Small businesses are the heart of Michigan’s economy. They make up 99.6% of all businesses based in the state and employ about 1.9 million people. That’s nearly half of Michigan’s private workforce, according to federal figures. By starting a small business, you’re joining this community and supporting your neighbors.
Launching a small business is no easy task, however. There are many ways to get tripped up.
Conceiving your business
Planting the seeds of your business is often the most exciting part. When you land on a good idea, understand how it fits into the market and come up with the perfect name, it can be quite exciting. You also need to consider the practicalities.
You need to decide what type of business structure makes sense, a decision that will shape much of what happens later. Should it be a single-member business, such as a sole proprietorship? Or do you need to think a bit bigger by looking at something such as an LLC?
It’s important to take every factor into account when making this choice, including by seeking outside counsel if you think it will help.
Straightening out finances and taxes
The string of seemingly endless paperwork is where it becomes easy to slip up. A small business must clear a number of state and federal hurdles in order to operate legally, all of which require their own independent processes. As Michigan State University Extension explains, you’ll need to look at:
- Getting a Federal Employee Identification Number in order to allow for financial transactions
- Obtaining an Unemployment Insurance Account with the state’s Department of Licensing and Regulatory Affairs – something you must do before hiring anyone
- Applying for a sales tax license, depending on which goods are subject to sales tax
- Registering the business with the Michigan Department of Treasury so you can be tax compliant
One wrong step here can disrupt your business before it even gets started.
Proper permits and licenses
The state of Michigan, on its own, has hundreds of licenses and permits a business owner can consider, everything from baking to fortune-telling to being a mortician to welding. Municipalities then have their own licenses and permits to take into account.
As a hopeful small business owner, you have to determine which of these licenses your operation requires, then obtain them in a timely manner.
Impossible? Of course not. But going through each of these stages requires some patience and planning if you want to avoid headaches down the line.