To start a sole proprietorship in Michigan, you file an Assumed Name Certificate with your county clerk if your business name is anything other than your full legal name, pick up any state or local license your trade requires, register for the federal and Michigan tax accounts that apply to you, and put basic insurance in place before you take on customers. There is no incorporation step and no state-level formation filing. The DBA costs $10 and takes effect immediately.
File an Assumed Name Certificate If You Need One
Michigan law requires anyone doing business under a name other than their own legal name to file an Assumed Name Certificate with the county clerk before operating.1Michigan Legislature. Michigan Code 445.1 – Carrying on Business Under Assumed or Fictitious Name If you operate strictly as “Jane Smith,” no filing is needed. Add anything — “Jane Smith Consulting,” “Lakeside Design” — and you have to register.
You file in every county where you operate or maintain an office. The certificate lists your full legal name, your residential or principal business address, and the exact business name.1Michigan Legislature. Michigan Code 445.1 – Carrying on Business Under Assumed or Fictitious Name
Check the Name First
Before filing, search the LARA business entity database through the state’s online services portal.2State of Michigan. Online Services Then ask the county clerk in your filing county, because assumed names registered only at the county level may not appear in the state database. Neither search covers federal trademarks. Run your proposed name through the USPTO’s free trademark database as well, looking for marks that look alike, sound alike, or carry a similar commercial impression.3USPTO. Federal Trademark Searching A trademark conflict can force you to rebrand later even if no Michigan business has your name.
Filing Mechanics and Fee
The county clerk supplies the official form. You sign it in front of a notary before submitting; an unnotarized form gets rejected.1Michigan Legislature. Michigan Code 445.1 – Carrying on Business Under Assumed or Fictitious Name Michigan caps notary fees at $10 per act.4Michigan Legislature. Michigan Code 55.285 – Notarial Acts The filing fee is $10 and includes two certified copies; extra copies are $1 each if ordered at filing.5Michigan Legislature. Michigan Code 445.3 – Fees Most counties accept the form in person or by mail; the notarization requirement keeps many from offering fully digital filing. Hold onto the certified copies. Banks, landlords, and licensing agencies routinely ask for them.
Renewal and What Happens If You Skip the Filing
The certificate is valid for five years. The county clerk mails a renewal form 30 to 60 days before expiration, and renewal costs $4.6Michigan Legislature. Michigan Code 445.1a – Carrying on Business Under Assumed or Fictitious Name Missing the renewal is treated as abandoning the name.
Operating under an unregistered assumed name is a misdemeanor punishable by a $25 to $100 fine, up to 30 days in county jail, or both, and each day counts as a separate offense. More practically, you cannot file suit in a Michigan court to enforce a contract or collect on business conducted under the unregistered name until you bring the certificate into compliance. Unpaid invoices become unenforceable until you file.
Check Whether Your Trade Needs a License
Michigan does not require a general business license for sole proprietors. Individual trades and professions are a different story. The Bureau of Professional Licensing within LARA regulates more than 700,000 professionals across fields including residential builders, cosmetologists, electricians, plumbers, and real estate agents.7State of Michigan. Professional Licensing Run your occupation through the State License Search on the LARA website to confirm whether you need a state credential before taking clients.8State of Michigan. Find / Verify a Licensed Professional or Business
Working from Home
Contact your city or township zoning office before you open a home-based business. Michigan’s Zoning Enabling Act lets municipalities regulate home occupations, including noise, signage, customer traffic, and hours.9Michigan Legislature. Michigan Code 125.3204 – Single-Family Residence, Instruction in Craft or Fine Art as Home Occupation Many localities require a home-occupation permit; some prohibit regular foot traffic or outdoor storage. Fees and rules vary by municipality.
Local Licenses
Some cities and townships add their own business license or registration on top of state licensing. There is no central database. Call the clerk or licensing department in the municipality where you operate.
Set Up Your Tax Accounts
Sole proprietorship income flows onto your personal return on Schedule C, but that does not mean you can skip the setup step. What you need depends on whether you have employees and whether you sell goods.
Federal EIN
A sole proprietor with no employees can legally use a Social Security number for federal tax purposes. You need an EIN if you hire employees, open certain business bank accounts, or file excise tax returns.10Internal Revenue Service. Get an Employer Identification Number Many owners get one anyway so their Social Security number stays off invoices and tax forms. The IRS issues EINs online at no cost and delivers the number immediately.11State of Michigan. Michigan Business Roadmap
Michigan Sales Tax
If you sell tangible goods, register for a sales tax account with the Michigan Department of Treasury. Michigan’s sales tax rate is 6%.12State of Michigan. Sales and Use Taxes Registration goes through the Michigan Treasury Online (MTO) portal, which also handles use tax and withholding accounts.13State of Michigan. Business Taxes Service-only businesses generally don’t need a sales tax license, though some services are taxable. Check with Treasury if you’re unsure.
Michigan Income Tax
Michigan taxes individual income at a flat 4.25%, and your business profits are part of that income.14State of Michigan. 2026 Michigan Income Tax Withholding Guide No employer withholds it for you, so you pay it directly.
Plan for Self-Employment Tax and Quarterly Payments
Sole proprietors owe self-employment tax on net business income to cover Social Security and Medicare. The combined rate is 15.3%: 12.4% Social Security and 2.9% Medicare.15Social Security Administration. 2026 Cost-of-Living Adjustment (COLA) Fact Sheet The Social Security portion applies only to net earnings up to $184,500 in 2026. Medicare has no cap.16Social Security Administration. Contribution and Benefit Base An additional 0.9% Medicare surtax applies to net self-employment income above $200,000 ($250,000 married filing jointly).
Because nothing is withheld, the IRS expects quarterly estimated payments covering both income tax and self-employment tax. The deadlines are:17Internal Revenue Service. Estimated Tax
- April 15, for income earned January through March
- June 15, for income earned April through May
- September 15, for income earned June through August
- January 15 of the following year, for income earned September through December
If a deadline lands on a weekend or federal holiday, the payment is due the next business day. Missing a deadline can trigger an underpayment penalty even if you pay in full at filing.
Insure the Business and Separate Your Money
A sole proprietorship puts no legal barrier between business debts and personal property. A lawsuit or unpaid business debt can reach your personal bank accounts and home. Insurance is how you manage that exposure.
- General liability insurance covers third-party claims for bodily injury, property damage, and certain personal-injury claims tied to your operations. Most common for owners who meet customers or work on client property.
- Professional liability (errors and omissions) insurance covers claims that your work, advice, or service caused a client financial harm. Common for consultants, IT professionals, and accountants.
- Commercial auto insurance is required if the business owns a vehicle or you regularly use a personal vehicle to transport goods, haul equipment, or drive clients. Most personal auto policies exclude business use, so a claim during business driving can be denied.
Insurance doesn’t change your legal exposure as a sole proprietor. It just means an insurer pays covered claims up to policy limits instead of your savings doing so.
Open a separate business bank account as soon as you have your certificate and, if you’re getting one, your EIN. Most banks want your EIN or Social Security number and a certified copy of your Assumed Name Certificate to open the account.11State of Michigan. Michigan Business Roadmap Some ask for additional documentation, so call ahead. Keeping business and personal money separate simplifies your Schedule C at tax time and creates a clean paper trail if the IRS ever has questions.
If You Plan to Hire, Add These Steps
Bringing on employees changes the obligations significantly.
- An EIN becomes mandatory once you have employees.10Internal Revenue Service. Get an Employer Identification Number
- Register for a withholding account through Michigan Treasury Online and withhold both federal income tax and Michigan’s 4.25% income tax from paychecks.13State of Michigan. Business Taxes
- Pay federal unemployment tax (FUTA) at 6% on the first $7,000 of each employee’s wages. A credit of up to 5.4% for timely state unemployment payments brings the effective rate to 0.6%.18Internal Revenue Service. Topic No. 759 – Form 940, Employers Annual Federal Unemployment (FUTA) Tax Return
- Carry workers’ compensation insurance once you regularly employ one person for 35 or more hours per week over 13 weeks, or three or more employees at one time, including part-time workers.19State of Michigan. Employer Insurance Requirements
- Report new hires to the Michigan New Hires Reporting Center within 20 days.
Skipping withholding registration, unemployment tax, or workers’ compensation coverage can produce penalties, back-tax assessments, and personal liability for employee claims.