Michigan ranks among the cheaper states to form a business in: a $50 filing fee, and a sales tax that never gets more complicated than the flat state rate, with no city or county add-ons to track. What follows is the full rundown on starting a business in Michigan in 2026.
1. Which business structure fits you?
Every business starts with a structural choice, and Michigan gives you the same four options most states do.
- Sole proprietorship: no paperwork to start, and legally you and the business are the same thing, for better or worse when it comes to liability.
- Partnership: two or more people running things together, carrying the same personal liability a sole proprietorship does, just divided up.
- LLC: the structure most small Michigan businesses land on, since it keeps your personal assets separate from what the business owes.
- Corporation, S-corp or C-corp: more formal, more paperwork, usually the right call once investors or multiple shareholders are involved.
Our business structure comparison breaks each of these down further.
LLCs and corporations file with LARA's Corporations Division, Michigan's business-filing agency. Sole proprietorships and general partnerships have nothing to register there.
2. Register your business
Forming an LLC
Michigan LLCs form through Articles of Organization filed with LARA. At $50, it's one of the cheapest filing fees nationally, and standard processing runs about 3 to 5 business days.
Michigan uses the term "resident agent" for what most states call a registered agent, but it works the same way: a physical in-state address is required. Serve in that role yourself, or hire someone to do it.
Michigan doesn't require an operating agreement by law, but multi-member LLCs should draft one regardless, so that decision-making and profit splits are settled in writing rather than left to guesswork.
Sole proprietorships and DBAs
LARA doesn't come into play for sole proprietorships. An assumed name gets registered instead as a Certificate of Assumed Name with the county clerk, filed in whichever county your business operates from.
3. Get an EIN
Applying for an EIN costs nothing and takes about 15 minutes on the IRS site. Without one, you can't open a business bank account, hire anyone, or file most business tax forms, even as a solo-owner LLC.
4. Check licenses and permits
Michigan doesn't issue a general business license either. It comes down to industry and city: professional licensing for regulated fields, a sales tax license from the Department of Treasury for anyone selling taxable goods, and whatever local permits your city requires. Our guides on professional licensing by industry and zoning for home businesses dig into both.
5. Understand Michigan taxes
Michigan's personal income tax is a flat 4.25% statewide. A few cities, Detroit, Grand Rapids, and Lansing among them, layer their own local income tax on top, so location still matters even with a single state rate. Electing corporate tax treatment for your LLC brings the Michigan Corporate Income Tax into play at 6%, though it exempts businesses with gross receipts under $350,000.
The 6% sales tax rate doesn't budge anywhere in Michigan, since neither cities nor counties are allowed to tack on anything extra.
6. Stay compliant
Michigan LLCs file an Annual Statement with LARA by February 15 each year, beginning the year after formation, and it costs $25. There's no fine for filing late, but two or more consecutive missed years can trigger involuntary dissolution, so it's not something to ignore indefinitely.
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 running 3 to 5 business days.
Does sales tax vary by city in Michigan?
No, it's a flat 6% statewide, and no local additions are 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.
Numbers above reflect Michigan Department of Licensing and Regulatory Affairs and Department of Treasury guidance as of 2026, and they shift over time, so double-check before filing. This isn't legal or tax advice; a Michigan-licensed attorney or CPA can address your specific situation.