This updated guide covers the essential steps to start a business in Michigan: pick a legal structure, register with state and federal tax authorities, obtain licenses and permits, register assumed names as needed, and use Michigan business resources like the SBDC. It also advises on employer registration and hiring considerations.

Why Michigan Still Makes Sense for Small Business

Michigan offers established resources and clear steps for new entrepreneurs. Before you open, create a realistic business plan, estimate startup costs, and research local demand. Use state and local resources to reduce risk and speed compliance.

Choose a Legal Structure

Decide how you will structure the business. Common options include:

  • Sole proprietorship
  • General partnership
  • Limited partnership
  • C corporation
  • S corporation
  • Professional corporation (PC)
  • Limited liability company (LLC)
  • Nonprofit corporation
Your choice affects taxes, liability, governance, and funding. If you expect investors or multiple shareholders, consider a corporation. For simple owner-run firms, an LLC or sole proprietorship often fits.

Register, Tax, and Licenses

Register your business with the state and get any required tax accounts. You will usually need a federal Employer Identification Number (EIN) from the IRS if you hire employees or form a corporation or partnership. You must also register with Michigan tax authorities to collect sales tax and to remit withholding and employer taxes.

Michigan requires the appropriate licenses and permits for many businesses (food service, child care, professional services, and construction, among others). Check state-level licensing through the Department of Licensing and Regulatory Affairs and local city or county permitting for zoning and health inspections.

If you plan to use a trade name (a DBA or assumed name), you will need to file the assumed name - filing location and process can vary by county and by business entity type.

If you hire employees, register as an employer for unemployment insurance and withholding taxes. The state administers employer unemployment programs and tax accounts; make sure you understand reporting and contribution requirements. 1

Get Help and Local Resources

Michigan maintains free and low-cost counseling and training for new businesses. The Small Business Development Center (SBDC) network provides one-on-one business advising, help with financial projections, and market research. Local economic development offices and chambers of commerce can connect you to grants, loans, and networking.

Practical Tips for Managing Growth

Hire carefully and document policies for pay, benefits, and training. Use a reliable accountant or payroll service to keep tax filings and payments current. Maintain clear contracts with vendors and customers and protect intellectual property as needed.

Starting a business in Michigan takes planning and ongoing compliance, but state resources and local support make it manageable. Follow the correct registration, tax, and licensing steps, hire the right advisors, and focus on serving your customers well.

  1. Confirm where assumed name (DBA) filings must be submitted in Michigan for different entity types (county clerk vs state filing).
  2. Verify the current state agency and procedure that administers unemployment insurance accounts and employer registration in Michigan.
  3. Confirm the exact process and online portal for registering to collect and remit Michigan sales and use tax.

FAQs about Starting A Business In Michigan

Do I need an EIN to start a Michigan business?
You need a federal EIN if you hire employees, form a partnership, or incorporate. Sole proprietors without employees can often use their Social Security number, but an EIN is recommended for separating personal and business finances.
Where do I get Michigan business licenses and permits?
State-level professional licensing is handled through the Department of Licensing and Regulatory Affairs (LARA). Local zoning, health, and building permits come from city or county offices. Check both levels before opening.
How do I register to collect sales tax in Michigan?
Register with the Michigan tax authority to obtain any required sales tax accounts and to remit sales and use taxes. The exact registration steps depend on your business type and the products or services you sell.
Do I have to register for unemployment insurance?
If you hire employees, you must register as an employer for state unemployment insurance and employer withholding. State agencies administer employer accounts and reporting requirements.
What local resources help new Michigan businesses?
The Michigan SBDC offers counseling, business planning help, and market research. Local economic development agencies and chambers of commerce can connect you to funding and networking opportunities.