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Michigan Business License Basics

Michigan Business License Basics

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Michigan Business License Basics

Starting a small business in Michigan often means registering with several federal, state, and local agencies. Let’s review common Michigan business license registrations so your business starts off right.

Related: Guide to starting a business in Michigan 

Setting Up the Business

Sole proprietorship: In Michigan, a sole proprietorship is an unincorporated business owned by a single individual. The owner has complete control over the business but is personally liable for all debts and obligations. No formal registration is required, making it the simplest and most common form of business structure.

General partnership: A general partnership in Michigan is an unincorporated business owned by two or more individuals who share management responsibilities, profits, and losses. Partners have unlimited personal liability for the partnership’s debts and obligations. No formal registration is required, but a partnership agreement is recommended to outline the partners’ roles and responsibilities

Corporation: A corporation in Michigan is a legal entity separate from its owners, providing the owner’s (shareholders) limited liability protection. Corporations are the most complex business structure to set up and have specific administrative requirements. 

Limited Liability Company (LLC): An LLC in Michigan combines aspects of sole proprietorships and corporations, offering flexibility in management and taxation. Owners, called members, have limited personal liability for the LLC’s debts and obligations, but they aren’t as complex as corporations. 

Related: Comparison of Business Structures

What Licenses Do Michigan Businesses Need?

With the business structure out of the way, we can begin looking at the different types of registrations businesses in Michigan may need. There isn’t a standard business license, as requirements vary depending on where the business is located and what it does. Here is a general overview of the different registrations your business may need.

General Business License

There is no general state of Michigan business license, however, many cities require businesses to be licensed to operate. Rules for business registration vary depending on location and what the business does. Below are a few cities that have local business license requirements.

  • Detroit: In order to open a business in Detroit, a Certificate of Occupancy is required from the Zoning Division before operating a business out of a building. After the building is approved for use, a Business License is required from the Business License Center.
  • Grand Rapids: The City of Grand Rapids requires a business license for certain businesses such as dance halls, home-based businesses, mobile food vendors, and more.
  • Warren: Some businesses operating in Warren’s city limits are required to be licensed by the City Clerk, such as bowling alleys, self-serve car washes, caterers, and tattoo parlors.
  • Sterling Heights: Every business operating in the city of Sterling Heights must register with the City Clerk. There is a one-time filing fee to register a new business. In addition to the Business Registration, certain businesses such as banquet & event facilities, tattoo studios, junk yards, businesses selling alcohol, and several more.
  • Lansing: The City Clerk’s Office issues business licenses for entities operating billiard rooms, health clubs, ice cream vendors, and others.
Take the guesswork out of figuring out what licenses and permits are required to start your business with license research packages from Bizee and LegalZoom.

For as little as $99, you can save a lot of time and know your business is in compliance with local, state, and federal requirements. 

Assumed Name Registration

While not a license, it’s common for Sole Proprietorships and Partnerships operating under a business name that is different from the full name of the owner(s) to register for an Assumed Name Certificate (also known as a Doing Business As or DBA) with the County Clerk’s Office in the county where the business is located.

Building & Zoning Permits

Zoning: Check with your local zoning department to ensure your intended use complies with the zoning district. To check zoning restrictions, contact your local city or county planning office. They’ll guide you on whether your business activity is allowed in your desired location and what

Building Permit: A building permit is required for most construction, alterations, or additions to structures in Michigan. To get one, submit your building plans to the local building department for review. They check if the plans meet safety, zoning, and building code requirements. Approval is needed before starting construction.

Signage Permit: In Michigan, most local governments regulate the size, location, and type of business signage. Before installing any signs, check with your local building or planning department for specific requirements and to obtain a sign permit. The application process typically involves submitting a design sketch, site plan, and payment of fees.

Michigan Sales Tax License

Retailers & wholesalers selling tangible personal property, some contractors, and certain services in Michigan need to register for a Michigan Sales Tax License (also called a Sales Tax Permit) from the Michigan Department of Treasury.

Certificate of Exemption

Businesses purchasing merchandise to resell usually want to obtain a Michigan Certificate of Exemption to avoid paying sales tax on inventory that is being purchased to resell to their customers.

Professional License

A variety of professions in the state are regulated and need to be registered before offering certain services. A few common occupations that require licensing in Michigan include; garbage haulers, dance studios, pet shops, and others. Additional information, fees, and licensing requirements for professions are available from the Michigan Department of Licensing and Regulatory Affairs (LARA).

Employer Identification Number (EIN)

The Michigan Employer Identification Number (EIN), also known as a Federal Tax Identification Number, is a unique nine-digit number assigned by the Internal Revenue Service (IRS) to businesses operating in Michigan. It is used for tax filing and reporting purposes, similar to how an individual uses a Social Security number. Companies can apply for an EIN through the IRS website or by submitting a paper form.

Next Steps

These are some of the most common business licenses a new business in Michigan will need to register for. Be advised that while it’s a good start, there are so many different licenses that may be needed, be sure to double-check with the City Clerk’s Office, Chamber of Commerce, and/or Economic Development office in your area before opening your doors.

Michigan Business License Basics

Michigan Business License Basics

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