How to Start a Business in Michigan

If you’re interested in starting a business in Michigan, this guide will walk you through the process.

Step 1: Create a business plan for your Michigan company

The first step for starting your business is to write a business plan. Your business plan is a detailed report of the company, its purpose, and its growth potential.

What should a business plan include?

Most business plans include:

  • A fleshed-out look at your business idea.
  • A company overview.
  • Your business’s goals.
  • Market research and strategies.
  • Management and personnel details/plans.
  • Current and future financials. 

Other Business Plan Considerations

The business plan should also discuss attainable state-specific tax breaks or local grants. Some businesses may take advantage of the Michigan Business Development Program, for example. This program provides grants, business loans, and economic assistance to companies that create jobs in the state. You can also look into resources provided by the Michigan branch of the Small Business Administration (SBA).

When writing a business plan, it’s essential to identify challenges, too. If you present the project to a bank or investor, they’ll want you to acknowledge potential struggles and solutions. 

Need help creating a business plan for your Michigan startup? We put together a comprehensive library of articles and guides on business planning.

Step 2: Choose a business structure

Next, you need to assess possible business structures. In Michigan, a business can take several different forms, including sole proprietorships and limited liability companies (LLCs). 

A sole proprietorship is the simplest business structure to create. It’s not registered with the state, is free to set up, and designates all profits to the sole owner. 

Michigan LLC

An LLC is incorporated with the state, costs money to create, and offers liability protection. These liability protections safeguards the owner’s assets (like home and car) if the company is sued or ends up in debt. 

Filing LLC Articles of Organization

To set up a Michigan LLC, you need to file Articles of Organization. Your Articles of Organization include:

  • The company name and address.
  • Creation date.
  • Purpose.
  • Title.
  • Address of the company’s registered agent.
  • A list of managing members.

The LLC organizer, who is typically the company owner, must sign the document and submit it to the Michigan Corporations Division for approval. There’s a $50 filing fee that must be paid as well.

If you’d rather have an expert handle it for you, you can work with a business formation and compliance company like ZenBusiness.

Step 3: Determine startup costs for your Michigan business

As always, there’s a cost to start a company. To calculate just how much your new Michigan business will cost, use a cost calculator to zero in on fixed prices, ongoing expenses, and one-time costs. 

Curious about “how much it costs to start a business in Michigan?” Look no further. This helpful guide will walk you through business cost calculation and more.

Ongoing Expenses Examples

Ongoing expenses could include a lease. Michigan has more than 1.5 million parcels to choose from, with reasonably low commercial rates. Even so, leasing can still be one of your higher ongoing expenses. Taxes are another ongoing expense. While the state is highly ranked for its business-friendly tax climate, taxes will also be a significant factor. 

Some new business owners overlook the costs to maintain licenses and permits. Not all businesses need them, but Michigan has a state license search that can tell you what your company needs and how much it costs each year.

Step 4: Name your Michigan business

Do you have a name picked out for your business? Like most states, Michigan has rules that every entrepreneur must follow when picking a company name. 

Business Name Rules

No two businesses can have the same name. The state says every company should be “distinguishable from one another” and doesn’t allow duplicate titles. To see if a name is available, conduct a business entity search on the Michigan Department of Licensing and Regulatory Affairs website. 

The state lets you reserve a name for $25. If you don’t plan to incorporate your business for a few months, this is an excellent way to hold the title so it won’t vanish. 

Restricted Words

You also can’t use “restricted words” in a company name. Restricted words are inappropriate words or any words that refer to a government agency. There’s a list of local stories and more information about naming a company in Michigan’s “Choosing a Business Name” ebook.

Registering a Matching Domain Name

As you settle on a company name, you may also consider registering the matching domain name. If this feels outside of your wheelhouse, ZenBusiness can help you create a domain name.

Step 5: Register your business in Michigan

Next, register the type of business you selected. If you’re forming an LLC, you’ll submit your formation documents and pay a filing fee. You’ll renew your status every year by filing an annual report through the Department of Licensing and Regulatory Affairs (LARA). You can also refer these tasks to a business formation company.

Obtaining an EIN

Whether your business is in Flint or Ann Arbor, your LLC needs a federal employer identification number, also known as an employer identification number (EIN). This nine-digit number is issued instantly online by the IRS. It’s used when you file federal taxes and hire employees, but the state of Michigan will also use it for state taxes.

Once you obtain this tax ID, you’ll have to register it and the company with the Michigan Department of Treasury, which you can do online. Note: If you choose to open your business as a sole prop, you can use your social security number as your tax ID instead, though it leaves you open to potential identity theft.

Recommended: Learn more about the benefits of an EIN and how to get one for your LLC or Corporation in our EIN information page.

Some businesses in Michigan need special business licenses and permits. Check to see what your company needs.

Getting a Business Bank Account and Insurance

It’s a good idea to open business bank accounts so you can keep personal and business finances separate. Comerica Bank and Fifth Third Bank are two popular banks in Michigan, but online options can also streamline the business banking process. Also, consider any business insurance you may need, such as general liability and workers’ compensation, and unemployment insurance if you hire employees.

Step 6: Market your business

Before you even open your Michigan small business, it’s essential to think about how you’ll attract customers. There are many DIY marketing tactics you can use to get the word out about your new company. For starters, open social media accounts on the channels where your future customers are. 

Target your demographic through social media

If you’re targeting seniors, you’re in luck. Michigan’s population skews older, with about 26% of the state’s population aged 65 or older. This demographic gravitates toward Facebook, while the younger crowd leans more on Snapchat and Instagram. 

There are also free online directories you can add your business to, including Google My Business and Yelp. Both also include options for customer reviews, which provide digital word-of-mouth marketing for your company.

Use local media

Consider inviting local media to your grand opening and to different events you hold throughout the year. When an H&M opened in Detroit, the Detroit Free Press covered the event, drawing large crowds.

Examples of good businesses to start in Michigan

Michigan offers excellent opportunities for many different kinds of businesses. Currently, the state employs the most people in healthcare, manufacturing, and food services. Other Michigan business include companies in the following industries:

  • Administrative support
  • Construction
  • Real estate and rentals
  • Educational services
  • Transportation services

Looking for more ideas? Check out our list of the best businesses to start in Michigan.

Bottom Line

Michigan has an inviting business climate that’s attractive to new entrepreneurs. The Great Lake State offers a low cost of living, business-friendly tax codes, affordable commercial real estate, and an educated workforce. For those interested in learning how to start a business in Michigan, you’ll likely find favorable conditions and numerous opportunities.

Ready to start your Michigan business? Follow the steps outlined above and you’ll be well on your way to being your own boss. And remember, we can help! From our formation services to worry-free compliance, we’ve got you covered every step of the way.

Top Michigan Cities to Form Businesses

Detroit: Traditionally the automotive capital of the world, now diversifying into technology, healthcare, and finance. Ongoing urban revitalization attracting new businesses and investments. Emerging hotspot for tech and creative industries.

Grand Rapids: Historically known for furniture manufacturing; strong in healthcare, IT, and consumer goods. Supportive business community with a focus on sustainable practices. Ideal for startups in green technologies.

Ann Arbor: Home to the University of Michigan, fostering innovation and research. Vibrant startup scene supported by incubators and accelerators. Strong sectors in technology and healthcare.

Lansing: State capital with a significant government sector. Growing presence in insurance and healthcare industries. Benefits from research and development partnerships with Michigan State University.

Kalamazoo: Base in pharmaceuticals and life sciences, with major companies like Stryker and Pfizer. Supports economic development initiatives focused on biotechnology and medical research. Strong community support for startups and business growth.

These cities offer diverse opportunities based on their industrial strengths, educational resources, and strategic initiatives, making them suitable for a variety of business ventures in Michigan.

Michigan Business FAQs

  • Most entrepreneurs start a business with less than $25,000, but other microbusinesses can be activated for just $5,000. Your startup funds will go a little further in Michigan than in other states as the cost of living is low, and business taxes are reasonable.

  • While you may gravitate towards the bigger cities of Detroit or Grand Rapids, research shows Holland, Michigan, is the best place to start a business. It was selected as the nation’s best city to start a small business because it boasts many startups, the potential for revenue growth, and excellent access to resources.

  • The cost to start an LLC in Michigan is $75. This filing fee must be submitted along with completed Articles of Organization to the state for approval. The filing fee in Michigan is lower than in most states.

    For more information on starting an LLC, visit our Michigan LLC page.

Disclaimer: The content on this page is for information purposes only and does not constitute legal, tax, or accounting advice. If you have specific questions about any of these topics, seek the counsel of a licensed professional.

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Written by Team ZenBusiness

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