In Michigan, registering a business is not necessarily complicated, but there are several steps to take and decisions to be made by the business owner. This guide will provide the procedures and associated links to get started.
Know your business
When registering for a small business license, it’s important to understand what type your business will be based on size, assets and ownership. The list includes Professional Service Corporation, “S” Corporation, Nonprofit Corporation, Limited Liability Company, Limited Liability Partnership, Corporation, General Partnership and Sole Proprietorship. Be sure to identify properly as regulations vary between each choice.
Obtain identification and register
Beginning to register a small business begins with obtaining a Federal Employer Identification Number (FEIN), which is like the business’ social security number. It will be needed for financial transactions, especially when applying for credit. Once the number has been assigned, the business will need to be registered with the County Clerk. If the business is a sole proprietorship and the full legal name will not be used, it must be registered as an “assumed name.”
Unemployment and sales tax
Next, the business owner must obtain an Unemployment Insurance Account through the state of Michigan. The account will be needed before any employees can be hired. This number will also be necessary when filing quarterly taxes. Then the business can apply for the Sales Tax License. In Michigan, the sales tax is 6 percent for non-grocery items while grocery items are not taxable. Even if the plan is to sell non-taxable items, having a Sales Tax License is one more step in making the business legitimate, and also allows the business to make purchases for resale without paying the vendor(s) sales tax.
Register the business and apply for any permits
Finally, the business must be registered with the Michigan Department of Treasury. This will make sure that sales tax collected will be paid to the state. Various businesses need permits to operate, which can be found on the State License Search page.
Any additional information can be found on the Michigan Business One Stop website.
This article was written by Chase Hunt for CBS Small Business Pulse.