System (MiCLEAR) to apply for the same.

2. Obtain applicable federal licenses

Most small businesses or large enterprises require state business licenses and local permits but some specific industries or areas are governed by the Federal government and may require you to apply for a Federal license. If your business falls under any of the following industries then you will need to contact the respective federal agency for obtaining a license.

• Drug Manufacturing – You will need to contact Food and Drug Administration (FDA)
• Selling of tobacco, alcohol, or firearms – Licenses are issued by the Bureau of Alcohol, Tobacco, Firearms, and Explosives (AFT)
• Investment Advising – You need to approach the Securities and Exchange Commission (SEC)
• Broadcasting – The Federal Communications Commission (FCC) governs these licensing requirements
• Preparation of meat products – Licensing requirements are overseen by the Food and Drug Administration (FDA)
• Ground transportation – You need to obtain a license from the Department of Transportation (DOT)

3. Search for local or county licenses and permits

Once you form a business in Michigan, the city or county your business is situated in will also define the type of license required. The types of licenses, fees, and local ordinances applicable will vary depending on the city or county. Let’s look at an example to understand how you can obtain a Michigan business license at the county or city level.

Example: The physical address of your company is in Detroit, MI. Now, if your business falls under any of the categories mentioned by the city then you will need to obtain a local Michigan business license and permit. The categories are Amusement, Consumer Services, Food Services, Gas Station, Lodging, Motor Vehicle for Hire, Night Club, Retail, Second Hand Sales, and Vendors among others. Now, if you want to start a hotel or public lodging then you will need certain clearances from the Detroit Health Department, Fire Marshal Division, and Treasury Clearance. You will also need to apply for a Commercial Certificate of Compliance. Once you have all these clearances, you will be able to apply for a Michigan business license under the Lodging Category. The fee will vary according to the type of hotel and number of rooms like if you were to start a hotel having 1-50 rooms then the fee will be $345/year and if you start a Public Lodging House then the fee is $223/year.

4. Check for professional licenses

Of the many licensing classifications, one of the more significant types of licensing classifications is professional licenses. This License is governed by the Bureau of Professional Licensing (BPL). A Professional Michigan business license is divided into two categories and they are:

• Health Licensing – This area focuses on issuing licenses based on a specific health profession. Some of the common professions include Acupuncture, Occupational Therapy, Behavior Analysts, Pharmacy, Genetic Counseling, Veterinary Medicine, Psychology, Nursing Home Administrator, and Dentistry among others. You will need to apply online using the Michigan Professional Licensing User System (MiPLUS) for the appropriate license or permit.
• Occupational Licensing – The distribution of Occupational Licenses is governed by the Michigan Occupational Code. There are several categories of occupational professions for which you will need to obtain a Michigan business license. Some of these categories include Accountancy, Appraisal Management Companies (AMCs), Real Estate Brokers, Professional Surveyors, Personnel Agencies, Professional Engineers, and Collection Agencies among others.

5. Obtain any other necessary Michigan licenses and permits

The type of business activity will also define whether you need to apply for a Sales Tax License or not. This is a type of Michigan business license required by businesses or individuals planning to sell tangible personal property. The type of business activity can vary from retailing to a variety of services. There is no fee for a sales tax license.

6. Obtain home-based business licenses if required

Home-based businesses are gaining popularity due to several factors with low cost being a primary factor. If you are planning to start a business from home then it may be subject to some business laws as well as state regulations. Most home businesses are normally sole proprietorships, while some may even be partnership firms. When you operate from your home, the type of Michigan business license and permits required may also vary depending on the business activity. You might have to apply for temporary licenses and permits or even occupational licenses. For this reason, it is essential to conduct a proper Michigan business license search. Here are some details to focus on:

• You need to be aware of local zoning regulations and obtain the necessary clearances as any violation can lead to fines or even the closure of businesses.
• You may require local licenses for which you will need to check with the County Clerk’s office or the licensing departments of the city where your business is located.
• The licenses required by a home-based business will depend on the business activity. The following example will provide more clarity.

  Example: If you are an event planner starting your business from home then you may require both yearly and temporary permits and licenses. You will first need to obtain an event planning certification. It is necessary to obtain a Michigan business license depending on factors connected to a specific event like serving alcohol, food preparation and the selling of food, outdoor events, outdoor structures, live entertainment, and large gatherings. If your event has outdoor structures then you will need a building permit and need food licenses from the city’s Department of Health.

7. Renew and maintain licenses

Once you have obtained a Michigan business license, it will remain valid for one year. It is important to note that temporary licenses and permits are required for specific purposes and events and therefore do not require renewal. The licenses issued by the state, or city will need to be renewed to ensure the business operations are not interrupted. Some professional and occupational licenses also need to be renewed annually like the Personnel Agency licenses, which expire each year on December 31st. You can renew Michigan business licenses and permits online using the Michigan Professional Licensing User System (MiPLUS) or the Michigan Commercial Licensing, Enforcement and Regulation System (MiCLEAR).

Need any Assistance in Obtaining Your Michigan Business License?

If you are planning to start a new business in the state of Michigan then it is absolutely essential to obtain a Michigan business license. The types of licenses and permits can vary depending on the location of your company and activity. The Michigan business license search, application, fee, and renewal processes, and requirements are different for each type of license and are detail-oriented.