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Doing business in

Michigan

Navigate Michigan’s business landscape with ease—whether you’re incorporating, expanding, or managing tax compliance. Commenda helps you stay ahead with automated solutions for incorporation, compliance, and tax filings.
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michigan

Business Overview

Michigan maintains its automotive manufacturing heritage while diversifying into advanced manufacturing, technology, and defense sectors. The state offers competitive business costs, specialized workforce development programs, and R&D facilities that support innovation and business growth.

Key Facts & Figures

Category Details
Capital Lansing
Major Cities Detroit, Grand Rapids, Warren, Sterling Heights, Ann Arbor
State Sales Tax Rate 6%
Local Sales Tax Rate No local sales tax
Corporate Income Tax 8% flat rate
Physical Nexus Threshold Physical presence including employees, offices, or inventory
Economic Nexus Threshold $100,000 in annual sales or 200 transactions

Did you know?

Michigan is the center of the automotive industry, with Detroit traditionally known as the ‘Motor City’ and home to the ‘Big Three’ automakers.

Setup & Compliance

Michigan offers streamlined business registration with moderate regulatory requirements.

Michigan Business Setup Process:

  1. Choose Your Business Structure: Consider tax implications and liability protection needs.
  2. Register Your Business: File formation documents with the Michigan Department of Licensing and Regulatory Affairs.
  3. Register for Tax Accounts: Register with the Department of Treasury for sales tax and withholding.
  4. Obtain Required Licenses: Research and secure necessary state and local business licenses.
  5. Register as an Employer: Register with the Unemployment Insurance Agency if hiring employees.

Ongoing Compliance Requirements:

  • Annual Statements/Reports: Michigan entities must file annual statements or reports with LARA.
  • Sales Tax Collection: Collect and remit 6% state sales tax on taxable transactions.
  • Corporate Income Tax: C-corporations pay 6% corporate income tax.
  • Employment Taxes: Employers must register for unemployment insurance and workers’ compensation.
  • Industry-Specific Regulations: Various professions and industries require specialized licensing through state boards.

Hiring & Payroll

Michigan balances business interests with worker protections in its employment regulations.

Michigan Payroll Taxes:

  • Unemployment Insurance: Rates from 0.1% to 6.3% on first $9,500 of wages.
  • State Income Tax Withholding: Flat 4.25% of taxable wages.
  • Workers’ Compensation: Required for all employers with some exceptions.

Michigan Employment Laws:

  • Minimum Wage: $10.10 per hour ($3.84 for tipped employees).
  • Paid Medical Leave: Employers with 50+ employees must provide 1 hour for every 35 hours worked, up to 40 hours annually.
  • Social Media Privacy: Employers cannot request employee social media passwords.
  • Final Paychecks: Due on regular payday for the period in which termination occurred.
  • Michigan is a right-to-work state.

State Incentives

Michigan provides comprehensive economic incentives to support business growth and innovation.

Key Business Incentives:

  • Michigan Business Development Program: Grants and loans for business expansion.
  • Good Jobs for Michigan Program: Tax incentives for significant job creation.
  • Brownfield Redevelopment Tax Credit: Encourages development of contaminated properties.

Small Business & Startup Support:

  • Michigan Small Business Development Center: Comprehensive business resources.
  • Microloan Program: Support for small business financing.
  • Opportunity Zones: Tax benefits for investments in designated areas.

Regulatory Considerations

Michigan maintains a comprehensive regulatory framework supporting diverse business sectors.

Key Business Regulations:

  • Data Privacy: Laws protecting consumer and business information.
  • Environmental Compliance: Regulations for automotive and manufacturing industries.
  • Professional Licensing: Required for various service-based professions.

Additional Regulatory Areas:

  • Automotive Industry Compliance.
  • Manufacturing Sector Regulations.

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