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Doing Business in Michigan
Michigan’s economy took a big hit after the 2008 financial crisis, with the damage centering on the automotive industry in Detroit, but entrepreneurs report that the state is coming back strong. The Great Lakes State boasts a low cost of living and manageable corporate income tax rates. While the real estate market is on the rise again, it remains affordable to secure both homes and commercial space. Where prospects once seemed dismal, small businesses are now optimistic for the future.
Reasons of starting a business in Michigan
Michigan’s economy has shown strong signs of recovery since the Great Recession, and there are various reasons the state appeals to both entrepreneurs planning to start a business and the employees they need to hire.
While Michigan’s per capita personal income is just 89% of the national average, it has consistently ticked upward since 2012. In 2018, Michigan had the 17th largest economy in the United States, and the number of workers joining the labor force has been growing since 2015.
Michigan has a big surplus of available office space and, thus, low rental prices.
One of the most important sectors of Michigan’s economy is manufacturing. About 16% of Michigan’s economy comes from manufacturing industries, according to the Bureau of Economic Analysis. Michigan is home to many technically skilled workers, such as in engineering or chemistry.
Cost of living
The affordable cost of living in Michigan is likely to appeal to the employees you need to attract. Entrepreneurs enjoy low real estate costs and moderate taxes. Sperling’s Best Places cost-of-living index found Michigan to be significantly less expensive than the U.S. as a whole, particularly in housing costs. According to MIT’s living wage calculator, a single adult without any dependents could meet all of their needs in Michigan on a wage of about $10 per hour.
How much does it cost to start a business in Michigan?
The cost of starting a small business in Michigan depends on the type of business you start. These are the general filing fees for licensing and permitting a new business in Michigan:
1: Filing a city or county certificate for an assumed business name: $10 and up
2: Filing an assumed business name with the state: $25
3: Filing Michigan articles of incorporation: $50 to $100
4: Expedited processing for articles of incorporation: $50 to $1,000
5: Business licenses: $7 to $3,000 annually (average around $150)
Other costs that vary by business include equipment, supplies and inventory; a website domain and hosting; rent for a retail or office space; a business bank account, and any other costs that your business requires to be functional. These costs range from a few hundred dollars to tens of thousands. You may also need to pay fees for federal paperwork or licenses, such as filing for an Employer Identification Number for federal taxes. Before you begin the process of registering your business, create a business plan to get a full picture of the startup costs involved.
How do I start a business in Michigan with no money?
Accessing capital for startups or expansions is a little more difficult in Michigan than on the coasts. Some small business owners have found that access is improving as the economy grows, though.
Heyboer noted that rapidly growing startups encounter many pain points, since access to venture capital is not as great in Michigan as it is in some other parts of the country. Young companies should prepare for a difficult time finding investors and plan accordingly.
Since venture capital is not widely accessible in Michigan, many entrepreneurs turn to local federal credit unions, such as the Michigan State University Federal Credit Union. The federal Small Business Administration also provides loans, financing options and grants for small businesses and startups.
There are also various nontraditional financing options available to entrepreneurs who lack the cash flow to start a business, many of them thanks to the internet. These include peer-to-peer lending and community development finance institutions.
Source: Business News Daily