The complexities of starting a business should not deter you from pursuing your entrepreneurial goals in Michigan. If you understand all the legal and operational requirements, you will find it easier to create your business from scratch and nurture it to success. As a start, you should conduct thorough research about your business idea and have adequate funding before you embark on the venture. Once this is accomplished, you have to register your business, acquire necessary permits or licenses and sort out tax compliance issues. The Michigan Department of Treasury is the state body in charge of registering business and collecting taxes. At county level, there are also offices where business owners can get licenses, permits or even meet compliance requirements. It is important to note that federal, state and county rules of compliance may differ and for this reason it is a good strategy to consult a knowledgeable accountant or business attorney.
Is your business idea in Michigan worth the risk?
Ask yourself several questions before you actually embark on your business venture. What problem or need does your business solve? Why do you think this business will be successful? Who are the competitors and what advantage do you have over them? What are the business’s strengths, weaknesses, opportunities and threats (SWOT analysis)? Is the funding required within your reach? What is your plan in case you require alternative funding? Do you have sufficient knowledge and skills required to run this business? Who are your target customers and how will you reach them? These questions are important in determining your next steps.
Business Structures You Can Adopt in Michigan
You will need to decide which business structure is applicable for you. If you are the single owner of the business, then you will choose a sole proprietorship structure. If you jointly own the business with another person, then the partnership business structure will be applicable. Partnerships can be general partnerships (where both of the owners are fully liable) or limited partnerships (liability is limited based on the partner’s investment). Aside from sole proprietorships and partnerships, a business can be a limited liability company (LLC), where liability of all composition members is limited, or a corporation, where the business is totally a separate entity from all the members forming it. Note that you can own a corporation, especially if you want to be considered a separate entity from the business.
Registering your Business in Michigan
After you have put all your business details in order, it is time to go to the next step of registering your business. First of all, obtain a Federal Employer Identification Number (FEIN) which will be useful for tax filing purposes. This is not a mandatory requirement if you do not intend to have any employees and are a sole proprietor. In this case, your Social Security Number will suffice. Besides the FEIN, you will need to get the Unemployment Insurance Account (UIA) from the Michigan Department of Licensing and Regulatory Affairs before hiring any employees. The next step is to register your assumed business name at the county clerk’s office so that it is officially known which name you will be doing business under. Afterwards, you should obtain a sales tax license from the Michigan Department of Treasury, which authorizes you to make purchases and resell without paying sales taxes to the vendor. You should also register your business with the Michigan Department of Treasury.
Michigan State Regulations and Licenses
The permits, licenses and regulations applicable to your business depend on the type of industry your business falls into. For example, businesses whose activities generate emissions or wastes and will have impact on the environment require special permissions from the Michigan Department of Environmental quality (MDEQ). In order to get accurate information about regulations and compliance, you should consult your local or county authorities.
Building Codes and Zoning Regulations in Michigan
There are standards that buildings used for businesses must meet. These thresholds are specified by the Michigan state, county or town authorities. You can get the structure compliance information from the city tax assessor or the county clerk’s office. If your business is home-based, you may still be subject to some of these rules and regulations. Your local government can clarify all standards that your home must meet in order to be considered fit for business. Production of potentially dangerous items such as poisons, drugs, fireworks, explosives, sanitary, toys or medical products is prohibited in most states, including Michigan.
Taxes for Startup Businesses in Michigan
Tax information for businesses is very sensitive, and only professional advisors can guarantee full compliance for your business. As mentioned before, EINs are a mandatory requirement for filing taxes, with the exception of sole proprietorships. Taxes are classified under employer taxes, self-employment taxes and personal income taxes. There are also other applicable Michigan State business taxes such as corporate income tax, flow-through withholding, international fuel tax agreement (IFTA), sales, motor fuel, tobacco, use and withholding taxes. There may be additional taxes at the local county level as well. Not all businesses are subject to all of these business taxes, so researching what your particular business and industry requires is essential.