Michigan Business License

Despite Michigan’s business-friendly environment, it can be tricky to legally establish your business with the proper licenses. This is because the lack of a general Michigan business license creates a confusing situation in which each business can need a unique combination of licenses, all of which need to be identified independently.

Given the hundreds of different licenses available in Michigan, this guide will help you quickly and confidently pinpoint the exact licenses and permits you need so you can focus on what matters most: running and growing your business.

Do I Need a Business License in Michigan

In Michigan, businesses are required to obtain various licenses and permits at the local, state, and federal levels. Here’s a general breakdown:

Type of Business

Below, we’ve detailed common ways in which your Michigan business type can dictate the licenses you’ll be required to obtain, as well as specific examples of these:

• Sales Tax Licenses: If your business plans to sell or lease physical goods that would typically incur sales tax, you’ll need to obtain a specific license online from the Michigan Department of Treasury
• Professional Licenses: Your business also may require some additional licenses, depending on the industry in which it operates. For example, apart from exempt entities, all businesses handling or serving food to the general public must obtain a food establishment license from the Michigan Department of Agriculture & Rural Development (MDARD)
• Environmental Permits: If your business’s activities have the potential to negatively affect the environment or human health, you’ll likely need to obtain additional licensing. For example, any business that plans to apply pesticides privately or commercially must get a license from the MDARD to ensure they do this safely

However, this is not the only factor influencing the exact combination of licenses you’ll need — the location of your business within Michigan plays an important role as well.

Location

In this section, we’ve provided a succinct overview of the potential licenses and permits that your business may need due to local, state, and federal requirements:

• Local: Depending on the city or county in which your business operates, its licensing requirements can vary dramatically. A variety of businesses must obtain specific licenses in order to operate in the city of Detroit, for example, including amusement parks, bowling alleys, and pet shops
• State: Of course, businesses often face plenty of licensing requirements at the state level as well, depending on their industry. You can find a complete list of the industries that require state licenses on the Michigan Bureau of Professional Licensing website
• Federal: If your business operates within certain industries or does specific types of work, you might need a license from the federal government. These include the alcohol, aviation, firearms and explosives, radio and television broadcasting, and transportation industries, among others

Since the exact permits and licenses your business will need are entirely unique to your situation, you’ll have to conduct thorough research into your own local, state, and federal regulations to smoothly launch your business.

Alternatively, many entrepreneurs opt to leverage the expertise of third-party services to handle this on their behalf.

How to Get a Business License in Michigan

In order to get your business license(s) in Michigan, you will need to complete the following steps:

• Form Your Business
• Obtain an Employer Identification Number (EIN)
• Apply for the Required Licenses and Permits

Let’s take a look at each step in more detail below.

Step 1: Form Your Business

Before setting out to obtain a business license in Michigan, it’s pivotal that you first choose an appropriate structure for your business. Sole proprietorships, general partnerships, and corporations are all common choices, however it’s often seen as the most advantageous for small businesses in Michigan to register as a Limited Liability Company (LLC). Here are a few reasons for why:

• Limited Liability: Members are protected from personal liability for business debts, safeguarding personal assets
• Tax Benefits: LLCs typically enjoy a pass-through tax treatment, avoiding the double taxation that corporations are subjected to
• Management Flexibility: LLCs allow for flexibility in management structure, either being member-managed or manager-managed based on the preferences outlined in the certificate of formation
• Ease of Formation: With the Michigan Secretary of State providing forms that meet the minimum state law requirements and the option to file online, setting up an LLC is relatively straightforward

As a business owner, you can opt to avoid the tricky process of forming an LLC by instead leveraging the help of third-party LLC formation services.

Step 2: Obtain an EIN

The second step you’ll need to complete before applying for your business license is to obtain your EIN. This is a unique nine-digit number assigned by the Internal Revenue Service (IRS) to businesses in the United States so that their financial transactions can be identified and tracked.

An EIN is often necessitated when applying for various permits and licenses as it allows local and state governments to ensure your business is operating within the confines of the law. You can obtain it in a number of ways:

• Online: You can apply for your EIN on the IRS’s official website by using the EIN Assistant. You should be granted your EIN shortly after completing this application
• By Fax/Mail: After completing Form SS-4, you can apply for an EIN by submitting it to the IRS via mail or fax
• By Phone: International applicants and businesses located outside US Territories are required to call the IRS at (267) 941-1099 to obtain their EIN — which they should receive during this call

Note: If you are a sole proprietor, you will be able to use your Social Security Number (SSN) instead (as long as you do not have employees).

Step 3: Apply for Licenses and Permits

After settling on the appropriate structure for your business and initiating the application for your EIN, the next step is to focus on securing the necessary licenses and permits to operate legally within your locale and industry.

• Local Licenses: Municipalities and counties in Michigan have their own licensing requirements that’ll apply in addition to any state and federal obligations. For instance, businesses looking to establish a gas station in the city of Detroit must obtain a specific license that’s unique to this city in order to do so legally
• Statewide Licenses: In addition to a statewide sales tax permit, which many Michigan businesses need, your business also may have additional licensing obligations based on its industry. For example, professions like accountancy, medicine, and occupational therapy all require specific licenses. For a full list of these statewide licenses, see the State of Michigan website
• Federal Licenses: While the federal government doesn’t mandate licenses for general business operations, if your business falls under any government-regulated category, such as agriculture, fishing, firearms, and alcohol sales, it may be required to obtain applicable federal licenses or permits

Note: For more information, have a look at the Michigan Licensing and Regulatory Affairs website.

Step 4: Renewal of Licenses and Permits

In order to maintain your Michigan business licenses and keep your business running, you’ll need to renew them periodically. While this often occurs every one or two years, the exact renewal period and process will vary based on the license-issuing agency. Remember to clarify this information yourself using the agency’s website.

Alternatively, due to how complicated each step of applying for and renewing Montana business licenses is, third-party services that handle this entire process are becoming an increasingly popular option.

How Much is a Business License in Michigan

Applying for the most common business license in Michigan — the sales tax license — won’t cost you anything. However, other professional licenses managed by local, state, or federal agencies likely will have fees attached.

For example, a state liquor distribution license can cost $600 while a livestock dealer license can range from $25 to $400 based on the exact type you need. Businesses that require specialized permits or licenses, such as restaurants or healthcare providers, often need to pay extra.

This means your business license cost will be unique to your business’s situation. To get a more accurate idea of this total cost, many entrepreneurs choose to hire a third-party service to handle this research and identify the exact licenses they’ll need.