Starting a business in Michigan doesn’t have to be a pain. Check out our 10-step guide to help you form your company from start to finish. Find out why so many Michigan startups trust MyCompanyWorks.
Michigan History
Michigan’s name is derived from the Ojibwa Indian words “Mishi-Gama,” which means ‘large lake.’ It’s nicknamed The Great Lake State, as the only state that touches four of the five Great Lakes. It’s also called the Wolverine State, though there are no longer any living wolverines to be found there.
No point in Michigan is more than six miles from a body of water. The state is home to the world’s only floating post office, which delivers mail to ships as they pass under the Ambassador Bridge.
The world’s first concrete road was laid in Detroit in 1908. Michigan is home to the world’s largest cement plant, limestone quarry, Holstein dairy herd, and manufacturer of magic supplies. Detroit is known as the car capital of the world, and Michigan remains a national capital for the automotive and advanced manufacturing industries.
Major Companies are Headquartered in Michigan
Ford Motor Company holds the top spot for large companies in Michigan. They are followed by General Motors, Lear, and Whirlpool. Other large corporations are Meijer, ZF North America, the Dow Chemical Company, and Kellogg.
Startup Environment
Although Michigan’s economy took an enormous hit in the early 2000s, the state is currently experiencing a period of incredible growth, setting multiple records for the production of goods and services. This translates to a startup scene that has the potential to be quite strong for the auto and tech industries. As of 2022, Michigan has been ranked by several sources as the top emerging startup ecosystem.
If you’re not sure which business type to choose, it’s important to learn about business entities. If you’re running a simple company with low risk, a Michigan Assumed Name may be all you need to get started. Most businesses choose either an LLC or Corporation (details below) for taxation flexibility and limited liability protection. You may want to contact an accountant or attorney to help you make the right decision.
Michigan Assumed Name (DBA)
A “Doing Business As” – known as an Assumed Name in Michigan – does not form a separate company. The Assumed Name just allows you to do business with a name that is not your own. You must apply for a certificate to legally use an Assumed Name. LLCs and Corporations also use DBAs to keep multiple companies separate under the same business formation. So for instance, you might form Michigan Widgets LLC, but use Assumed Names to separate Michigan Mac Parts, Willy’s Widget Shop, and Pro Widget Manufacturing.
Michigan Corporation (C-Corp or S-Corp)
A Corporation is a separate entity that provides liability protection to business owners. This type of business structure is owned and managed by shareholders, directors, and officers. Traditional C-Corporations are subject to stricter rules and higher taxation, so usually only companies that are complex or have a lot of employees choose this business type.
S-Corporations can be either a Corporation or LLC that registers as a small business with the IRS. An S-Corporation enjoys the benefit of “pass-through” taxation, meaning the business does not have to file a tax return. Rather, income, losses, and expenses are reported on each owner’s personal tax return. If your business is simple and doesn’t have a lot of workers, we recommend filing for the Small Business election to keep paperwork and taxes simple.
NOTE: Some professions are required to choose what is known as a “Professional Corporation” or PC (doctors, lawyers, architects, etc.). We can help you start a PC on our Corporation page.
Michigan Limited Liability Company (LLC)
The Limited Liability Company, or LLC for short, is a separate business entity that is simple to manage. An LLC can be owned and operated by just one person, and you need directors or officers. Limited Liability Companies are run by members and managers. This business type is the most popular choice among LLCs’, Corporations, and DBAs. If you’re looking for a business type that’s easy to manage and inexpensive to maintain, the LLC may be the best option for you.
A proper business name should tell the public about your products and services and be easy to say and remember. You’ll need a solid name that can grow with your business, so it’s worth spending some time to develop one that’s catchy and memorable. Even if you don’t what you’re going to sell as time goes by, it’s a good idea to make room in your name for future products and services.
Example: Jake wants to sell snow sports equipment, but he’s not sure if he’s just going to sell skis and accessories, or add outdoor gear and apparel later on. So a name like The All Things Snow Shop would be a better choice than Jake’s Ski Shop.
Think about what you’re going to sell. Will you carry products, or provide services? Once you know what you’re going to offer, jot down names that include words to describe your business. You can also include words that like your city’s name or area code to appeal to your local market. Have some fun and ask family and friends to help you try out new names by saying them out loud and pretending to answer the phone with the business name. If it’s easy to say, catchy, and memorable, you probably have a great name.
Enter your proposed business name into Google and other major search engines to see if anything comes up. Remember, a great business name is unique, so you want to make sure it isn’t already being used, or is similar to other business names, especially in the city and state where you operate. Make sure to check various spellings, and even misspellings of your name to find other business names that are similar to yours.
If your name passes the Internet screening, check the Michigan Secretary of State’s site for potential naming conflicts.
IMPORTANT: Nationwide and international companies must use a business name that is totally unique to your business to help prevent tax problems and being wrongfully named in lawsuits.
You can hire a trademark professional to do your research, but they charge pretty high fees. We have found that checking the Internet and your state business site is effective, so you can save some money by doing the research yourself. The US Patent and Trademark Office (USPTO) can be searched online for business names. This is probably the best indicator if your name has any conflicts.
Once you have a unique business name, you can register your business online with the Michigan Secretary of State. Before starting a business in Michigan, you must register with local and state business authorities. Details are listed here for LLCs, Corporations, and DBAs. If you need to form a different type of entity, we can still help. Contact us for more information.
NOTE: All businesses in Michigan are required to register alternative trade names by filing an Assumed Name application if want to operate under a different name than the original business name, or without a formal business structure (LLC, Corporation, etc.).
You can skip this checklist and order a Michigan LLC, Corporation, DBA, and more with MyCompanyWorks online business formation system. Start the process and save time with any of our startup packages.
(Optional, but recommended for DBAs without employees).
An Employer Identification Number (EIN) – also called a federal tax ID is required for all US businesses who hire employees. You can apply online with the IRS or request an EIN with any of our business formation packages.
DBAs are only required to have an EIN if they hire workers, but you can reduce the risk of identity theft if you have one. Otherwise, you’ll be required to use your social security number on tax and other documents. We recommend that all DBAs should apply for an EIN.
NOTE: International applications are processed by phone. We can also apply for you.
Keep personal finances separate from your business with a designated bank account and credit cards. Establishing these accounts in your company’s name will help you to build business credit and apply for loans as your business grows. You can research options by starting with your local bank. If they don’t offer business solutions, a quick Internet search should show local and online financial solutions. Each organization is different, but you can expect to submit the following paperwork to open accounts.
Top Business Banks in Michigan
TIP: Take advantage of our free banking solution with any business formation.
Our Banking Partners are standing by for all your financial needs.
Now that you’ve registered your business name you need to obtain a business license for your company – this authorizes your company to do business in your city or county. Typically this also involves registering for state taxes and permits (the city may require them as part of the business licensing process).
Order business licenses online from our partners.
Depending on your business, you may be required to carry various insurance policies. Common business policies are:
Get free quotes and a full range of insurance products from our recommended partners.
Spend some time starting an accounting system and an organized way to keep important documents accessible. You’ll save a ton of time if you ever get audited. Tax records should be kept for a minimum of seven years, and other paperwork will need to be filed away for at least three years (and some for the life of your business). You can find out more about managing your business finances from our guide here.
Find out how long to keep your business records.
You must have an active Employer ID Number to legally hire employees. You can obtain your number by applying with the IRS or requesting one with any of our formation packages. You may also have to register with local and state business authorities as an employer. Once you have your EIN and workers’ compensation policy, you can hire employees by having them fill out an I-9 for employment eligibility, proper state identification, and IRS form W-4. Check with your county or the state of Michigan to find out if you need to register new hires with any agencies.
Find help, tools, and experts to manage employees and payroll.
Now that you have a great business name and you’re legally registered to do business, it’s time to promote your products and services. These days it’s critical to have a website, even if it’s just a simple online ad. Most consumers check the Internet for companies that sell what they want. You’ll want to set up a website, and social media accounts to show off your business identity and attract customers. We offer an affordable custom domain, email, and website package to launch your web presence quickly.
DBA: In Michigan, your Fictitious Business Name should be valid for 5 years (unless you change the company name or other information listed on the FBN) at which point you’ll need to renew it with the county.
LLC: By February 15 of each year, each Michigan LLC is required to file an annual report with the government. Companies formed after September 30 on the year of filing and Foreign LLCs are exempt from this rule.
Corporation: Your business must keep corporate records at its principal place of business. By May 15 of each year, an officer of your corporation must file an annual report. LLCs and Corporations will pay a filing cost of $25. This can be filed online here.
Franchise Taxes: There is no franchise tax in Michigan. Michigan corporations are taxed annually at a flat 6% rate.
Click here to view our MyCompanyWorks Premium™ service which can automate most of your ongoing compliance tasks.
| Michigan Secretary of State – Ann Arbor Branch 295 N Maple Rd Ann Arbor, MI 48103 Phone: 888-767-6424 Michigan Secretary of State – Grand Rapids Branch 1 Division Ave N Grand Rapids, MI 49503 Phone: 888-767-6424 |
Michigan State Taxation Departments
Michigan Department of Licensing and Regulatory Affairs
Michigan State Labor and Employment Departments
Michigan Department of Labor and Economic Opportunity
Michigan State Startup Resources
Small Business Administration (SBA) Michigan State District Office
2. SCORE Mentors
SCORE is made up of active and retired business people who volunteer their time to support startup businesses. From coaching to funding resources, finding a local SCORE mentor can save precious time and money.
3. Michigan State Legal Statutes
4. Michigan State Chambers of Commerce
5. Michigan Angel Investors
6. Michigan Business News
7. Michigan State Small Business Development Center
8. West Michigan Sustainable Business Forum
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