Tag Starting a Michigan Business

Starting a Michigan Business Series: License and Permits

As you prepare to launch your Michigan business, be sure you’ve done your due diligence.  While it’s still pretty simple to start a business in Michigan there are a few guidelines you need to follow.

One step of particular importance is determining if your business requires any type of license or permit to do business in the state of Michigan, and if you need to organize an office to work, the use of sliding walls can be a great option and you can get them from sites such as  https://www.movablepartitionwalls.co.uk/sliding.

Not having a license in place can be serious problem, especially if you’ve already been doing business for some time.  Not doing your homework early on, can lead to massive headaches down the road and possibly a fine or closure of your business.

You’ll need a license if you fall in the following categories:

  • Construction
  • Financial
  • Insurance
  • Occupational (see full list below)
  • Real Estate
  • Utilities
  • Transportation
  • Retail Fuel

Most of what you need to do can be handled online at this State of Michigan website.  Another option is Michigan Business One Stop.

Not every business in Michigan requires a license.   If your business isn’t in the above list and you’d like to double check, Michigan offers an alphabetical list of required licenses by occupation.

If you require assistance getting the most out of your business, contact us at TalanSBS.  We believe in the power of the entrepreneur.

Occupational Licensing

  • Veterinarian Exams
  • Inspector – Information
  • Plumbing – Information
  • Plumbing – Forms
  • Architects – Information
  • Barbers – Information
  • Cosmetology – Information
  • Forester – Information
  • Hearing Aid Dealer – Information
  • Landscape Architect – Information
  • Morticians – Information
  • Nursing Home Administrators – Information
  • Ocularist – Information
  • Engineer, Professional – Information
  • Polygraph Examiner – Information
  • Police Officer Licensing – Information
  • Certified Disadvantaged Business Enterprise
  • Commercial Driver Licenses
  • Notary Public – Information
  • Chauffeur License – Information
  • Commercial Services License Look-up
Start a Michigan Business Series: Employee Identification Number

 

 

 

 

 

 

 

 

Often mistakenly called an Employee Identification Number, an EIN, or Employer Identification Number is also known as a your Federal Tax Identification Number according to this tax payment tips.  Similar to a social security number, an EIN is used to identify a business entity.

Do I Need an EIN?

If you have employees or operate a partnership or corporation you’ll need an Employer Identification Number.  If you answer yes to any of the other questions you’ll need one as well:

  • File employment, excise, or alcohol, tobacco and firearm taxes?
  • Withhold taxes on income, other than wages, paid to a non-resident alien?
  • Do you have Keogh plan?
  • Are you involved with the following types of organizations:  Trusts, IRAS, Estates, Non-Profits, Farmers Co-ops, Plan administrator?

Getting an EIN is a free service and you can apply online.

Your EIN will be a nine digit number assigned by the IRS.  It’s important to keep this number safe.

If you recently started a business that falls under the above listed categories, this is an important step to launching your business.  Be sure to follow all the steps listed on the IRS website to ensure timely processing.

Employer Identification Exempt Organizations

A tax exempt organization is non-profit org that is exempt from certain taxes as described under Section 501 of the IRS code.  If you think your exempt you’ll need to apply to the IRS for a determination letter that would grant you formal tax exemption, also known as 501(c)(3) status.

Avoiding Common EIN Problems

  • If you file as an S Corporation be sure to file Form 2553, Election by a Small Business Corporation
  • An association, LLC, or other org that elects to be taxed as a corporation must file Form 8832, Entity Classification Election
  • Remember to always include your SSN, EIN, or ITN on Line 7b or Form SS-4
  • Always use the full legal name you entered on Form SS-4, line 1 and the EIN given to you, consistently on all business tax returns
  • If you change your address after receiving your EIN, you must use Form 8822 to notify the IRS of the new address

 

Starting a Michigan Business: Michigan Business One Stop

 

 

 

 

 

 

In my talks with other aspiring business owners I’m always surprised by the lack of awareness of Michigan Business One Stop.  What is it?  It’s Michigan’s online portal with pretty much everything you need to get your business up and running.  All in one location.  Talk about a time saver.

Here are just some of the things you can do with Business One Stop:

  • Learn about Financing your Business
  • Tax Information
  • Play with the One Stop Simulator
  • Find Employer Resources
  • Business Entity Search
  • Keep track of filings

The Business Start Up Tool on One Stop is a great tool for creating varying scenarios for launching different types of business.  It will help you understand the state requirements for that business, including costs and time frames.  It’s really simple to use and leaves you with a wealth of knowledge for the onset.

The site includes a online secure service for starting your business.  Right online.  Register for taxes, apply for licenses and permits.

If you’re in the process of starting a business, Michigan Business One Stop is the place to go.

Have you used Michigan Business One Stop?

 

 

 

Starting a Michigan Business Series: How to Structure a Business Plan

Planning is important in any business.  A business plan is a tool that keeps on giving.  Providing guidance when necessary and answering questions when you stray off the beaten path.

A business plan can help you woo investors, get bank financing, identify potential markets, point out potential competitors, and ultimately gives you a clear path and direction for your business.

Quite often business owners skip this phase when launching a business.

As we move forward in our Starting a Michigan Business Series, this weeks focus is on how to structure a business plan.

1. Executive Summary

An overview of your business. Even though this will be at the beginning of your business plan, it should be written last, after you’ve evaluated other areas of your business.

2. General Description

Explain the type of business your in. If it’s an existing business give a history of the company. If it’s a start-up focus on the qualifications for starting the business. Note why the business is needed and it’s chances for success.

3. Products and Services

What are the unique features of your products and services.  Use this section to describe them and how they will attract customers to your business.

4.  Marketing

Specify your target market.  You should be able to show that there are specific market segments that will pay for your products or services.  Outline what your strategy (marketing) will be to attract customers.  List your competitors giving an honest evaluation of their strengths and weakness and how you will compete against them.

5.  Management

List the people that will be active in your business.  Showcase their skills and experience.  Think abbreviated resume.

6.  Legal

What will the structure of your business be?  Corporation, Limited Liability Partnership, S or C Corp?  Will there be patents or trademarks involved?  What sort of agreements are in place between owners?

7.  Finances

List the business’ financial needs and where you expect to get these funds.  Be sure to project revenue, expenses and profits.  Going through this section to create a financial statement will help you understand cash flow, the life blood of every business.  It addition you’ll understand your break-even point and how sensitive your business may be to market fluctuations.

8.  Operations

What systems or process will be used in your business?  Where will your business be located?  What type of facilities will you require?  Do you need supplies?  Where will be the be obtained?  What will the hours of operations be?  Use this section to explain operational process for your business.

Your executive summary is going to be the most important part of you business plan.  Most investors won’t get pass this point, so be thorough when crafting it.  Focus on drawing the reader in, give them a reason to move past this section and on to your overall plan.

Remember the depth and complexity of your plan will depend on what type of business your launching.  No matter what, it’s an important exercise in getting insight to your business pre or post launch.

What do you think, is a business plan still a important part of launching a business?

 

 

Starting a Michigan Business Series: Forming a Corporation

It’s Monday, which means only one thing.  Starting a Michigan Business time.  This week the focus is on Forming a Corporation, what you need know, where you need to go, and how to find the documents you need to get started.

First things first.

1.  Choose a name.

Have you settled on a name?  Make sure you name is not already taken by visiting  the Michigan Corporation Division Name Availability Search.

You’ll also need check the list of restricted words. These words are not allowed in your corporate name:  List of Restricted Words

2.  Determine if your business is subject to special licensing or permits.

No need for surprises.  You can check online here:  michigan.org/medc/services/license.  You may also want to check with your local county, city or township clerk for local requirements.

3.  File Paperwork with the State of Michigan

Be thorough when completing the paperwork.  Be sure to have the proper corporate form, filled out completely.  Forms are returned if not properly completed.

4.  Register for a federal Employer Identification Number (EIN)

You can apply for an EIN number by faxing your SS-4 (Application for Federal Employer Identification Number – EIN) to 859.669.5760 or calling 800.829.4933

5.  Register for Michigan Taxes

You’ll need to complete Michigan Taxes Form 518 and return to the Michigan Department of Treasury and fax to 517.636.4520

Corporation Advantages:

  • Shareholders (company owners) have personal limited liability
  • Access to capital is easier than with other structures
  • Profits can be divided between owners and the corporation which reduces taxes and offers lower tax rates
  • Perpetual existence. Upon death of an owner (stockholder) the corporation continues to exist
  • Tax benefits for employee fringe benefits such as medical, dental, and disability

Corporation Disadvantages:

  • Fees. It costs money to incorporate, plus recurring annual corporate fees
  • There are formalities that MUST be followed. There is no flexibility here
  • Profits paid to owners are subject to double taxation
  • Can be complex to set up and maintain
  • Dissolution does not automatically happen

A great resource for starting a business is Michigan Business One Stop.  It’s an online portal with access to FAQ’s and necessary documents for starting a business.

If you have questions you can call the DELEG (Department of Engery, Labor & Economic Growth, Bureau of Commercial Services, Corporation Division) at 517.241.6470.  Or visit online at michigan.gov/corporations

It’ never a bad idea to seek out the services of a lawyer and accountant when launching a new a business.  While these steps will get you on your way they should never be considered a replacement for legal advice.

Starting a Michigan Business Series: How to form a partnership

In our inaugural post for the Starting a Michigan Business Series we looked at the difference between a partnership and corporations.  This week we’ll focus on how to form a partnership.

Most partnerships are formed with little to no planning.  Two people get together, form a business, lost in the discussion of how cool and how fun.  It’s not until the honeymoon is over that the lack of ground rules or some semblance of structure comes back to haunt them.

Fortunately with some pre-launch planning, you can avoid the common pitfalls that have plagued many a business partnership for which they will also be using a PayStubCreator software.

First you and your partners need to sit down and ask some very pointed questions:

  1. Are you and your partners aligned in values, goals, and ideas?
  2. What will each partners role be in the business?
  3. How much financially will each partner contribute to the business?
  4. Will compensation be dictated based on contributions or other factors?
  5. What happens if a spouse wants to join the business
  6. What happens if a partner wants to leave the business

While it’s a mood killer for the excitement of starting a business with a friend or family member, hashing these details out will be much appreciated in the case of conflict.

Partnerships are fun and CAN work.  Each partner brings something unique to the table.  One may have the business contacts, another might handle the day to day operations, while another may handle sales and marketing.  Clearly outline expectations while establishing a routine for communications.  What will day to day communications look like? Quarterly?

Through the process you may realize that a partnership isn’t the right fit.  Issues during the discussion phase may indicate conflict once you work together.

Now lets get your business up and running.  You’ll need to download your forms HERE.  They will need to include the following:

  • Name of the limited liability partnership, which must contain the words “Limited
  • Liability Partnership” or the abbreviation “L.L.P.” or “LLP” as the last words or letters of its name.
  • The address of the partnership’s principal office
  • General nature of the partnership’s business

As of this post the registration fee is $100.

Be sure to enlist a lawyer and accountant. You’ll need to establish a partnership agreement in writing.  This is an important step, no matter who your partners are. And if you are planning to start a business out of Michigan, hire the most credible resident services officer to help you manage your compliance, legislative and regulatory requirements.

For those in established partnerships, what suggestions do you have for someone just starting out?

Starting a Michigan Business Series: Corporation or Partnership?

As an entrepreneur you end up wearing quite a few hats.  This doesn’t always leave time for finding relevant information for your business.  Were do you even begin when it comes to starting your small business?  The Starting a Michigan Business Series will be designed to answer FAQ’s related to launching a business in Michigan.

First up in our series is Corporation or Partnership?  Is there an advantage to one over the other?

Quite simply, it depends.  Not quite what you were looking for.  Yet it really is determined by your situation.  Each has an upside and downside.

Let’s take a look at the differences.

Corporation Advantages:

  • Shareholders (company owners) have personal limited liability
  • Access to capital is easier than with other structures
  • Profits can be divided between owners and the corporation which reduces taxes and offers lower tax rates
  • Perpetual existence. Upon death of an owner (stockholder) the corporation continues to exist
  • Tax benefits for employee fringe benefits such as medical, dental, and disability

Corporation Disadvantages:

  • Fees. It costs money to incorporate, plus recurring annual corporate fees
  • There are formalities that MUST be followed. There is no flexibility here
  • Profits paid to owners are subject to double taxation
  • Can be complex to set up and maintain
  • Dissolution does not automatically happen

Partnership Advantages:

  • Pooling of resources, expertise and strengths
  • Fewer formalities than other business structures
  • Does not pay Federal income taxes
  • Liability is spread among the partners
  • Investment can come from partners as a quick easy loan. This creates interest income for the partners and a business deduction

Partnership Disadvantages

  • All partners are personally liable for business debts and liabilities
  • There may be unequal commitment (think time and finances, click here)
  • Can be difficult to attract investors
  • Partners may have differing opinions on how to run the business

If you’re a current small business owner, what has your experience been with these business structures?  What would you recommend to an entrepreneur just getting started?