# Michigan Business Setup Checklist — Sole Proprietor
## Step 1: Choose and Register Your Business Name
### Fictitious Name (DBA) Registration
If you operate under a name other than your legal name:
- File a **Fictitious Name Registration** with Michigan Secretary of State
- **Where:** Online at [https://www.michigan.gov/sos](https://www.michigan.gov/sos) or by mail
- **Cost:** $25 (online) / $25 (mail)
- **Valid:** 5 years, then renew
- **Form:** Available at Michigan SOS website
### If using your own legal name:
- No DBA needed
- Example: "John Smith" operating as "John Smith"
**[ ] File Fictitious Name Registration (if applicable)**
## Step 2: Get an EIN (Employer Identification Number)
Even as a sole proprietor with no employees, you need an EIN for:
- Opening a business bank account
- Processing payments through Stripe
- Tax filing
- **How:** Free at [https://irs.gov/businesses/small-businesses-self-employed/apply-for-an-employer-identification-number-ein-online](https://irs.gov)
- Takes 15 minutes online
- You'll get it immediately
**[ ] Apply for EIN**
## Step 3: Open a Business Bank Account
- Keep business and personal finances **completely separate**
- Required if you ever form an LLC later
- Most banks: free checking for sole proprietors
- Use your EIN and DBA registration (if applicable)
**[ ] Open business bank account**
## Step 4: Michigan Tax Requirements
### Sales Tax
- **Good news:** Michigan does NOT charge sales tax on digital products and services
- Digital worksheets, PDFs, and online subscriptions are generally exempt
- Confirm with Michigan Department of Treasury: [https://www.michigan.gov/treasury](https://www.michigan.gov/treasury)
### Income Tax
- Sole proprietor income is reported on your personal tax return (Schedule C)
- Michigan income tax: 4.25% flat rate (as of 2024)
- Federal self-employment tax: ~15.3% on net earnings
### Federal Tax
- Report income on Schedule C (Form 1040)
- Pay quarterly estimated taxes if you expect to owe $1,000+
**[ ] Confirm sales tax exemption for digital products**
**[ ] Set up accounting system (Wave, QuickBooks, etc.)**
## Step 5: Michigan Home Schooling Law Compliance
Since you're selling educational materials:
- Michigan requires homeschool parents to follow [MCL 388.1651-388.1652](https://legislature.mi.gov)
- You do NOT need to be a licensed teacher to sell educational materials
- Your content is "supplemental" — parents are responsible for curriculum choices
- **Recommendation:** Add a disclaimer that worksheets are supplemental and parents should verify content meets their needs
**[ ] Add educational disclaimer to website**
## Step 6: Insurance
### General Liability Insurance
- Not legally required for sole proprietors in Michigan
- Recommended once you start making income
- Cost: ~$300-600/year for online businesses
- Providers: Next Insurance, Hiscox, Thimble
### Professional Liability (Errors & Omissions)
- Covers claims if someone says your worksheets caused educational harm
- Recommended for educational services
- Cost: ~$200-500/year
**[ ] Research and purchase insurance (defer until revenue starts)**
## Step 7: Payment Processing
### Stripe Setup
- Sign up at [stripe.com](https://stripe.com)
- Connect your business bank account
- Required: EIN, business address, bank account
- Takes 2-7 days to verify
### Tax Forms
- Stripe will send 1099-K if you process $600+ in payments (2024 threshold)
- Set up Stripe tax settings for your business
**[ ] Create Stripe account**
**[ ] Verify Stripe business information**
## Step 8: Website Legal Pages
Once you have the above, publish these on your website:
| Page | Link Location |
|------|--------------|
| Privacy Policy | Footer, every page |
| Terms of Service | Footer, checkout page |
| Refund Policy | Footer, checkout page |
| Contact page | Footer, Privacy Policy |
Required footer links:
- "Privacy Policy" | "Terms of Service" | "Refund Policy" | "Contact"
**[ ] Publish all legal pages on website**
**[ ] Add footer links to all pages**
## Step 9: Website Setup Requirements
**[ ] Require users to confirm they are 18+ on signup**
**[ ] Implement HTTPS on your website**
**[ ] Use encrypted database for storing user emails**
**[ ] Publish privacy policy, terms, and refund policy**
## Step 10: Recommended Next Steps (When Ready)
### Convert to LLC (Optional but Recommended)
Once you're making consistent revenue ($500+/mo):
- File Articles of Organization with Michigan SOS: $50 online
- Provides liability protection separating personal and business assets
- Michigan LLC annual fee: based on income
**[ ] Consider LLC conversion after 6 months of revenue**
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## Estimated Startup Costs (Legal/Business)
| Item | Cost |
|------|------|
| DBA Registration | $25 |
| EIN | FREE |
| Business bank account | FREE |
| Stripe account | FREE |
| Privacy/Terms legal review | $500-1,500 (optional but recommended) |
| General liability insurance | $300-600/year |
| **Total (minimal)** | **$25-300** |
| **Total (with attorney review)** | **$800-2,400** |
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## Useful Links
- Michigan Secretary of State: [michigan.gov/sos](https://www.michigan.gov/sos)
- Michigan Department of Treasury: [michigan.gov/treasury](https://www.michigan.gov/treasury)
- IRS EIN Application: [irs.gov](https://irs.gov)
- Michigan Homeschool Law: MCL 388.1651-388.1652
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*This is informational guidance, not legal advice. Consult a Michigan-licensed attorney for personalized legal counsel.*