How to Register Your Small Business in Michigan
You’ve decided to start a small business – congratulations! This is a very exciting (and busy!) time and you’ve got a lot of decisions to make, but one of the very first steps you take should be registering your business and obtaining a formal license. This may seem like a complicated process at first, but don’t worry, standing in line at the DMV for hours isn’t part of the deal. Here’s how to get your business registered with the State of Michigan.
Identify the Business Structure
Prior to registering your business, you need to decide what business structure is best for you. In fact, we also wrote a blog about the Different Types of Business Structures. Check it out for reference.
In short, small businesses consider the following options:
- Sole Proprietorship: is simplest business structure, it involves one sole owner and doesn’t require much paperwork or many fees, you pay personal taxes and are personally liable.
- Partnership: general partnerships involve one or more people who will contribute to the business and hold themselves personally liable. A limited partnership means some partners are limited, or not personally liable.
- Limited Liability Company (LLC): is a type of structure that shields you from personal liability. Similar to a sole proprietorship, an LLC is not a separate entity, and personal income taxes are paid for any profits from the business.
- Corporation: A corporation is a bit more complex than the other types of business structures in that it creates privileges and liabilities beyond an individual. It becomes its own entity and pays its own taxes.
Obtain a Federal Employer Identification Number (EIN)
Once you’ve settled on an appropriate business structure, register for an EIN, this is essentially a business’ social security number. It will be needed for financial transactions, especially when applying for credit, and filing taxes. You need an EIN if you:
- Started a new business
- Hired or will hire employees, including household employees
- Opened a bank account that requires an EIN for banking purposes
- Hanged the legal character or ownership of your organization (for example, you incorporate a sole proprietorship or form a partnership)
- Purchased an existing business
Visit the IRS website for step-by-step instructions. It doesn’t take long at all. This EIN is your permanent number and can be used immediately for most of your business needs, including
- opening a bank account
- applying for a business license
- filing a tax return by mail
However, it will take up to two weeks before your EIN becomes part of the IRS’s permanent records. You must wait until this occurs before you can file an electronic return, make an electronic payment, pass an IRS Taxpayer Identification Number matching program.
Register Your Business Name
Michigan businesses operating under a name different from the owner’s last name must register that name with the state. In Michigan, like in other states, these sometimes are referred to as trade names, “doing business as” (dba) names, assumed names or aliases. Depending on the type of business you have, you will be required to register your business name at either the county or state level.
Michigan requires business trade names to be unique from other business names used in the state. To make sure your name isn’t already taken, conduct a name availability search on the Department of Licensing and Regulatory Affairs website. The search results will list businesses registered at the state level.
Next, conduct a search at the county level, focusing on where your business is located. This is done through your local county clerk’s office. Many county offices, may have online access to their name databases. If you live in Kent County, Michigan you can visit their website here.
Assumed Name vs Co-Partnership Name
If your business is a sole proprietorship or general partnership, called a co-partnership in Michigan, register your business name with the county clerk’s office. There are two types of name registrations at the county level: assumed name and co-partnership name.
- Businesses with one or more owners can file an assumed name registration. With this type of registration, changes to the business cannot be made at a later date without the written authorization of each owner who signed the original document.
- Co-partnership name registrations are limited to businesses with two or more owners. Only one owner is required to sign the name registration form, in front of a notary public. With this registration type, future changes can be made byany owner of the business.
Information required on the county clerk forms includes owners’ names and addresses, as well as the chosen business name and location. Some forms also require a description of the business’ purpose. Sign the form in front of a notary public and deliver to the county clerk’s office in person or by mail along with filing fee, which also differs between counties.
Some county clerks offer online filing, which is very convenient. The registration is good for 5 years and renewable 30-90 days prior to expiration.
State of Michigan
Michigan requires corporations, limited liability companies, and limited partnerships to register with the state Department of Licensing and Regulatory Affairs. Complete a Certificate of Assumed Name form, which is available on the department’s website along with other corporate forms and publications. The completed form may be mailed to the Michigan Department of Licensing and Regulatory Affairs, Corporations, Securities & Commercial Licensing Bureau, Corporations Division, P.O. Box 30054, Lansing, MI 48909. If the business is a corporation or limited partnership, include a $10 filing fee. If it is a limited liability company, the filing fee is $25.
Federal Licenses and Permits
You may need to get a federal license or permit if your business activities are regulated by a federal agency. Examples of this include commercial fishing, aviation, agriculture, or manufacturing/selling alcoholic beverages. Click here to see if any of your business activities are listed on the Small Business Administration site, and then check with the right federal agency to see how to apply.
For more information and detailed, step-by-step instructions, check out the Small Business Development Center’s Guide to Starting and Operating a Small Business.
We hope this guide helps you navigate the waters of registrations and licensing. If you’re struggling to decide on a business name, structure, or formulate first steps like a business plan and financing, enroll in our Intro to GROW classes, and any of our other workshops or training programs. We are here to help you every step of the way!