With a population of 9.9 million, the state of Michigan is the 10th most populous state and the 11th most extensive state by landmass in the US.
Michigan took a big hit during the 2008 financial crisis that saw businesses go bankrupt, homes foreclosed and major manufacturers, particularly in the Detroit area, like General Motors on the verge of closing down.
However, things have been looking up lately for the Mitten State. The cost of living and state taxes have dropped to a manageable level and this has encouraged entrepreneurs to set up shop in the state. The growth in small businesses (SMBs) has been so rapid that they are now the primary driver of the state economy.
Below are some statistics on Michigan small businesses:
- 886,557 small firms have established themselves in the state, that’s 99.6% of all businesses in Michigan.
- 1.9 million individuals are employed by small businesses in the state. That’s 49% of the private workforce.
- Self-employed individuals running their own incorporated businesses have an average median income of $51,000, while those with unincorporated businesses have an average median income of $23,000.
- Due to a huge surplus of office space in major cities like Detroit, rent prices are pretty low which is good news for new entrepreneurs.
- There are 105,395 small businesses in the professional, scientific, and technical services industries. 19,954 of these are businesses with less than 20 employees.
- The utilities sector has the smallest share of small businesses with just 317 working in it.
- 279,680 people are employed by SMBs in the healthcare and social assistance sector which is 45.4% of the private workforce in the same sector.
- Small firms in the utilities sector employ 1,784 people. This is 7.7% of the entire private workforce in the same industry.
- To open a Limited Liability Company (LLC), you must register with the Corporations Division of the Michigan Department of Licensing and Regulatory Affairs.
- Michigan state law requires that every new Michigan LLC designates a Michigan registered agent that will be available during regular business hours at a physical address within the state.
- The list below shows the general licensing and permit fees for businesses in Michigan:
- Average fee for a business permit is between $150 to $3,000 annually.
- Expedited processing for Articles of Incorporation incurs a cost of between $50 to $1000.
- Filing an assumed business name with the state carries a $25 fee.
- In order to file Articles of Incorporation, you are charged between $50 – $100.
- Filing a county certificate for an assumed business name has an average fee of $10.
- With a 6% corporate income tax (CIT) rate, Michigan has one of the lowest tax rates in the country.
- Small businesses that qualify for the alternative credit under the CIT pay 1.8% instead of the 6% tax rate. Those that don’t qualify pay a business income tax of 4.95% and a gross receipt tax of 0.8%.
- The state also imposes a 6% sales tax and a 4.25% flat personal income tax rate.
- 13,369 SMBs generate 22% of Michigan’s $53.4 billion worth of exports. These include farm products like soybeans, dairy products and corn, manufactured products like electrical equipment, appliances and components.
- Michigan SMBs created 26,000 net new jobs in 2019. 24,000 of these new jobs were created by firms with less than 20 employees.
- US SBA – Small Business Profiles
- Office of the United States Trade Representative
- Business News Daily