Michigan Business Taxes Registration

Most businesses need to register with the State of Michigan's Department of Treasury. Business owners file for Michigan business taxes with Form 518. This form allows a business to register for sales, use or withholding taxes, the single business tax (set to expire in 2007), and motor fuel or tobacco products tax. Form 518 can be obtained by applying online at www.michigan.gov/taxes.

Any business that sells tangible personal property (defined as any good that one can possess or exchange) from a Michigan location needs a sales tax license. The Michigan sales tax is six-percent of retail sales receipts.

Any business without a retail location in Michigan that sells or leases tangible personal property to a Michigan customer from an out-of-state location must register for a use tax license. Businesses must also register with the Michigan Department of Treasury if a Michigan resident buys or rents tangible property from an out-of-state source.

Every business in Michigan that employs one or more employees is required to withhold federal income tax under the IRS Code. Businesses must also withhold Michigan income tax from wages paid to employees.

When liable for sales, use, or withholding tax, an application should be filed with the Michigan Department of Treasury. This application for registration can be accessed online at www.michigan.gov/taxes

State of Michigan Registration

As a general rule, the State of Michigan does not require businesses to register. If you decide to incorporate your business, however, you must file articles of incorporation with the State of Michigan. In addition, you must file a certificate of assumed name if you will conduct business under a name different than your legal name. The law requires that sole proprietorships and partnerships record the proper certificate with the Livingston County Clerk at www.co.livingston.mi.us/CountyClerk/dbatheform.htm. Corporations, limited liability companies ,and limited partnerships must record the proper certificate with the State of Michigan (not with Livingston County Clerk) at www.michigan.gov/cis under Corporate Forms. The purpose of the law is to place on public record the name of the person who is conducting or transacting business under an assumed name.

IRS Registration

If you form a separate business entity (corporation) or hire employees, your business must register with the IRS with Form SS-4 and obtain a Federal Employer Identification Number (FEIN).

Employees

If you hire employees, numerous laws will apply to your business (tax reporting, civil rights, minimum wage, overtime, and OSHA) As a preliminary matter, you will need to purchase and post labor posters. These posters inform employees of their rights. Every business must certify that every employee is lawfully employed and must file a new employee information form with the State of Michigan.

Overlooked Costs

A new business should consult with a professional to assure it has a realistic budget to meet the variety of expenses it will incur. New business owners often overlook the following:

• real estate taxes
• personal property taxes
• Michigan unemployment compensation insurance premiums
• sales taxes
• payroll taxes (general rule is $.0765/dollar paid in wages)
• estimated tax payments

* Caution home-based business owners. Be sure your homeowner's policy covers damages arising from business use and damage to business assets. Many homeowner policies will require a rider.