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Moving your business to Michigan

Date: 04/11/2023 | Category: | Author: developers

Moving your business to Michigan

There comes a time in every business’s lifespan when entrepreneurs or business owners want to move their business to another state. Different businesses have different reasons for relocating, although the most common is expanding the existing company and looking for better sales locations. If you are thinking of moving your business to Michigan then there are several factors to keep in mind, such as planning the relocation early. We have created this guide to not only help you plan your relocation but to understand the various options available for an entity domestication in Michigan or relocating an LLC or a corporation.

Why choose Michigan for your business?

Every state in the USA provides various benefits to different kinds of businesses. The state of Michigan is one of the fastest-growing technology states that boasts of a pro-business climate. The state offers several business incentive programs including tax credit programs. If you transfer a business to Michigan then you will also be able to leverage the strong infrastructure as well as a wide variety of small business resources that will make moving LLC to Michigan or a corporation easier, more efficient, and inexpensive. Let’s look at some of the top benefits of relocating to this state.

Talented workforce

One of the top business benefits in Michigan is the availability of a talented workforce. Each business has a different requirement when it comes to employing talent and hence the talent pool is also quite diverse in the state. The existing talent pool plays a key role in developing the overall business climate as well. According to Nexient, a software company, Michigan has good engineering schools from which startups as well as Fortune 500 companies could recruit. After moving your business to Michigan, you will be able to leverage a workforce that is defined by grit, integrity, as well as a culture of innovation.

Global connectivity

One of the areas that many companies look at while thinking of relocation is global supply chain assets or global connectivity infrastructure. If you transfer a business to Michigan then you can benefit from onshoring and near-shoring solutions, which is an integral part of the state’s FDI Strategy. Today, Michigan is considered to be one of the top global destinations for Foreign Direct Investment (FDI). Foreign trade and global connectivity are possible as Michigan is home to 33 active deep water ports, 18 commercial airports, and 26 freight railroads. This is one of the top business benefits in Michigan. It is considered the strategic connection of distribution and transportation routes and creates a cost-effective supply chain for small businesses and medium enterprises.

Low cost of living

Michigan is affectionately known as the Mitten State and is considered to be one of the top 10 most affordable cities in the nation. Whether you are looking at the cost of living from a business or an individual perspective, it is low in most top-tier cities like Ann Arbor and Lansing. If you are considering moving your business to Michigan, some of the other low-cost cities to consider are Jackson, Okemos, Holland, Midland, and Rochester Hills.

Business incentives and grant programs

One of the most valuable and top business benefits in Michigan is the state business incentive and grant programs. The business incentives vary according to industry and also include tax credits. Apart from loans and other funding sources, the state provides grants under the MI Business Grant Program. When you transfer a business to Michigan, you can benefit from the following incentive and funding programs:

Domesticating Your Company in Michigan

As a business or individual planning to relocate to Michigan, you may have several questions. One of the most commonly asked questions: “Does Michigan allow domestication, and what are the state laws or regulations applicable to proceed?” Domestication refers to changing the domicile of your corporation or LLC from any other state to Michigan. Unfortunately, Michigan business law does not have any provisions for entity domestication but there are other options available like conversion to a domestic entity and applying for foreign qualification.

Steps to Move a Corporation to Michigan

There are several benefits of moving a corporation to Michigan where the state provides just the right combination of infrastructure, resources, and support. This along with state incentive programs for small businesses makes Michigan an attractive option for new entrepreneurs as well as those who want to relocate their existing businesses. The big question is: “How do you transfer a business to Michigan?” The good news is that there are two options available, and we have included them below.

Register as a Foreign Corporation

One of the first options for moving your business to Michigan is to register it as a foreign company. This is a recommended option for those entrepreneurs who want to operate their business in the home state (incorporation state) as well as Michigan. If you are moving a Corporation to Michigan using the process of foreign qualification, as governed by 2022 Michigan Compiled Laws, Chapter 450 – Corporations, Act 284 of 1972 – Business Corporation Act, Chapter 10 Foreign Corporations. The process for foreign qualification is as follows:

  • You need to designate a registered agent in Michigan for handling service of process
  • Identify a corporate name or an assumed name and register the said name
  • Submit a Certificate of Good Standing along with the name registration application
  • Apply for a certificate of authority pursuant to MI Comp L § 450.2001 (2022) along with a fee of $60

Do you want to form a foreign corporation in Michigan?

Dissolve a home Corporation and establish a new Corporation in Michigan

The second option for moving a Corporation to Michigan is a lengthy process wherein you have to dissolve the existing company and form a domestic corporation in Michigan. The process of dissolution will be governed by the laws of the home state or the state of incorporation. Let’s look at an example to understand this.

Example: If you have an existing corporation in the state of Florida then you will first need to file the Articles of Dissolution for Florida Profit Corporation. Prior to filing the articles, you will need to obtain approval from either the shareholders of the said company or the corporation’s directors. Some states like Florida have a filing fee for Dissolution while others don’t.

It is important to note that the laws and process for dissolution will vary from one state to another and can be categorized under voluntary, judicial, and administrative dissolutions. You will also need to file any outstanding taxes in the home state before you can transfer a business to Michigan.

Once you have dissolved your company in the home state or state of incorporation, you can proceed with moving your Corporation to Michigan. The process will be the same as that of forming a domestic corporation. It involves:

  • Appoint a Michigan registered agent to facilitate service of process
  • Identify and reserve a corporate name using the Application for Reservation of Name
  • File Articles of Incorporation pursuant to MI Comp L § 450.1202 (2022) along with the appropriate fee
  • Prepare bylaws for your Michigan Corporation
  • Apply for necessary business licenses and permits

IncParadise is one of the top registered agent services in the USA. We provide services that cater to a wide variety of business-related requirements like helping you dissolve your company in the home state and assistance with moving your business to Michigan.

Steps to Move an LLC to Michigan

The state of Michigan provides a pro-business environment that facilitates the success, growth, and expansion of small businesses and medium enterprises. The state is home to diverse industries and you can transfer a business to Michigan in any of these high-growth industries. Some of the top industries include advanced manufacturing, technology cluster industries, auto production, the semiconductor industry, and the financial services sector among others. The following two options make moving LLC to Michigan possible.

Register as a foreign LLC

Moving your business to Michigan can be highly beneficial from the perspective of expansion. In a scenario where you would want to operate your company in the existing state and also expand to Michigan, the solution that works best is to register your LLC as a foreign entity. The process of moving an LLC to Michigan is known as foreign qualification. The process of foreign qualification is governed by the 2022 Michigan Compiled Laws, Chapter 450 – Corporations, Act 23 of 1993 – Michigan Limited Liability Company Act, Article 10. The following steps would be helpful with registering a foreign LLC:

  • Hire and maintain a registered agent in Michigan for handling service of process pursuant to MI Comp L § 450.4207 (2020)
  • Identify a name and register the business name or assumed name of the said LLC by filing a Michigan Assumed Name Certificate
  • Submit a Certificate of Existence or Certificate of Good Standing from the home state
  • Apply for a Certificate of Authority to Transact Business in Michigan pursuant to the provisions of Act 23 of the Public Acts of 1993

Do you want to register a foreign LLC in Michigan?

Dissolve a home LLC and form a new LLC in Michigan

If you are thinking of moving an LLC to Michigan but don’t want to operate your company in two different states then this is a viable option. All you have to do is close or dissolve your limited liability company in its current state and register a new LLC in Michigan. The procedure can be exhausting as you will be required to file different types of documentation in the former and new state before you will be able to transfer a business to Michigan. Let’s look at an example to understand this.

Example: If you are operating a limited liability company in the state of Colorado then you will first need to file a Statement of Dissolution for Colorado LLC. The LLC dissolution can be categorized as a voluntary, Administrative, or Judicial dissolution. There is a $25 fee for filing this statement. You will also need to collect a certificate of good standing from Colorado, which will be submitted in Michigan.

You will need to ensure outstanding taxes have been paid and business licenses have been terminated in the home state before moving your business to Michigan. Once you have dissolved your LLC in the home state, you can proceed with the entity domestication in Michigan. The process will be the same as that of forming a domestic limited-liability company and involves:

  • Appoint a Michigan registered agent to facilitate service of process
  • Identify and reserve a business name using the Application for Reservation of Name after conducting a name availability search
  • File Articles of Organization pursuant to MI Comp L § 450.4203 (2022) along with the appropriate fee
  • Prepare LLC operating agreement
  • Apply for necessary business licenses and permits

IncParadise is a reputed registered agent service with presence in all 50 states. If you plan on moving an LLC to Michigan by dissolving the home entity and forming a new LLC then we can provide valuable assistance in your home state as well as Michigan.

Move Your Business to Michigan with IncParadise

Michigan is fast becoming one of the most popular tech hubs for startups and foreign entities. Its robust infrastructure and the availability of a talent pool help businesses to achieve steady growth and accelerate their expansion plans faster. If you want to transfer a business to Michigan then the state presents many opportunities. IncParadise can help you with the process of moving a Corporation or LLC to Michigan with ease.

We are one of the top registered agents in the state and understand that different businesses have different needs. Hence, we offer a wide variety of additional services like obtaining an EIN, and Michigan annual report among others.

IncParadise can help you to move your business to Michigan!

Michigan Small Business Grants

Date: | Category: | Author: developers

Michigan Small Business Grants

There are two important stages to complete prior to starting a new company and they are business planning and financial budgeting. Financial budgeting takes into consideration various factors like initial investment, operational investment, and miscellaneous expenses. More often than not, these investments or expenses can be higher than expected and this is where a Michigan small business grant can be quite helpful. A grant is a type of financial assistance similar to loans, yet different in many ways. This article has been created to provide first-time business owners with an insight into various grants, loans, business incentives, and other forms of Michigan small business funding that they can leverage.

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).

The projects undertaken by new businesses can vary from infrastructure improvements to the acquisition or purchase of heavy machinery and workforce development among others.

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.

Apart from this, a startup can also take advantage of the Pure Michigan Business Connect (PMBC) initiative. This is a public/private initiative that helps goods and service suppliers in Michigan to connect with different levels of corporate purchasers. There are several other Michigan small business funding resources available for first-time entrepreneurs and high-tech startups. These resources include Michigan small business grants and early-stage funding programs including the Michigan Mobility Funding Platform and the Michigan Translational Research and Commercialization (MTRAC) 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.

IncParadise is an expert incorporation provider and offers one of the most reputed Michigan registered agent services. We can help you to start a business in this state. We also provide additional services that can assist you with all your annual filings including annual reports.

Form a new business in Michigan today!

Michigan Business Tax – Complete Guide

Date: | Category: | Author: developers

Michigan Business Tax – Complete Guide

Whether you are a first-time business owner or have been operating a company for several years, you are obligated to fulfill certain tax requirements at the federal, state, and local levels. Different states have different forms of taxes applicable as well as incentives that help in offsetting such taxes. This article has been created to provide you with an insight into Michigan business taxes. In the state of Michigan, different entities will be taxed differently and hence this guide will help you to understand the tax liabilities for a variety of entities including LLCs, profit corporations, sole proprietorships, and partnerships.

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.

There are several different types of domestic and foreign entity structures that you can choose to form in Michigan, hence the tax status will vary from one entity to another. The Michigan LLC taxes would be different from that of a sole proprietorship or a C corporation. Your company may be required to file a single tax or multiple taxes depending on the business activity. In such a scenario, you will need to use a Michigan business tax calculator for determining the exact rate or amount of tax. The most common form of taxes applicable in the state are:

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%.

Since the local sales tax rates can vary according to the city or county, it always helps to use a Michigan business tax calculator. The use tax is remitted to the state in the form of monthly, quarterly, or annual returns and applies to tangible personal property. If a company meets the criteria for collecting sales and use tax but doesn’t file it with the Department of Treasury then they will be levied penalties and interest on the tax due amount.

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.

The FTE tax is governed by Section 51 of the Income Tax Act and is levied only on the positive “business income tax base” specific to Michigan. There are statutory adjustments that include charitable contributions, interest income and dividends, and tax refunds among others. The Michigan LLC tax filing requirements state that the tax return has to be filed by the Michigan FTE annual tax return due date and can be filed using Michigan Treasury Online (MTO). Apart from this, an LLC may be required to file Sales and Use Tax and Withholding Tax depending on the business activity and the number of employees.

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.

The Michigan corporation tax filing requirements specify that all corporations, insurance companies, and financial institutions that expect a liability that exceeds $800 for a specific tax year will be required to make quarterly estimated payments as well as returns. Each payment should approximate the tax liability of the taxpayer for the said quarter or should be 25% of the estimated annual liability of the said C Corporation. The CIT return has to be filed by the last day of the fourth month post the end of the taxpayer’s tax year.

It is important to note that the CIT Michigan Corporation taxes isn’t required to be filed by any taxpayer reporting less than $350,000 in apportioned or allocated gross receipts. This tax has to be filed with the Department of Treasury. Apart from this, a C corporation may also be required to file Withholding Tax, Sales and Use Tax, and other miscellaneous taxes and fees.

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.

If your S Corporation is involved in selling tangible property then certain Michigan Corporation taxes will be applicable like the sales tax and the use tax. If the company is selling tobacco or motor fuels then you will need to file Tobacco and Motor Fuel tax returns using the MiMATS (Michigan Motor Fuel and Tobacco Tax System).

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.

If your company is not based in Detroit but has conducted business activities in Detroit then you will also need to file the City Partnership Tax using form 5458. You can use the Michigan business tax calculator to calculate the tax as well as the Renaissance Zone Deduction for City of Detroit Partnership.

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.

Once you have formed a new business, in addition to the Michigan business tax, there are several important annual requirements from business licensing to annual reports. Hence, IncParadise offers additional services to fulfill such requirements as foreign qualification, Michigan domestication, and filing DBA among others.

Do you want to form a new business in Michigan?

Foreign Qualification in Michigan

Date: | Category: | Author: developers

Foreign Qualification in Michigan

You may be operating a company in any state in the USA except Michigan. Now, you want to expand your reach or open a branch or even move your business to Michigan. This is made possible through a specific process known as a foreign qualification in Michigan. This process will help you in establishing an LLC or a corporation or other kinds of business entities in a new state without the need for re-registration or incorporation of the said entity. This guide has been created to provide information concerning the various features of a Michigan foreign business registration including state laws, requirements, the process, and understanding the essence of doing business 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).

The process of foreign LLC registration or incorporation may be different from the foreign qualification in other states or even the home state. Let’s look at an example to understand this:

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.

Once you have applied for a Michigan foreign business registration, you will need to maintain state compliances like obtaining necessary business licenses and permits. You will also be required to hire and maintain a Michigan registered agent like IncParadise. We can help you with all your state business formalities including annual compliances like filing annual reports.

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.

The general point of view of doing business refers to a company owning a warehouse in the state of Michigan or is planning to open a retail store in the state. This is considered as “doing business” in this state and will require such an entity to undergo a Michigan foreign business registration. There are several activities though that are not considered to be transacting business in the state and they are:

  • 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.

If the chosen name is available then you need to file the Application for Registration of Corporate Name pursuant to MI Comp L § 450.2056 (2019). The name registration application has to be submitted to the Michigan Department of Licensing And Regulatory Affairs, Corporations, and Securities & Commercial Licensing Bureau along with a non-refundable fee of $50. You will also need to submit a Certificate of Good Standing along with the name registration application. The name registration expires each year on December 31, but you can renew it before the expiration date.

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.

You can also opt for an expedited service, which varies from 24-hours to one-hour services. There will be an additional fee for these services.

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.

If the chosen name is not available then the foreign LLC can register an assumed name. If you are using an assumed name also known as a trade name or a DBA, then it is important to conduct a search for trademark names using the Trademark Electronic Search System (TESS). The assumed name or trade name can be registered using the Certificate of Assumed Name for Corporations, Limited Partnerships, and Limited Liability Companies. The fee for the assumed name certificate for a limited liability company is $25.

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.

We can also help you to acquire a Certificate of Good Standing or Certificate of Existence from your home state. We provide several other business-oriented additional services in Michigan that will help in fulfilling annual compliances of your business like filing annual reports or getting an EIN tax ID. We also provide foreign qualification services in all 50 states.

Are you ready to apply for Michigan foreign Qualification?

Filing a DBA in Michigan

Date: | Category: | Author: developers

Filing a DBA in Michigan

Your business idea can make you a key player in the USA and international markets. Therefore, you would need to form a company first. One of the primary requirements of any company is its branding and for that filing a DBA in Michigan is necessary. A DBA is a type of business name that can be used by several kinds of entities. This guide has been created to provide you with insights into what a DBA is, the filing requirements, and how to manage, renew, and cancel a DBA. The guide will also answer your queries related to looking up a DBA in Michigan.

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.

It is important to note that when choosing a DBA name and registering it with the state, you will need to ensure it is compliant with all state laws. The assumed name certificate of Michigan will be governed by the Michigan Compiled Laws – Mich. Comp. Laws § 450.1217 Transacting business under an assumed name. There are several benefits of an assumed name or DBA, which makes it easier to establish a small business including home-based startups. There are several reasons for choosing a DBA or an assumed name and some of the top reasons are:

  • 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.

To conduct business under a DBA, you will be required to complete and file the assumed name certificate in Michigan. This form is known as the Certificate of Assumed Name for Corporations, Limited Partnerships, and Limited Liability Companies. The form has to be submitted to the Michigan Department of Licensing And Regulatory Affairs, Corporations, Securities & Commercial Licensing Bureau pursuant to Act 23 – Public Acts of 1993 and Act 284 – Public Acts of 1972. The fee for a corporation is $10, and for a limited liability company is $25. You can use the COFS (Corporations Online Filing System) for submission, send it by mail, or submit it in person at:

  • 2407 N Grand River Ave
    Lansing, MI 48906
    Telephone: (517) 241-6470

You can also register your DBA or assumed name with the County where your business is located. Alternatively, we can help you to register a DBA or assumed name for your business in the state of Michigan. It is important to be compliant with the state laws for filing a DBA in Michigan. You need to also ensure compliance with trademark laws. When you file a Michigan DBA online application with us, you will benefit from our knowledge of the process, as well as our expertise. We will provide the necessary guidance, to help you save time, minimize bureaucracy, and ensure the application is not rejected.

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.

We can also provide additional services that will ensure your other business requirements are fulfilled like getting a tax id, S corporation status, and dissolutions among others.

Do you want to apply for a Michigan Assumed Name?

How to start a sole proprietorship in Michigan

Date: | Category: | Author: developers

How to start a sole proprietorship in Michigan?

A Sole Proprietorship is one of the oldest and simplest business structures. As the name suggests, this type of business has a single owner and is also known as a sole trader or simply a proprietorship. Today, most home-based businesses are also considered sole proprietorships. You can start a sole proprietorship in Michigan especially if you are a first-time entrepreneur. The operations and formation of such an entity are different from most other structures like LLCs and corporations. Hence, we have created this guide to answer your queries about how to start a sole proprietorship in Michigan. The guide will provide information concerning all characteristics of a sole proprietorship like creating a business plan, filing a DBA, tax ID, business licenses and permits, and filing taxes among others.

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.

To start a sole proprietorship in Michigan, a business name is mandatory.

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

A DBA or “doing business as” (DBA) name, is also known as a trade name, fictitious name, and an assumed name. This name is chosen by sole proprietors who don’t want to use their full legal name.

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.

If the said name is available then you can file the certificate of assumed name with the Michigan Department of Licensing and Regulatory Affairs (LARA). We, at IncParadise, can also help you with the process of filing your DBA in Michigan.

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

You can apply for an Employer Identification Number (EIN) with the Internal Revenue Service (IRS).

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

When you file a sole proprietorship in Michigan, your company may require any one of the above categories of licenses and permits or multiple licenses from different categories. The requirement for these licenses will vary depending on the primary business activity, location, industry, and occupation. The licenses and permits are overseen by the Michigan Department of Licensing and Regulatory Affairs (LARA) and issued by different agencies like the MSP/Commercial Vehicle Enforcement Division is responsible for issuing licenses and permits for delivery service carriers involved in intrastate commerce.

Similarly, local licenses and permits are issued by city departments or the office of the county clerk. It is quite an intricate task to identify the relevant licenses when you start a Michigan sole proprietorship. This is where our Business License Research Report service can provide the necessary guidance and aid. This is a detailed research report that contains a list of filing instructions, supporting document requirements, and fees for all business licenses and 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.

You can open a business account online with Cheqly and take advantage of their services. Cheqly is our partner organization. They not only offer banking access from anywhere but they also facilitate fund transfers locally as well as internationally. It is a full-stack neobank for small businesses and startups.

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.

IncParadise, one of the top registered agents in the state can provide guidance and expertise to help you start a sole proprietorship in Michigan with ease. We also offer a wide variety of additional services like filing a DBA, and getting an EIN, among others.

Do you want to file a sole proprietorship in Michigan?