Planning to launch a business in the Great Lakes State? Smart move. Michigan’s business-friendly environment makes it an attractive place to start your journey. If you’ve been researching how to start a business in Michigan, you probably know that business registration is one of the key items on your to-do list. 

Whether you’re launching a tech startup in Ann Arbor or opening a boutique in Detroit, this guide will help you understand the essential steps to register your business in Michigan.

Do I Need to Register My Business in Michigan?

If you plan to operate a business in Michigan, the registration requirements for your venture will depend on factors like your business structure, location and the type of activities your business will conduct. In many cases, you may need to complete multiple registrations, secure permits, or obtain specific licenses to comply with state and local regulations. Understanding these requirements is essential for ensuring your business operates legally and efficiently.

Here’s a quick guide to help you determine if registration is necessary for your specific organization:

Business Structure

Michigan requires most business structures to register with the Michigan Department of Licensing and Regulatory Affairs (LARA). This includes limited liability companies (LLCs), corporations and limited partnerships. However, if you’re a sole proprietor or operating under your legal name, you may not need to register unless you’re using a different business name. In that case, you’d need to register a “Doing Business As” (DBA) name with LARA.

Type of Business

Certain professions and industries in Michigan are more highly regulated than others and, therefore, require specific licensing and registration to operate legally. You can find out if your industry is subject to additional regulations by visiting the Michigan Department of Licensing and Regulatory Affairs (LARA) website, which provides detailed licensing information for various professions. Additionally, consulting industry associations or local business resources can help clarify specific requirements.

Common industries that require additional licensing or registration in Michigan are:

  • Healthcare: Includes medical practices, home health services and other healthcare providers.
  • Firearms and Ammunition Sales: Businesses selling or distributing firearms and ammunition must comply with state and federal licensing requirements.
  • Alcohol Sales: Restaurants, bars, retailers and distributors must obtain licenses through the Michigan Liquor Control Commission.
  • Construction and Contracting: Builders, contractors, electricians, plumbers and other trades require appropriate licensing based on their trade and scope of work.
  • Real Estate: Real estate agents, brokers and property management companies need specific professional licenses.
  • Childcare and Education: Daycare centers, preschools and other childcare providers must meet state licensing requirements.
  • Automotive Services: Includes auto repair shops, dealerships and towing companies.
  • Food and Beverage: Restaurants, catering businesses and food manufacturers often need food safety permits and health department inspections.
  • Financial Services: Loan officers, mortgage brokers and financial advisors must obtain relevant licenses.
  • Personal Services: Salons, spas and tattoo parlors need health and safety permits.

Sales Tax License

Any business selling goods or tangible products in Michigan that are subject to retail sales tax needs a seller’s permit. This license allows the business to legally collect sales tax on behalf of the state using a unique seller’s permit number. To comply with state regulations, you must register with the Michigan Department of Treasury before beginning any sales activities.

Businesses with Michigan Employees

All new businesses that have Michigan employees are required to register with the federal Internal Revenue Service (IRS), as well as the Michigan Department of Treasury. Owners are required to do this for Social Security Tax (federal) and income tax withholding (federal and state) purposes. Some Michigan cities have a city income tax, so you’ll need to check to see whether those rules apply to your company. 

Location-Based Requirements

Finally, some cities and counties in Michigan may have additional registration or licensing requirements for businesses operating within their jurisdictions. For instance, Detroit has specific license requirements for certain types of businesses, such as restaurants and hotels.

By determining which of Michigan’s business registration requirements apply to you, you can ensure that your business operates legally and remains compliant.

How Much Does it Cost to Register a Small Business in Michigan?

The cost to register a small business in Michigan varies based on your business structure, location and the specific permits or licenses required for your venture. While obtaining a sales tax license is free, other registration costs can range from $15 to $1,000 depending on your needs:

  • State Filing Fees: Registering a Limited Liability Company (LLC) or Corporation with the Michigan Department of Licensing and Regulatory Affairs (LARA) typically costs $50 to $100. Additional fees may apply for expedited processing.
  • Local Permits: Fees for local business licenses or zoning permits depend on your city or county regulations, typically ranging from $15 to several hundred dollars.
  • Industry-Specific Licenses: The cost of professional or occupational licenses varies widely. For example, licenses in construction or healthcare can range from $50 to over $1,000.
  • Federal Requirements: If your business requires an Employer Identification Number (EIN), this is free through the IRS. However, regulated industries may have additional federal licensing costs.

For a detailed breakdown, refer to the Michigan Department of Licensing and Regulatory Affairs (LARA) and your local government resources to calculate the exact fees for your business.

How to Register a Business in Michigan 

The process for registering your business in Michigan can vary based on your specific business structure and activities. To simplify the process, it’s important to understand the requirements that apply to your situation. Here’s a step-by-step guide to help you get started:

Step 1: Choose a Business Structure

Decide on your business structure—such as a sole proprietorship, partnership, limited liability company (LLC) or corporation. This impacts how you register your business. Each structure has different legal and tax implications, so you’ll need to choose one that aligns with your goals.

Step 2: Select and Register a Business Name

If operating under a name different from your personal name (for sole proprietors) or your LLC or corporation name, you’ll need to file for a “Doing Business As” (DBA) name with the Michigan Department of Licensing and Regulatory Affairs (LARA). A quick name search on LARA’s website will confirm whether your desired name is available.

Step 3: Register with LARA

Next, file the necessary formation documents with LARA. For LLCs, this means filing Articles of Organization, and for corporations, Articles of Incorporation. You can do this online or by mail. Sole proprietorships and partnerships don’t typically require registration with LARA. However, if you’re using a business name other than the owners’ names, you’ll need to register your DBA.

Step 4: Obtain an Employer Identification Number (EIN)

Most businesses need an EIN from the IRS for tax purposes, even if they don’t have employees. You can obtain an EIN for free through the IRS website. Sole proprietors without employees may use their Social Security numbers, though an EIN can provide additional privacy and professionalism.

Step 5: Apply for Required Licenses and Permits

Certain professions and industries in Michigan require state-issued licenses. Check with LARA to verify if your industry needs specific licenses. Next, check to see if you’ll need a city permit. Visit your local city clerk or county recorder’s website to see if your business activities require local licensing.

Step 6: Register for a Sales Tax License (If Applicable)

If your business sells or leases tangible goods in Michigan, you must register for a sales tax license with the Michigan Department of Treasury. If you do not sell tangible goods, you can skip this step.

Step 7: Comply with Other State Requirements

Depending on your business type and activities, you may need to meet additional state requirements to operate legally in Michigan. For example, businesses with employees must register for Michigan’s unemployment insurance tax through the Michigan Unemployment Insurance Agency. It’s crucial to research the specific requirements for your business type to avoid penalties or delays.

Start Your Michigan Business With Confidence

Registering your business in Michigan might seem daunting, but breaking it down into manageable steps makes the process much more approachable. From choosing your business structure to securing necessary licenses, each step brings you closer to making your dreams a reality. Remember that requirements can vary based on your location, industry and business type, so take time to research what applies to your specific situation. 

With proper registration and compliance in place, you’ll be ready to join Michigan’s thriving business community and focus on what really matters—growing your business. And remember, when you need a feature-rich, fee-free digital business banking solution, North One has your company covered.