How to Start a Business in Michigan

Written by Dave Lavinsky

starting a business in michigan

You have a great business idea and business name. Now how do you make your Michigan business a reality? This guide will take you through the steps of starting your own business in Michigan and additional resources to help you launch a successful business.

14 Steps to Start a Business in Michigan

Starting a business is an exciting prospect, but there are a number of steps you need to take in order to open your new business in Michigan.

1. Conduct Market Research

Conducting thorough market research is a critical step in starting a business, as it allows you to gather important information about your target market and how best to reach them. It can help you determine whether there is a demand for your product or service, how much competition you will face, and what pricing strategy to use.

Basic market research involves studying your target market, including who they are, what they want or need, and how much they’re willing to pay for it. You’ll also want to research your competition and find out what they’re doing well and where they’re falling short.

Once you have this information, you can develop a business plan that outlines your goals and how you plan to achieve them.

2. Write a Business Plan

business plan is an essential asset in every entrepreneur’s toolbox. No matter how small the business, how grand the vision, how limited the funding — a business plan can make or break a new business venture.

Business plans are not written in stone; they are living documents that evolve over time to reflect changes in your business and the marketplace around it. Even so, having the best business plan template at the beginning can be incredibly helpful to launch your business.

If you are starting from scratch, ensure you include the following essential components:

Other resources are available through the Small Business Administration (SBA) and Michigan Small Business Development Center (SBDC) to help you write a great business plan. Our collection of sample business plan can help you determine the best type of business to start.

If you are seeking funding for your business, a business plan is also required as part of the application process.

3. Establish a Legal Business Entity

There are a number of different business structures to choose from in Michigan, and the one you choose will have a big impact on how your business is run.

Informal business structures include those that are not registered with the state or county, which means they are typically easier to set up. However, you won’t have any of the legal protections offered by more formal business entities. If your informal company is sued, fails financially, or goes through another similar crisis, its status may be subject to challenge by creditors or others. Examples of an informal business structure include sole proprietorship and general partnership.

A formal business structure includes those that must register with the state and/or county which typically requires a filing fee. The benefits of choosing one of these formalized structures include:

  • Offers greater liability protection for you and your business in case of financial or legal trouble
  • Enables you to raise money and attract investors
  • Offers tax benefits
  • Provides a means to sell your business when you’re ready to move on

Examples of formal business structures include S corporation, C corporation, limited liability company (LLC), and limited partnership (LP).

Choosing the business structure that is right for you will depend on how many people will be involved in the business, how you plan to distribute profits and losses, your preferred tax structure, and how much money you want to invest upfront.

To learn more, visit the Michigan Corporations Division website. To register your business online, visit the Corporations Online Filing System (COFS) website.

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4. Choose a Business Location

Once you have your business plan in place, it’s time to start looking for a location. There are a number of factors to consider in choosing the best location for your business. These may include the following:

  • Access to Customers – How easy will it be for your customers to access your business? Consider how many people live, work, or shop in the area.
  • Demographic Snapshot – Looking at the overall makeup of the community can give you an idea of how much demand there might be for your product or service. Look for trends in age, gender, race, and income. Take note of how many homes are located in the area too; how many people rent versus how many own homes? This information will be helpful in determining how much disposable income residents have to spend on your product or service.
  • Competition – How many other companies offer products or services similar to yours? If there are a lot of them, how will you set yourself apart from them? Can you price your product or service more competitively than they do? Do some research on how much people spend on these goods and how often they buy them.

5. Licenses and Permits

Licenses and permits are a necessary part of starting any Michigan business. In Michigan, there are a number of different licenses and permits you may need, depending on the type of business you’re starting and the municipality in which you’re doing business. Some common licenses and permits include:

  • General Business License
  • Sales Tax License
  • Federal Employer Identification Number (EIN)
  • Zoning Approval
  • Health Department Approval
  • Fire Department Approval

Search your business type here to determine which permits and licenses are applicable to your business. You can learn more about the regulations by industry by visiting the Michigan Department of Licensing and Regulatory Affairs (LARA) website.

In most cases, you will need to apply for licenses and permits with the municipality. The process for getting a license varies by city and county, but often involves submitting an application along with some form of payment. You may also need to submit copies of your business plan and other materials as part of the application process, so make sure you have those ready before you start applying.

Additionally, many cities require that you apply for a zoning permit before you open your business. Zoning permits show that the area in which you plan to open your business is zoned properly and, therefore, acceptable by local authorities for this purpose.

You can apply for a federal employer identification number by visiting the Internal Revenue Service (IRS) website.

6. Open Business Bank Accounts

Once you have your licenses and permits in hand, it’s time to open a business bank account. This will help you keep your personal and business expenses separate. It also makes bookkeeping and tax preparation much easier come tax season.

When opening a business bank account, the business owner will need to provide the bank with some basic information about the company, including the company’s name, physical address, and contact information.

7. Learn About Intellectual Property Ownership

When starting a business in Michigan, it’s important to protect your intellectual property (IP). This includes any ideas, inventions, or creative works that are unique to your company. In order to protect your IP, you need to register it with the United States Patent and Trademark Office (USPTO).

The USPTO is responsible for granting patents and trademarks to businesses and individuals. A patent protects an invention or process, while a trademark protects a brand name, logo, or slogan.

There is a filing fee associated with registering your IP with the USPTO, but it’s worth it to protect your hard-earned ideas. The USPTO offers a number of resources on their website to help you get started, including how to search the USPTO’s databases to see if your idea or product has been patented already.

8. Get Business Insurance

One of the most important things you can do when starting a business is to get business insurance. This will protect your company in the event that something goes wrong – for example if you’re sued or your property is damaged.

There are a number of different types of business insurance, so it’s important to talk to an insurance agent to find the right coverage for your company. Some common types of business insurance include:

  • General liability insurance: This covers any accidents or injuries that occur on your property.
  • Commercial auto insurance: This covers your vehicles, which could be used for business purposes.
  • Workers’ compensation insurance: If you have employees, the workers’ disability compensation insurance will help cover medical costs if they are injured or disabled on the job.
  • Property insurance: This covers damage to your property, such as from a fire or theft.
  • Professional liability insurance: If you have a business license, you will need to have professional liability insurance in order to protect yourself against being sued.
  • Unemployment insurance: You’ll need to pay into this if you hire employees, but the unemployment office will cover their lost wages if they become unemployed.
  • Business interruption insurance: This covers lost income if your business is forced to close due to a natural disaster or another catastrophic event.

The best way to find an insurance agent is by asking around. Other business owners are a great resource for referrals and recommendations. You can also find a list of insurance agents on the website of the National Association of Insurance Commissioners (NAIC).

9. Establish Your Accounting and Tax Filing System

One of the most important tasks for any business is keeping track of its finances. This includes tracking business expenses and business income, as well as preparing tax returns. You’ll need to establish an accounting system to make tax filing easier.

There are a number of different accounting software programs available, so it’s important to choose one that works best for your business. Programs like QuickBooks or Peachtree allow you to track your income and expenses, as well as prepare invoices and generate reports.

When it comes to filing your taxes, this is based on your chosen business entity. Each type has its own tax requirements.

In Michigan, the state offers a Small Business Resource Guide that provides information about how to start a business, as well as how to file taxes for your business. You can find the guide here.

10. Create a Marketing Plan

A marketing plan is essential for any business. It outlines your marketing goals and how you plan to achieve them. It should include marketing strategies for both online and offline marketing, as well as how you plan to reach your target audience.

Common marketing strategies include:

  • Search engine optimization (SEO): This is how you make sure your business website appears high in search results.
  • Pay-per-click (PPC) advertising: This is how you advertise on search engines like Google, Yahoo, and Bing. You can pay for your ad to appear at the top of the search results page or when certain keywords are searched.
  • Content marketing: This involves creating blog posts, how-tos, eBooks, videos, and webinars that target your audience. You can then use these assets to build a relationship with your customers and create brand awareness.
  • Social media marketing: This includes using platforms like Facebook, Instagram, Twitter, Pinterest, and YouTube to connect with your audience. You can also use social media accounts to distribute content you’ve created.
  • Email marketing: This is how you promote your business through email newsletters. It can help build brand awareness and attract new customers.

One of the most important parts of a marketing plan is your budget. You need to determine how much money you have to spend on marketing, and how you will allocate those funds.

Your marketing plan should also include a timeline, so you can track your progress and make adjustments as needed.

If you’re not sure how to create a marketing plan, there are a number of resources available to new business owners. You can also find additional resources at the U.S. Small Business Administration (SBA).

11. Obtain Funding For Your New Michigan Business

One of the most difficult things for new business owners is obtaining startup funding. This can be especially challenging if you don’t have any collateral or strong credit history.

There are a number of different ways to obtain funding for your business. One option is to seek out investors, either friends and family, angel investors, or venture capitalists. You can also apply for small business grants, a business credit card, or small business loans from banks or other lending institutions.

If you’re not sure where to start, the SBA offers a variety of resources for small businesses, including information about how to find business funding. You can find the SBA’s funding directory here.

12. Recruit and Hire Employees

When it comes to recruiting and hiring employees, it’s important to take your time and be selective. You want to find individuals who are the best fit for your business and have the skills and experience necessary to help you achieve your goals.

The recruitment process can be time-consuming, but it’s important to interview as many candidates as possible to ensure you find the right fit. You should also make sure you have a well-defined job description so you can easily identify which candidates are a good match.

Once you’ve hired your employees, it’s important to onboard them properly. This includes providing them with information about your business and how they can best contribute to your success. You should also set expectations and establish clear rules and procedures.

13. Stay Organized

Running a business is no easy task, and it’s important to stay organized in order to be successful. This includes creating a system for tracking your finances, as well as staying on top of your marketing efforts.

Here are some tips for how to be organized as a small business owner:

  • Create systems for how you handle your finances
  • Keep track of your income and expenses
  • Update a calendar with important business dates
  • Schedule regular meetings with your employees
  • Stay on top of your marketing efforts and create a schedule
  • Create systems for how you track and monitor your marketing efforts
  • Document how you’ve made an impact so you can report your progress

Staying organized from the beginning will help ensure your business is a success and that you’re always operating at full capacity.

14. Open for Business

You are now ready to open your doors and share your product or service with the world. Be prepared for your business to experience both success and failure, as well as how you will react during each situation.

It’s also important to give back to the community that helped you get started. Volunteering is a great way to stay involved in your community, as well as a way to learn how you can improve how you run your business.

By following these steps, you should be able to get your Michigan business off the ground and running successfully. The U.S. Small Business Administration (SBA) offers a variety of resources for how to start a business and how to stay in compliance once your small business is up and running.


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