Starting a Business in Michigan: Licenses, Permits & Requirements (2026)

Last updated: April 24, 2026

Three things shape the regulatory reality of starting a business in Michigan in 2026. First, Michigan’s Earned Sick Time Act (ESTA) now applies to virtually every employer: businesses with 11 or more employees have been covered since February 21, 2025, and businesses with 10 or fewer became covered on October 1, 2025. Unlike most states without paid leave laws, every Michigan employer with employees must either accrue 1 hour of paid sick time per 30 hours worked or frontload the annual cap. Second, Michigan’s minimum wage jumped to $13.73 per hour on January 1, 2026 and is scheduled to reach $15.00 in 2027 with automatic inflation adjustments after that — the result of the Michigan Supreme Court’s 2024 ruling in Mothering Justice v. Attorney General. Third, Michigan is one of only a handful of states with a 6% flat state sales tax and no local add-on: whether you sell in Detroit, Traverse City, or the UP, the rate is the same, and there is no city- or county-level sales tax to separately administer.

This guide compiles the specific Michigan agency requirements, portal links, fee amounts, and city-level variations that apply to starting a business in Michigan in 2026. The source agencies referenced are the Michigan Department of Licensing and Regulatory Affairs (LARA) for business entity filings and most professional licensing, the Michigan Department of Treasury for tax registration, the Unemployment Insurance Agency (UIA) and Workers’ Disability Compensation Agency (WDCA) within the Department of Labor and Economic Opportunity (LEO), MDARD (Michigan Department of Agriculture and Rural Development) for food and pesticide licensing, and MiLEAP (Michigan Department of Lifelong Education, Advancement, and Potential) for child care licensing — which moved out of LARA in 2023 when Governor Whitmer created the new department.

Michigan Business Requirements at a Glance

Requirement	Agency / Portal	Cost	Timeline
LLC Articles of Organization	LARA Corporations Division — Michigan Business Registry / COFS	$50 online or paper	Approx. 1 hour online processing
Annual Statement (LLC)	LARA Corporations Division	$25/year; $50 late penalty on Feb 16	Due every February 15
Assumed Name (DBA / “d/b/a” certificate)	County clerk (sole prop/partnership); LARA (LLCs and corps)	$25 state filing; county fees vary	5-year renewal
Federal EIN	IRS.gov	Free	Immediate online
Sales Tax License	Michigan Treasury Online (MTO)	Free (no renewal fee)	Required before collecting tax
Withholding Tax Registration	Michigan Treasury Online (MTO)	Free	Before first payroll
Unemployment Insurance (UIA)	LEO — Unemployment Insurance Agency	New employer rate with $9,000 taxable wage base (2026)	Within 20 days of first covered payroll
New Hire Reporting	Michigan New Hire Operations Center	Free	Within 20 days of hire
Workers’ Compensation Insurance	Private insurer, Accident Fund, or Workers’ Compensation Placement Facility	Varies by payroll and industry	Required at 1+ EE at 35 hrs/13 wks OR 3+ EE at once
Earned Sick Time Act (ESTA) compliance	LEO Wage & Hour Division	Paid time (wage cost)	Effective all employers since Oct 1, 2025
Local Business License (if in regulated city/industry)	City clerk or planning/licensing department	Varies (~$100–$400)	Before opening
LARA Professional/Occupational License (industry-specific)	LARA Bureau of Professional Licensing / BCC	Varies by license	Before practicing in licensed profession

How to Start a Business in Michigan (Step by Step)

Step 1: Form Your Michigan LLC

File Articles of Organization (Form CD-700) through Michigan’s Corporations Online Filing System (COFS) or the newer Michigan Business Registry at LARA. Michigan accepts online, mail, or in-person filings. Online filings typically appear in the system within about an hour. Cost: $50.

Your LLC name must include “Limited Liability Company,” “L.L.C.,” or “LLC,” and must be distinguishable on the LARA records. Run a name search in the Business Entity Search on the LARA Corporations Division site before filing.

Registered agent: Your LLC needs a resident agent with a Michigan physical address (P.O. box not accepted). You can serve as your own resident agent if you live in Michigan, or hire a commercial registered agent service.

Annual Statement: Every Michigan LLC must file an Annual Statement by February 15 every year. Filing fee: $25. A $50 late penalty applies immediately on February 16 — there is no grace period. The first Annual Statement is due February 15 of the year after formation if your LLC was formed January through September; if you formed October through December, your first statement is due February 15 of the following year (so you skip the nearest February). Missing the deadline does not dissolve your LLC immediately, but LARA will eventually place an LLC in “not in good standing” status and, after roughly two years of non-filing, administratively dissolve it.

Assumed Name (“d/b/a”): LLCs and corporations file assumed name certificates with LARA ($25, 5-year term). Sole proprietors and general partnerships file at the county clerk in each county they operate — fees vary by county (typically $10–$30) and terms range from 5 years in most counties.

Get your free federal EIN at IRS.gov immediately after forming — you need it to register for state taxes, open a business bank account, and hire employees.

Step 2: Register for Michigan Taxes Through Michigan Treasury Online

Michigan’s unified tax registration portal is Michigan Treasury Online (MTO). Register here for sales tax, use tax, withholding tax, Corporate Income Tax, and — if selling prepared food or other taxable items — the Michigan business tax account number.

Michigan Sales Tax

Michigan imposes a flat 6% state sales tax with no local sales tax anywhere in the state. This is one of the cleanest sales tax structures in the country — you charge 6% whether you sell in Detroit, Traverse City, Marquette, or anywhere in between. There is no home rule, no county piggyback, no district tax, no transit tax.

• Sales tax license: Free through MTO. No renewal fee. Required before collecting or remitting sales tax.
• Use tax: 6% on out-of-state purchases used in Michigan that were not subject to Michigan sales tax.
• Service businesses: Michigan taxes goods, not most services. Cleaning, landscaping, HVAC labor, PI services, and child care are generally not subject to sales tax. HVAC and landscaping charges can become taxable when they involve the transfer of tangible personal property that is not “affixed to and made a structural part of” real estate.
• Filing frequency: Assigned by Treasury based on prior liability — monthly, quarterly, or annual.

The Michigan Legislature has discussed expanding sales tax to currently exempt services (including cleaning and personal care), but as of April 2026 no such expansion has been enacted. Monitor Treasury and Legislature updates before assuming the status quo will hold.

Michigan Income Tax

Michigan uses a flat 4.25% individual income tax rate for 2026 (confirmed by the Michigan Department of Treasury on April 15, 2026). No brackets. The Corporate Income Tax is 6.0% of apportioned Michigan income for traditional C corporations with gross receipts of $350,000 or more (below that threshold, small businesses are exempt from CIT).

• Pass-through entities (default LLCs, S-corps, partnerships): income flows to owners’ personal Michigan returns at 4.25%.
• Michigan’s optional Flow-Through Entity Tax (FTE) lets pass-through entities elect entity-level taxation at 4.25% as a federal SALT deduction workaround — useful primarily for owners above the $10,000 federal SALT cap.
• File and pay through Michigan Treasury Online.

Cities That Levy Their Own Income Tax

Twenty-four Michigan cities impose a local income tax on top of the state 4.25%. If your business is located in one of these cities or employs residents of one, you may need to withhold the city rate:

• Detroit: 2.4% resident / 1.2% non-resident
• Grand Rapids: 1.5% resident / 0.75% non-resident
• Lansing, Flint, Saginaw, Pontiac, Battle Creek, Jackson, Muskegon, Muskegon Heights, Port Huron, Highland Park, Hamtramck, Ionia, Walker, and several others impose 1.0%/0.5% rates. Verify current rates at Treasury’s City Income Tax page before setting up payroll for employees who live or work in these cities.

Step 3: Register for Payroll Taxes and Comply with the Earned Sick Time Act

If you’ll have employees, register with three different agencies: the Michigan Treasury (withholding), the Unemployment Insurance Agency (UIA), and — functionally — the Wage and Hour Division of LEO for ESTA compliance.

Michigan Withholding Tax

Register through MTO. Michigan withholding is a flat 4.25% on state taxable wages. If the employee lives or works in one of the 24 cities with a local income tax, you must also withhold the city rate and remit to that city.

Unemployment Insurance (UIA)

Register with the Michigan UIA through its Michigan Web Account Manager (MiWAM) before your first covered payroll.

• 2026 taxable wage base: $9,000 per employee for contributing employers in good standing. If Michigan’s UI Trust Fund drops below $2.5 billion, the wage base automatically increases to $9,500.
• New employer contribution rate: 2.7% (non-construction) for most industries; construction industries pay the average rate for construction, which is higher. Rates are assigned on Form UIA 1771 once your account is established.
• 2026 maximum weekly benefit: $530 (increased from $446 on January 1, 2026) — signal that total employer assessments are rising to fund the benefit increase.

Earned Sick Time Act (ESTA) — Applies to Every Michigan Employer

Michigan’s ESTA replaced the Paid Medical Leave Act on February 21, 2025 for employers with 11+ employees, and expanded to all employers with 10 or fewer employees on October 1, 2025. Last-minute amendments signed into law in February 2025 softened some of the original 2024 ballot-initiative language, but the basic structure remains:

Employer Size	Annual Earned Sick Time	Paid vs. Unpaid
11 or more employees	Up to 72 hours/year	All 72 hours paid
10 or fewer employees	Up to 40 hours/year	40 hours paid (under the 2025 amended law)
New small business (first 3 years OR under 11 employees)	Deferred compliance	Compliance required on the earlier of: 3 years after hiring first employee, OR the date the business crosses 11 employees

Key implementation rules:

• Accrual: 1 hour of earned sick time per 30 hours worked, OR employer can frontload the annual cap at the start of the benefit year.
• Waiting period: Up to 120 days for new hires.
• Carryover: Unused time carries to the next year, capped at 72 hours (large) or 40 hours (small) in year 2 unless frontloaded.
• Documentation: Employer can request “reasonable documentation” for absences of more than 3 consecutive days. Employee has at least 15 days to provide it, and the employer pays any out-of-pocket cost the employee incurs to obtain it.
• Posting: ESTA notice must be posted in a conspicuous location at each worksite and distributed in writing to each employee.
• Recordkeeping: Retain hours worked and ESTA hours used for at least 3 years.

ESTA is the single most material 2025-26 change for Michigan small business operators. Every spoke page on this site addresses ESTA — because every Michigan employer now has to comply.

Step 4: Get Workers’ Compensation Insurance

Michigan’s Workers’ Disability Compensation Act (WDCA) requires coverage as soon as either of two triggers is met:

Trigger	Threshold
Full-time-ish employment	1 or more employees regularly working 35+ hours per week for 13+ weeks during the preceding 52 weeks
Headcount	3 or more employees employed at any one time (includes part-time)
Agricultural employers	3 or more full-time workers, 35+ hours/week for 13+ weeks per calendar year
Domestic/residential household employers	Generally exempt unless 3+ workers at 35+ hours for 13+ weeks

Where to get coverage: Any licensed private insurer, the Accident Fund (Michigan’s oldest and largest WC carrier, headquartered in Lansing), or — if you can’t obtain coverage in the voluntary market — apply through the Michigan Workers’ Compensation Placement Facility, the state’s assigned-risk plan.

Penalties for operating without required coverage include fines, loss of civil liability protections, and personal liability for the full cost of any injury claim plus potential misdemeanor charges under the WDCA.

Step 5: Get Local Business Licenses and Any State Professional License

City and County Licensing

Michigan has no statewide general business license. Local licensing requirements vary significantly by city:

• Detroit: Most businesses operating in Detroit need a Business License from the Buildings, Safety Engineering, and Environmental Department (BSEED). Detroit also has a local income tax (2.4% resident / 1.2% non-resident) administered by the City of Detroit Income Tax Division. Sole proprietors and partnerships operating under assumed names file the Assumed Name Certificate with Wayne County.
• Grand Rapids: No general business license for most businesses, but regulated categories (food, short-term rentals, peddlers, taxis) need specific licenses from the City Clerk. 1.5% resident / 0.75% non-resident local income tax.
• Ann Arbor: No general business license, but specific licenses apply to food vendors, taxi/rideshare, peddlers, and regulated health businesses. Strict zoning and downtown vendor rules apply.
• Lansing: Business registration with the City Clerk is required for many categories. Also imposes a 1.0%/0.5% local income tax.
• Warren, Sterling Heights, Troy, Livonia, Dearborn, Clinton Township: Suburban Detroit cities generally do not impose a general business license, but individual industries (food service, mobile food, construction, home occupations) have specific permit processes through the city clerk or building department.
• County-level: The 83 Michigan counties handle assumed name filings for sole proprietors/partnerships, property tax rolls, and many local health department licenses (food service, septic, wells).

LARA Professional Licenses

LARA’s Bureau of Professional Licensing (BPL) and Bureau of Construction Codes (BCC) issue most Michigan state professional and trade licenses, including:

• Cosmetologists, barbers, manicurists, estheticians, natural hair cultivators, electrologists (BPL)
• Mechanical contractors (HVAC, refrigeration, hydronic heating, ductwork), electricians, plumbers, and builders (BCC)
• Real estate brokers and salespersons (BPL)
• Professional investigators and security guard agencies (LARA Corporations, Securities & Commercial Licensing Bureau)
• Accountants, nurses, physicians, pharmacists, engineers, architects (BPL)

Contact LARA at 517-241-0199 or visit michigan.gov/lara.

Michigan’s Unique Tax and Payroll Environment

Four aspects of Michigan’s structure require specific planning compared to most other states:

1. ESTA is now universal. Unlike many states without paid sick leave laws, Michigan’s Earned Sick Time Act applies to every employer once the small-business grace period ends. There is no exemption for sole proprietors without employees (ESTA applies only if you have employees), but the moment you hire, the clock starts. Budget for sick time hours as a baseline payroll cost from your first hire.

2. No local sales tax, but 24 cities have local income tax. Michigan’s clean 6%-flat sales tax simplifies one side of compliance, but operating in or hiring residents of Detroit, Grand Rapids, Lansing, Flint, Saginaw, and 19 other cities requires city-level income tax withholding in addition to state withholding. Payroll systems need to be configured city-by-city.

3. Workers’ comp triggers surprisingly early. Many states require workers’ comp only at 3–5 employees. Michigan triggers at either 3 part-time employees at one time OR a single employee at 35 hours/week for 13 weeks. A small shop hiring one full-time manager plus two part-timers hits the 3-employee trigger immediately.

4. Minimum wage is on a scheduled climb. $13.73 in 2026, $15.00 in 2027, then annual inflation indexing. Unlike states where increases require legislative action, Michigan’s increases are automatic under the post-Mothering Justice framework. The tipped minimum is 40% of the standard rate ($5.49 in 2026) and is scheduled to rise toward parity over the next several years under the same ruling.

Michigan Market Context: Where the Demand Is

Michigan’s economy is anchored by the auto industry but has diversified into advanced manufacturing, healthcare, agriculture, and tourism over the past two decades. Small business demand is driven by several concentrations:

• Metro Detroit (Wayne, Oakland, Macomb counties): Approximately 4.3 million people — the 14th largest metro in the U.S. The Big Three plus hundreds of Tier 1 and Tier 2 auto suppliers create strong commercial cleaning, landscaping, HVAC, and facility services demand. Oakland County’s Bloomfield Hills, Birmingham, and Rochester Hills are among the highest-income ZIP codes in the state and drive residential services demand.
• West Michigan — Grand Rapids and Kalamazoo: GR’s furniture and food-processing cluster (Steelcase, Herman Miller, Meijer, Gordon Food Service), plus Kalamazoo’s life sciences corridor (Pfizer’s largest U.S. manufacturing site, Stryker, WMU), create a second major services market distinct from Detroit.
• Ann Arbor: University of Michigan, Michigan Medicine, and the research corridor around U-M create stable demand and above-average income. Restrictive downtown zoning limits food truck and street vendor operations — but the surrounding Washtenaw County suburbs are more accessible.
• Lansing / mid-Michigan: State government, MSU, and GM Lansing Grand River/Delta plants provide stable demand.
• Tourism and Up North economy: Traverse City, Mackinac Island, the Keweenaw, and the broader Pure Michigan corridor create strong seasonal demand for food service, lodging, cleaning, and landscaping that concentrates May–October. Winter demand in the same markets flips to snow removal.
• Climate reality: Michigan’s long winters (5–6 months of heating demand) and humid summers drive year-round HVAC work, and the freeze-thaw cycle makes roof, foundation, and drainage services a perennial need.

Michigan Business Guides by Industry

Every industry has different licensing, permit, and insurance requirements in Michigan. Select your business type:

• How to Start a Cleaning Service in Michigan — no state cleaning license, sales tax exemption for most janitorial services, ESTA compliance at first hire, Detroit/GR/Ann Arbor market
• How to Start a Food Truck in Michigan — MDARD STFU vs. Mobile Food license, Michigan Food Law Act 92 commissary rule, Detroit BSEED requirements, Ann Arbor buffer zones
• How to Start a Daycare in Michigan — MiLEAP Child Care Licensing Bureau, May 2025 rule overhaul, Great Start to Quality, GSRP revenue opportunity
• How to Start an HVAC Business in Michigan — LARA BCC Mechanical Contractor license required statewide, 3-year/6,000-hour experience, Michigan Mechanical Code, Detroit/GR local permits
• How to Start a Hair Salon in Michigan — LARA Board of Cosmetology 1,500 hours, cosmetology establishment license, booth rental rules, Detroit/GR market
• How to Start a Landscaping Business in Michigan — MDARD pesticide applicator certification (Commercial Core + Category 3A), cold-climate calendar, zoning by city
• How to Start a Private Investigation Business in Michigan — LARA Professional Investigator Licensure Act (Act 285), $750 fee, 3-year experience or degree, statewide license required

Key Michigan Business Resources

Resource	What It Covers
LARA Corporations Division	LLC and corporation filings, Annual Statements, assumed names
Michigan Treasury Online (MTO)	Sales tax, use tax, withholding, Corporate Income Tax registration
UIA — Unemployment Insurance Agency	Unemployment account registration, MiWAM, tax rates
WDCA — Workers’ Compensation	Workers’ comp thresholds, insurance verification, placement facility
LEO Wage & Hour Division	ESTA compliance, minimum wage, overtime, posting requirements
LARA Bureau of Professional Licensing	Cosmetology, accountants, nurses, real estate, and most professional licenses
LARA Bureau of Construction Codes	Mechanical/HVAC, electrical, plumbing, builder licenses
MDARD	Food establishment licenses, mobile food, pesticide applicator certification
MiLEAP Child Care Licensing Bureau	Child care center and home licensing, Great Start to Quality
Michigan New Hire Operations Center	New hire reporting within 20 days

Frequently Asked Questions

How much does it cost to start an LLC in Michigan?

The Articles of Organization filing fee with LARA is $50 — whether you file online through the Michigan Business Registry or by paper. Processing online is typically complete within about an hour. After formation, your Annual Statement costs $25/year due February 15. A $50 late penalty applies immediately on February 16 — Michigan has no grace period, so set a calendar reminder well in advance. Optional costs: assumed name certificate ($25 at LARA, 5-year term), and registered agent service if you use a third-party provider.

What is the Michigan Earned Sick Time Act (ESTA) and does it apply to my small business?

ESTA is Michigan’s mandatory paid sick leave law. Businesses with 11 or more employees have been covered since February 21, 2025; businesses with 10 or fewer employees became covered on October 1, 2025. There is a narrow exemption for truly brand-new small businesses: compliance is deferred until the earlier of 3 years after you first employ an employee OR the date you cross 11 employees. Covered employers must either let employees accrue 1 hour of paid sick time per 30 hours worked (up to 72 hours/year for 11+ employer; 40 hours/year for 10-or-fewer employer) or frontload the annual cap. Non-compliance exposes you to LEO Wage & Hour Division enforcement.

Does Michigan have a general business license?

No. Michigan has no statewide general business license. However, you need a sales tax license if you sell taxable goods (free at Michigan Treasury Online), a withholding tax registration if you have employees, and a UIA account for unemployment tax. Most cities require local registration for regulated categories — Detroit, Grand Rapids, Lansing, Ann Arbor, and many suburbs have their own business license requirements for food service, mobile food, short-term rentals, and specific regulated industries. Industry-specific state licenses flow through LARA (Bureau of Professional Licensing and Bureau of Construction Codes), MDARD (food and pesticides), and MiLEAP (child care).

When does Michigan require workers’ compensation insurance?

Michigan’s WDCA requires coverage as soon as either trigger is met: (1) you regularly employ one or more people at 35+ hours per week for 13+ weeks out of the preceding 52 weeks, OR (2) you have three or more employees at any one time, including part-time. Agricultural employers and domestic household employers have slightly different thresholds. This is earlier than many states (some require coverage only at 4 or 5 employees). Coverage is available from any licensed private carrier, the Accident Fund, or the Michigan Workers’ Compensation Placement Facility if you can’t obtain coverage in the voluntary market.

What is Michigan’s sales tax rate and are services taxable?

Michigan’s sales tax is a flat 6% statewide. There is no local, county, or city sales tax anywhere in the state — one of the simplest sales tax structures in the country. Most services (cleaning, landscaping labor, HVAC labor, PI services, child care) are not subject to sales tax. Services can become taxable when they involve the transfer of tangible personal property that is not affixed to and made a structural part of real estate (for example, the value of equipment or supplies transferred in a service transaction). Prepared food, alcohol, and hotel accommodations are taxable. The Legislature has discussed expanding the sales tax to some services but has not enacted any expansion as of April 2026.

What is Michigan’s individual and corporate income tax rate?

Michigan’s individual income tax is a flat 4.25% for tax year 2026 (confirmed by the Michigan Department of Treasury on April 15, 2026). No brackets. The Corporate Income Tax is 6.0% of apportioned Michigan income for C corporations with gross receipts of $350,000 or more. Pass-through entities (default LLCs, S-corps, partnerships) flow income to owners’ personal Michigan returns at 4.25%; Michigan also offers an optional Flow-Through Entity (FTE) tax at 4.25% as a federal SALT deduction workaround. In addition, 24 Michigan cities — including Detroit (2.4% resident / 1.2% non-resident), Grand Rapids (1.5%/0.75%), Lansing (1.0%/0.5%), Flint, Saginaw, and others — impose a local income tax on top of the state rate.

What is the Michigan minimum wage in 2026?

Michigan’s minimum wage is $13.73 per hour effective January 1, 2026 (up from $12.48 in 2025). The tipped minimum wage is $5.49 per hour (40% of the standard rate) provided the employee earns at least $8.24/hour in tips. Minors ages 16–17 can be paid $11.67/hour. The training wage for new hires under age 20 is $4.25/hour for their first 90 days. The minimum wage is scheduled to reach $15.00 in 2027 and then adjust annually for inflation starting in 2028, per the Michigan Supreme Court’s 2024 decision in Mothering Justice v. Attorney General.