How to start a business in Michigan

Get a federal EIN

Apply free on the IRS website and get the number immediately. You'll need it for the state tax registration, a business bank account, and payroll. Opening a new location? You already have one; the same EIN works in every state.

Sign an operating agreement

This internal document sets out who owns what, how decisions get made, and what happens if an owner leaves. It isn't filed with the state, but banks often ask for it, and it helps protect your liability shield. Single-owner LLCs need one too.

Open a business bank account

Bring your EIN letter, filed formation documents, and operating agreement or bylaws. Keeping business and personal money separate is one of the main things that protects your personal assets.

Check industry licenses and permits

Many businesses need a license or permit before opening, separate from registering the company. Check three levels: the state licensing board for your field, your city or county, and any federal agency that regulates your industry.

• Trades and construction: general contractors, electricians, plumbers, HVAC and roofers usually need a state or local license, and often a bond
• Personal services: salons, barbers, nail and esthetics shops need a shop license plus licensed staff; massage and tattoo studios are licensed too
• Professional services: accounting, engineering, architecture, law, real estate and insurance require state licenses for the people and sometimes the firm
• Child care, elder care and home care need a state facility or agency license and background checks
• Retail with restricted products: alcohol, tobacco and vape, cannabis, firearms (federal FFL), pawn and secondhand dealers
• Auto, transport and logistics: auto dealers and repair shops, towing, movers, and trucks that need a USDOT number
• Money and finance: lenders, mortgage brokers, debt collectors and money transmitters are licensed by the state, often through NMLS
• Local permits for almost everyone: city business license or tax registration, zoning or home occupation permit, sign permit and fire inspection

Decide on S corp tax treatment (optional)

If you want S corp taxation, file IRS Form 2553. The deadline is tight: generally within 2 months and 15 days after the start of the tax year you want it to apply. See Business basics for when it makes sense.

File Articles of Organization with LARA

Michigan business filings are made online through LARA's MiBusiness Registry, launched in June 2025. You'll need a MiLogin for Business account.

Name a Michigan resident agent

Michigan calls it a resident agent. You need one with a Michigan street address to accept legal papers. A commercial agent service works if you have no one local.

File an Assumed Name if the location uses a different name

Only needed if you'll operate under a name other than your registered legal name.

Register with Michigan Treasury

Register online through Michigan Treasury Online (MTO). Paper Form 518 takes 4 to 6 weeks, and phone registration isn't offered.

• Withholding, if you'll have Michigan employees
• Sales tax license, if you sell tangible goods to final consumers
• List every Michigan location; add new ones later in MTO

Check for city income tax

Some Michigan cities, including Detroit and Grand Rapids, levy a city income tax that employers withhold. Contact the City Treasurer where the location sits.

Register to collect sales tax

Michigan calls it a Sales Tax License. Register with the Michigan Department of Treasury through Michigan Treasury Online (MTO) before you make your first taxable sale in Michigan. You'll collect tax from customers and send it to the state.

• State rate: 6%
• Local taxes: No local sales taxes.
• Renews every year; licenses are valid January through December of the year shown.
• Services are generally not taxed, though use tax applies to some, like telecom and hotel stays. Digital goods like ebooks, music and streamed movies are not taxed, but downloaded prewritten software and apps are.

Buy items you resell tax-free with a resale certificate

Give your supplier Form 3372, Michigan Sales and Use Tax Certificate of Exemption so you don't pay tax on inventory you'll resell. The buyer fills it out and gives a sales tax license number for resale at retail; a blanket certificate can last up to 4 years, with no renewal needed while sales recur within 12 months. Keep certificates your own customers give you, too.

• Accepts the Streamlined Sales Tax multistate certificate
• Accepts the MTC Uniform Sales and Use Tax Resale Certificate

Selling into Michigan from another state? Watch the threshold

Out-of-state sellers must register once sales into Michigan pass $100,000 or 200 transactions (previous calendar year), even with no office here.

• Gross sales count, including taxable, nontaxable and exempt sales. Collection starts January 1 of the year after the threshold is met.
• Marketplace facilitators such as Amazon and Etsy collect for third-party sellers; a seller who sells only through a marketplace registers only if the facilitator is not required to collect on its behalf.

Note this Michigan sales tax rule

Residential electricity, natural gas and home heating fuel are taxed at a reduced 4% rate.

Complete Form I-9 and W-4 for each hire

Form I-9 is never mailed to the government. You keep it in your own files and show it only if ICE or the Department of Labor asks for an inspection.

• The employee completes Section 1 by their first day of work
• You review their original documents and complete Section 2 within 3 business days of the start date
• Keep it for 3 years after the hire date or 1 year after employment ends, whichever is later
• Store I-9s together, separate from personnel files, so an inspection doesn't expose other records
• Remote hire? Have an authorized representative check documents in person, or, if you use E-Verify, use the DHS remote video inspection option
• Also collect a federal W-4 for withholding

Post federal workplace notices

Federal posters (minimum wage, EEO, FMLA if you have 50+ employees, and others) go alongside the state ones.

Register with the Unemployment Insurance Agency

Employer accounts moved from MiWAM to the new MiUI system in February 2026. Registering a new business, quarterly wage reports, and wage uploads now happen in MiUI, using a MiLogin for Business account. The agency issues an account number only if registration shows you're a liable employer.

• 2026 new employer rate: 2.7% (5% for construction)
• Taxable wage base: first $9,000 per employee ($9,500 if you're behind on payments)
• Experienced employer rates run from 0.06% to 12.2%

Check income tax reciprocity

Michigan has reciprocity with Illinois, Indiana, Kentucky, Minnesota, Ohio, and Wisconsin. A resident of one of those states working in Michigan claims exemption on Form MI-W4, and you withhold their home state's tax instead. Remote employees who live in a Michigan city with an income tax may owe city tax too.

Buy workers' compensation insurance

Required if either is true:

• You have 3 or more employees at one time, including part-time
• You have 1 or more employees working 35+ hours a week for 13+ weeks in the past 52 weeks

Report each new hire

Report new and rehired employees to the Michigan New Hire Operations Center within 20 days.

Set up Earned Sick Time

Michigan's Earned Sick Time Act took effect February 21, 2025, as amended. Employers with 10 or fewer employees started accrual October 1, 2025. A small business that had no employees before February 21, 2022 has 3 years from its first hire to comply.

• Accrual: 1 hour for every 30 hours worked
• More than 10 employees: you may limit use to 72 hours a year
• 10 or fewer employees: you may cap paid leave at 40 hours a year
• Frontloading 72 hours (or 40 for small employers) at the start of the year skips accrual tracking
• Give employees written notice of your policy

Pay at least Michigan minimum wage

$13.73 an hour in 2026, rising to $15.00 on January 1, 2027. The tipped cash wage is $5.49 in 2026, and tips must bring the total up to the full minimum.

Follow Michigan pay timing rules

Michigan lets you choose your schedule but sets payment deadlines.

• Weekly or twice monthly: pay within 14 days after the pay period ends
• Monthly: pay within 15 days after the pay period ends
• Overtime after 40 hours a week
• Final pay for any departure is due by the next regular payday
• Pay stubs must show hours, gross pay, pay period dates, and itemized deductions

Retirement plan: no state mandate

Michigan doesn't require employers to offer a retirement plan or join a state program. Offering one is still a strong recruiting tool.

Adopt a harassment policy (training recommended)

Michigan doesn't require harassment training for private employers. The Michigan Department of Civil Rights offers training resources.

Post Michigan workplace notices

Michigan wage and hour posters plus MIOSHA safety posters, free to download. See the Posters & training tab for laminated all-in-one options.

Collect a W-9 before the first payment

The W-9 gives you the contractor's legal name and tax ID for their 1099. Check the classification first: if you control how and when they work, they may legally be an employee.

Send Form 1099-NEC to contractors

File with the IRS and send the contractor a copy by January 31. For payments made in 2026 and later, the reporting threshold is $2,000 per contractor per year (it was $600 before).

File 1099s for Michigan residents with Treasury

Stricter than many states: Michigan wants a copy of every 1099 issued to a Michigan resident, even with no Michigan tax withheld. The federal combined filing program doesn't cover the 1099-NEC, so file it directly. 10 or more forms must be filed electronically through MTO.

Check the workers' comp contractor test

For workers' comp, Michigan treats an individual as an employee unless they keep a separate business, offer services to the public, and employ others. A solo contractor who works only for you may count as an employee.

Skip the FinCEN BOI report (U.S. companies are exempt)

FinCEN's final rule, effective August 14, 2026, permanently exempts companies formed in the U.S. from beneficial ownership reporting. Ignore letters or emails demanding a BOI filing fee; they're a common scam. Only companies formed outside the U.S. still file.

File the LLC Annual Statement with LARA

Filed online through the MiBusiness Registry; paper is no longer accepted. Corporations file an annual report instead.

File quarterly UI wage reports

File the quarterly wage and tax report in MiUI by the 25th of the month after each quarter ends.

File Michigan withholding returns

Michigan combines sales, use, and withholding tax on the same returns, filed online only.

• Form 5080, monthly or quarterly as Treasury assigns, due the 20th of the following month
• Form 5081 annual return due February 28
• W-2s to Treasury by January 31

File sales tax returns on time

Treasury assigns monthly, quarterly or annual filing each year; monthly and quarterly returns are due the 20th after the period, and everyone files an annual return by February 28. File a zero return if you had no sales; skipping it can bring penalties.