If you’re dreaming of launching your own business, Michigan might be the perfect place to turn that dream into reality. Known for its economy and entrepreneurial spirit, the Great Lakes State offers a supportive environment for new businesses.
The state’s opportunities for innovation and entrepreneurship make it an attractive destination for businesses of all kinds. Wondering how to start a business in Michigan? You’ve got questions and we’ve got answers in this quick guide.
How To Start A Business In Michigan: 3 Factors That Determine Business Costs
Not sure how to start a business in Michigan? You can’t get a business going without considering the potential costs before you jump in. Think through these factors before you open your doors. Obtaining business insurance is crucial to protect against unexpected events and
1. Business type
The startup costs for a starting small business in Michigan can be minor if it’s home-based. It’s different from opening a retail store or restaurant. Often, these business models require employees and things like inventory. When choosing a business entity, such as a sole proprietorship, partnership, corporation, limited liability company (LLC), or nonprofit, consider the registration and ongoing requirements for each type. Find the why behind your business and what type of operation suits you.
2. Location
Costs like rent and labor vary from state to state. A small business based in a city could have higher overhead costs due to its footprint. Businesses in towns or rural areas usually have fewer concerns about the budget.
3. Industry
Some industries, like law, come with more regulations. They also have requirements for licenses and insurance. It’s important to estimate your total startup costs based on what sector you plan to launch in.
How to start a business in Michigan in 7 steps
There are steps that make up the foundation of every successful venture. Coming up with a viable business idea and conducting thorough market research are crucial first steps. Follow these steps to start your business in Michigan.
1. Identify your trade name
A trade name is typically referred to as DBA or “doing business as”. If another company registered their DBA as the same name, depending on your state’s legislation you may not be able to use it. Be sure to check your Michigan’s specifications for trade names.
Additionally, obtaining an Employer Identification Number (EIN) from the IRS is necessary for various financial and tax purposes, such as establishing bank accounts, fulfilling tax obligations, hiring employees, and obtaining permits and licenses.
2. Write your business plan
Your business plan lays out the details of your strategy. Careful planning will guide your actions and help you start the business on a path to success. A comprehensive business plan will include:
- An executive summary of the business strategy.
- A company overview that addresses key questions about your business.
- A market analysis summarizing your market research.
- A section describing your company mission, goals, and objectives.
- A description of your products or services.
- A go-to market strategy detailing your unique selling proposition and promotional tactics.
- A financial strategy that includes a proposed budget and projected financial statements for five years, as well as any prospective funding needs.
- The importance of tracking business income and understanding its tax implications, including the necessity of a business bank account for managing business finances.
The goal is to cover all the core information about your business, without overwhelming it with irrelevant details. The goal is to summarize your business plan for yourself and potential stakeholders.
3. Determine the right business structure
The legal structure you choose impacts everything from payroll taxes to operations. Evaluate the pros and cons of each. You can do this by considering things like ownership, funding needs, and administrative work.
Common structures for businesses just starting out include:
Sole proprietorship: The company and the owner are considered the same. The owner is personally responsible for all business responsibilities.
Partnerships: A business with more than one individual. A partnership requires a partnership agreement, and partners have limited liability for the debts of the LLP.
Limited liability companies: Thinking about how to start an LLC business in Michigan? These can be owned by one or more people/companies and limit your personal liability for business debts. They’re one of the easiest business structures to establish. The process of incorporation and filing fees for a limited liability company can vary by state.
It’s also crucial to manage your business finances by setting up separate financial accounts and establishing a business bank account and credit card to handle the company’s financial transactions.
4. Register the business
One of the first major steps is legally registering your trade name with federal or state authorities. Look for potential trademark conflicts. Also, take steps to protect your intellectual property rights if that applies to you. It is crucial to comply with regulatory affairs when registering a business entity with the Michigan Department of Licensing and Regulatory Affairs.
Obtain a Michigan business license and permits required for your industry too. You’ll also need to set up the appropriate tax accounts and procedures for payroll. Many states and localities have their own obligations to ensure regulatory compliance from day one. Understand all rules that apply to your company.
If your business conducts taxable sales within Michigan, you need a Sales Tax License through the Michigan Department of Treasury. This allows you to gather and submit sales tax on behalf of the state. You can register with the Michigan Department of Treasury online or through the mail.
6. Secure funding and open a business bank account
At this point, you should have a good answer to the question: How much does it cost to start a business? Now, you can begin putting money toward those expenses you have before launch. You’ll need to have your financing in place before you can get operations going.
You may need to get a small business loan or investors beyond the capital you have access to. Factor in the time it will take to do that. Keep in mind that you should also have some money set aside in a bank account to cover ongoing or unexpected expenses. Additionally, opening a business bank account is crucial for tracking income and expenses, maintaining liability protection, and separating business finances from personal finances.
7. Obtain business insurance and officially launch your business
With planning complete and operations ready, it’s finally time to start selling your products or services. Have a strong promotional strategy for attracting those first customers. Also, continue keeping an eye on your expenses to keep your business in good standing as you get the ball rolling.
Checking off those key milestones is just the start. But getting the foundational work done upfront goes a long way in setting yourself up for sustainable growth. Putting in the work now will continue to pay off as the business evolves. Additionally, consider the costs and considerations specific to operating an online business.
EASY APP
Using Homebase to optimize your business.
Having the right tools and technology in place is valuable as you start this journey. Homebase provides an all-in-one platform that can power your business. Homebase also provides valuable tools and resources specifically tailored for small business owners. The Small Business Administration offers additional resources to help estimate employee costs and apply for startup loans and business credit cards.
Simplified scheduling and labor management
Optimizing your staffing levels is important, especially for businesses with shift-based teams. Homebase scheduling helps managers create optimized schedules based on demand and employee availability. You can duplicate schedules or build from templates to save time.
Streamlined time tracking and payroll
Manual timesheets can be a hassle. Homebase enables employees to easily clock in/out from their mobile apps or on-site tablets. Track hours worked, PTO, and breaks. When it’s time for payroll, approved timesheets integrate with payroll processing. Additionally, understanding state income tax obligations is crucial when processing payroll.
Centralized employee records and compliance
Maintaining accurate records and adhering to labor laws is important. But it can also be challenging. Homebase provides a hub to store and access all digital employment documents and policy resources. This helps you keep an eye on everything from paying Michigan minimum wage properly to breaks.
Streamlined hiring and onboarding processes
Post open roles to multiple free and paid job boards right from Homebase. Easily review applicants and schedule interviews. Then, onboard new hires with digital paperwork. New employees get instant access to a time clock and schedules.
Effective team communication
Staying aligned across teams is a must. With Homebase’s team messaging tools, you can instantly share updates and shift details. Message individuals directly or get announcements out to an entire team.
From applicant tracking to team communication, Homebase equips your startup with an infrastructure that’s right-sized for small businesses. All while being powerful enough to scale up operations over time.
It’s time to start your small business in Michigan.
Being a new business owner comes with a lot of responsibilities and opportunities. When you have a clear blueprint, you can speed up your path to success. That empowers you to put the tools and systems in place that will support you. Various funding options and incentive programs are available specifically for Michigan businesses.
From there, you can focus on things like remaining compliant and coordinating your team. Thriving businesses are built on operational efficiencies that allow you to maximize productivity and profitability from the first day.
With Homebase, you get everything you need to take control of your business. Designed for hourly work, Homebase will help you schedule your team, track their hours, and run payroll seamlessly. You’ll also have a team communication app that keeps you and your employees on the same page. Homebase even has expert H.R. guidance to help you comply with government regulations without an in-house H.R. team.
Homebase is the all-in-one management app that simplifies running your small business. Get started now for free
