How to Start a Business in Michigan

Plan your Michigan business

Now it’s time to start planning. This means coming up with a business plan, naming your business, researching locations, and more. There’s a lot to cover here, so let’s break it down:

Select a business name

The first step is to choose a name for your new company. You should not take this step lightly, because it’s important to choose the right name. You will want to find a name that is appropriate and relevant for your business, and that’s also memorable for your clients or customers. 

It’s also important that the name be unique, meaning distinguishable from other businesses already registered in the state. You must choose a name that is not already taken by another business, and it must also be substantially different enough from already registered names. You can search a database of business entity names online here. Use this online tool to confirm whether or not your desired name is available. 

There are other business naming rules to consider, as well: 

• The business name must be unique from other businesses already registered in the state
• Names for LLCs need to contain “limited liability company”, or select approved abbreviations such as “LLC” or “L.L.C.”
• Names for corporations need to contain “corporation”, “incorporated”, or select approved abbreviations such as “corp” or “inc”
• The use of certain financial words, such as “bank” or “trust”, may require additional written permission
• Other rules may apply. See the Michigan business name rules PDF for details

You can move on to the next step once you’ve found a business name that you would like to use.

Or, if you’re not quite ready to form your business, you can reserve your desired business name for up to 6 months. This gives you some time to think about the name before moving forward. There is a $10 or $25 fee for a reservation, depending on the type of business entity. 

Michigan trade names

Michigan allows already established firms to register trade names, otherwise known as assumed names or DBAs. These are secondary names that are different from the primary name used on the business formation documents. 

Using a trade name allows you to legally do business under a second name. This offers more flexibility in how you market and brand your company. Find out more about Michigan DBAs here. 

Register a domain name

Once you choose a name, you should immediately register a domain name for your new business. In most cases, getting a .com domain name is ideal, but there are many other extensions (.biz, .net, etc.) that are worth considering. 

You can use a tool like Namechk to search for an available domain name and find a great deal on the registration cost. You may find that your desired names are taken, so you may need to get creative. 

Complete market research

Once you have an idea, you’ll want to do some market research. You want to gain a better understanding of who your customers – and competitors – are. You can achieve this by conducting online research, running focus groups, sending out surveys, and more. There are also companies that can help you complete market research, for a fee. 

Select a business location

Unless you plan to run a remote/virtual business, you will need to find a physical location for your company. Research commercial property in your area, and take note of typical costs. For customer-facing businesses (retail and some services), location is very important, so take your time in selecting the right area for your business. 

Create a business plan

You will now need to create a detailed business plan for your new venture. This plan is helpful for your own purposes, and will also be necessary in order to obtain funding from a bank. A good business plan should contain these elements:

• Finances: How much funding does the business need to get started? How many sales does it need each month to break even on expenses?
• Product: What do you plan to sell? Is it a product or a service? What problem does your business solve, and how is it distinct from your competitors?
• Marketing: How will you drive sales? What marketing and sales efforts do you plan to employ? How much money will you set aside to fund marketing efforts?
• Staff & Partnerships: How many people will you need to hire, and what skill sets do they need to have? Will you have any partnerships or arrangements with other local businesses? 

If you need help, you can find business plan templates online that will help walk you through the steps you need to take to draft a detailed business plan. If you plan to seek funding, you may also wish to call your bank to see what they require in terms of business plans. 

Register your business in Michigan

Actually registering your new business in Michigan is the next step to tackle. This process will involve working with the Michigan Department of Licensing and Regulatory Affairs, either through the online LARA portal or through the mail. You’ll need to submit some paperwork, and ensure you’ve met all the various requirements to start a business in MI. 

When forming a new Michigan company, there are two basic options:

• Entrepreneurs can file the necessary paperwork themselves (see below)
• Entrepreneurs can hire a professional business formation service to help them

It’s often a good idea to use a service because this can help save you both time and hassle. It will cost a bit extra, but the process will be much quicker and simpler — and using a service reduces the risk of making a mistake on your paperwork, or missing an important step. 

These services can also be your Resident Agent, which is a position tasked with receiving important legal documents and notice of lawsuits on behalf of your company. It’s required to appoint a resident agent, so this is another way that these services can help you. 

If you do choose to use a service, some great options include Northwest Registered Agent, ZenBusiness, and Bizee. All three offer low-cost services, quality customer service, and an efficient business formation experience. 

If you do end up completing the work on your own, the required steps are outlined below. Keep in mind that the process is a bit different for different types of business entities (LLCs, corporations, etc.)

Form a Michigan sole proprietorship

Follow these steps:

1. Decide if you will operate under your legal name, or use a trade name
2. If you use a name other than your own, you may need to register a trade name
3. Apply for a business license and/or other necessary permits from local governments (city/county)
4. More information here

Form a Michigan LLC

Follow these steps:

1. Name your new LLC 
2. Choose a Michigan Resident Agent (or use a service such as Northwest Registered Agent)
3. File the LLC Articles of Organization online, and pay the $50 filing fee. You can also choose to file this form by mail, with the same $50 filing fee
4. Draft an LLC operating agreement
5. Apply for an EIN with the IRS

Form a Michigan corporation

Follow these steps:

1. Decide on your desired corporate tax structure (S corp or C corp) 
2. Name your new corporation 
3. Choose a Resident Agent (or use a service)
4. Hold an organizational meeting and appoint directors
5. File the Michigan Articles of Incorporation online, and pay the filing fee ($50 to $500+, depending on the number of shares issued). You can also choose to file this form by mail
6. Apply for an EIN from the IRS

Apply for business licenses and permits

Registering your business and forming an LLC or corporation is an important part of starting your business – but in order to operate legally, you will likely also need to obtain certain permits and/or business licenses. 

The specifics vary depending on the type of business you are running, as well as your location. For example, restaurants will need health permits, bars will need liquor licenses, and medical service providers will need various professional licenses and federal permits. You will need to research the specifics that relate to your business type.

There are different requirements at each level of government:

• Local: Cities and counties may require certain business licenses or permits. Contact your county clerk for details.
• State: Michigan may require additional permits and/or licenses in order to operate legally in the state. Check the Michigan State License search for details. 
• Federal: Federal permits/licenses may be required for certain regulated industries, such as construction, medicine and legal services. Check the Small Business Administration (SBA) guide for more details. 

At this time, you should also apply for an Employer Identification Number (EIN). An EIN is a federal tax ID that is required to hire employees. You can apply for an EIN online with the IRS – the application is free and quick. 

Set up your business finances

Beyond securing funding, there are other routine tasks that you need to take care of to get your business’ finances in order. This includes:

• Opening a business checking account. You should have a separate business bank account that you use solely for business purposes. You can open this account at most banks, credit unions and financial institutions. Call ahead to see what documents will be required to open this account.

• Open a business credit card or line of credit. This is not strictly necessary, but most businesses can benefit from having a business credit card, and/or a business line of credit. This can be used for day-to-day expenses and purchases, and may also earn you some rewards. 

• Set up your accounting system. As a business owner, you will need to keep very detailed records about all revenue and expenses. To do this, you’ll want to set up the proper foundation from day one. This could be investing in an account software such as QuickBooks or Xero, hiring a bookkeeper, or at the very least establishing a spreadsheet to track everything. If you do not have any accounting experience, it’s wise to hire a professional to help. 

• Purchase business insurance. Most businesses should have some form of liability insurance, and potentially other forms of business insurance as well. Insurance policies can help protect your equipment and buildings from costly damage, and help shield your company from liability if a worker or customer is injured or otherwise harmed. Speak with a local business insurance provider to get started. 

Hire employees

Unless you plan to operate a solo business (with you as the only worker), you will likely need to hire employees. To do this, you will need a federal employer identification number (EIN), which is a free tax ID number issued by the Internal Revenue Service (IRS).  

An employer identification number is a primary requirement for employers on the federal level, but there are also state-level requirements to satisfy. 

Whenever you hire a new employee, you must report the new hire to Michigan within 20 days of the initial hire. You’ll also need to ensure that the employee holds all appropriate licenses and permits (foodservice workers will need health permits, for example). 

Employers also need to keep up with their tax filing requirements. This includes unemployment insurance tax, withholding tax, and others. Speak with your accountant for details.

At this point, you also should look into setting up your payroll system – whether you handle it yourself, or use a payroll service. 

Michigan business FAQs

Still have questions about running a business in Michigan? Here are some answers to frequently asked questions.