Michigan is one of the cheaper states to form a business in, with a $50 filing fee and a sales tax that never gets more complicated than the flat state rate, no city or county add-ons to track. Here's what it takes to start a business in Michigan in 2026.
1. Which business structure fits you?
Before you file anything, it helps to know what you're actually choosing between.
- Sole proprietorship. No filing required to start, and you and the business are legally the same entity. Simple, but you're personally liable for whatever the business owes.
- Partnership. Two or more people running a business together, with the same liability exposure as a sole proprietorship, just split across partners.
- LLC. The most common structure for small businesses in Michigan. It separates your personal assets from the business's debts and lawsuits.
- Corporation, either S-corp or C-corp. More paperwork and more formality, usually worth it once you're bringing on investors or multiple shareholders.
For a deeper comparison, see our guide on choosing a business structure.
LLCs and corporations register with the Michigan Department of Licensing and Regulatory Affairs (LARA), Corporations Division, the agency that handles business filings statewide. Sole proprietorships and general partnerships don't register there.
2. Register your business
Forming an LLC
You form an LLC in Michigan by filing Articles of Organization with LARA. The filing fee is $50, one of the lowest in the country, and standard processing takes about 3 to 5 business days.
Every LLC needs a resident agent, Michigan's term for a registered agent, with a physical in-state address. You can act as your own agent, or hire a commercial service.
Michigan doesn't require an operating agreement by law, but it's still worth writing one, particularly for multi-member LLCs, to spell out how decisions and profits get split.
Sole proprietorships and DBAs
Sole proprietorships don't file with LARA. If you're operating under an assumed name, you'll register it as a Certificate of Assumed Name with the county clerk in the county where your business is located.
3. Get an EIN
An Employer Identification Number is free straight from the IRS and takes about 15 minutes online. You'll need one to open a business bank account, hire anyone, or file most business tax forms, even if you're a single-member LLC with no employees.
4. Check licenses and permits
Michigan doesn't issue a single general business license either. What you need depends on your industry and city: professional licensing for regulated fields, a sales tax license from the Department of Treasury if you sell taxable goods, and any local permits your city requires. Our guides on professional licensing by industry and zoning laws for home businesses cover more of this.
5. Understand Michigan taxes
Michigan has a flat personal income tax rate of 4.25%. A handful of cities, including Detroit, Grand Rapids, and Lansing, add their own local income tax on top, so where you live and work matters even though the state rate doesn't change. If your LLC elects corporate tax treatment, the Michigan Corporate Income Tax is 6%, though businesses with gross receipts under $350,000 are exempt.
Sales tax is a flat 6% statewide, and unlike most states, Michigan doesn't allow cities or counties to add anything on top, so the rate is the same everywhere in the state.
6. Stay compliant
Every Michigan LLC files an Annual Statement with LARA by February 15 each year, starting the year after formation. The fee is $25. There's no monetary late penalty for missing it, but falling behind for two or more consecutive years can lead to involuntary dissolution, so it's still worth filing on time.
Michigan business costs at a glance
| Item | Cost |
|---|---|
| Articles of Organization (LLC) | $50 |
| Annual Statement (every year, due Feb 15) | $25 |
| Resident agent service (optional) | $39 to $150/year |
| EIN | Free (IRS) |
| State income tax | 4.25% flat (some cities add local income tax) |
| State sales tax | 6% flat, no local add-on |
Frequently asked questions
How much does it cost to form an LLC in Michigan?
$50, one of the lowest filing fees in the country, with standard processing in 3 to 5 business days.
Does sales tax vary by city in Michigan?
No, it's a flat 6% statewide with no local additions allowed.
What's the personal income tax rate in Michigan?
A flat 4.25%, though a handful of cities including Detroit, Grand Rapids, and Lansing add their own local income tax.
When is Michigan's Annual Statement due?
By February 15 each year, starting the year after formation, for $25.
Is there a penalty for missing Michigan's Annual Statement?
No direct monetary penalty, but falling behind for two or more consecutive years can lead to involuntary dissolution.
Fees and rates above come from the Michigan Department of Licensing and Regulatory Affairs and Department of Treasury as of 2026, and they do change over time, so double check before you file. None of this is legal or tax advice. Talk to a Michigan-licensed attorney or CPA about your specific situation.