A: The first thing to do is to determine which type of legal entity will best suit the needs of the business. There are four legal forms of business organization — sole proprietorship, partnership, corporation and Limited Liability Company. The type of organization formed determines where the business will be registered (the County or the State), corporate liability issues and the Federal and State tax structure. It is strongly advised that legal counsel be obtained before making this decision. The Macomb County Small Business and Technology Development Center offers a free seminar conducted by an attorney addressing the legal structure a company should have and the advantages and disadvantages of each. For a package of information on the seminars, as well as a ‘Checklist for Starting a Business’, please call 586.469.5118
A: There is a misconception that the Federal Government issues grants to those who wish to start a business. Unfortunately, there are only a few grants issued and these grants are usually very specific and highly competitive. Generally, the grants do not apply to the average person trying to start a business. Most grants are provided by private foundations. These foundations will usually offer grants only to non-profit organizations that have a similar, related or complementary mission to their own. For more information please call the Macomb County SBTDC at 586.469.5118
A: It is a common misconception that a loan from the SBA is better than a loan obtained from a bank. The SBA does not lend money. It is a guarantor of loans made by private banks and other financial institutions. The SBA has a loan guarantee program that enables a small business to borrow money from a bank when, absent the guarantee, the bank would refuse to make the loan. The Loan Guarantee program is not one that the borrower applies for – the bank approaches the SBA on behalf of the borrower and the bank is responsible for lending the money with a portion of the loan being secured by the SBA.For more specific information, please contact the Macomb County SBTDC at 586.469.5118
A: A Sales Tax License is obtained from the Michigan Department of Treasury. The Michigan Department of Treasury can be contacted directly at 517.636.4660 or www.michigan.gov/businesstaxes.
A: Most business licenses are issued at the State level. Information regarding the types of licenses that are required for a given business, as well as the application and process to be followed to obtain the license can be found on the State of Michigan website www.mich.gov. Some local communities may also require a business license. It is best to check with the city, township, or village offices regarding local requirements. Additional information and help can be obtained from Macomb County’s Department of Planning and Economic Development.
A: A business plan is a formal statement of a business goal, the reason it is believed the goals are attainable, and the plan for achieving the stated objectives. A written business plan helps identify many elements of the business including market size and definition, product offerings and description, product development and launch dates, distribution plans, sales channels, management team and credentials, revenue forecasts, estimated production costs, general business and startup costs, projected sales, monthly cash flow and estimated break even point and profits, etc. It is the key element to successfully planning the business. Most people believe a business plan is only necessary when you are seeking bank financing. This couldn’t be further from the truth! A good business plan is something that a business owner should revisit at regular intervals and there should be measurements to see how well the business is meeting its goals.
Writing a business plan can be a daunting task. Free assistance with preparation or reviewing the completed document is available from our business counselors. Go to www.MISBTDC.org and apply for counseling.
A: For any size or type of business to be successful it should have a marketing plan. A good marketing plan begins by identifying the targeted customers and their key demographics. The plan should include a description of the product or service to be offered, note any special features or characteristics of the products and the advantages provided to the customers by using the product or service, and should include a pricing strategy. The marketing plan should contain information on competitors including the level of demand for their offerings and their strengths and weaknesses. Finally, the marketing plan needs a budget that outlines an advertising and promotional layout.
Once a company understands its customers, what is important to them, and how its products satisfy their needs, it can more effectively communicate with the customers and stress the products’ benefits.
Our business counselors can help you determine your marketing needs and a marketing strategy to meet the goals of your business. Consultations are available by appointment only. Please call the Macomb County SBTDC at 586.469.5118 to make an appointment, or go to www.MISBTDC.org and apply for counseling.
A: Incorporated businesses and companies that hire employees must obtain an Employer Identification Number. A Federal Tax ID (or FEIN) is issued by the Internal Revenue Service (800.829.4933). The application and instructions for completing it can be obtained by visiting www.irs.gov. The application can be completed online as well.
A: A Sales Tax License is issued by the State (517.636.4660). This license allows a company to purchase items that are for resale without paying sales tax. If the items purchased are for business use, the sales tax must be paid. If you have additional questions, please call the Macomb County SBTDC at 586.469.5118 or visit www.michigan.gov/businesstaxes.
A: Before approaching any lending institution the organization will need a formal business plan (See above section titled “What is a Business Plan?”). If the company is a startup organization it will need to have private financing in place for the owner's portion of the investment in the company. A conservative rule of thumb is that approximately 20 percent to 30 percent of the total investment is needed. No lending institution is going to invest in a startup business if the principles of the business do not believe enough in the venture to invest their own money in it.
If the company is an ongoing enterprise, most lenders like to see a two-to-three year history of the business in terms of tax returns and year-to-date financials on the business and for the principles involved in the company.
A: Regardless of the nature of your business, the Department of Planning and Economic Development can provide you with direction in obtaining financial assistance in starting or maintaining operations.
The department’s Economic Development Services Group can assist qualified manufacturers and technology based businesses to access financing through various mechanisms. The EDSG is experienced in working with fixed asset financing programs such as the SBA 504 loan and tax exempt Industrial Development Revenue Bonds. Where necessary, non-traditional sources of financing can also be explored.
The EDSG is also experienced in assisting manufacturers in securing tax abatements and other incentives. These programs are used to help ease the financial burden on manufacturers that are buying new machinery and equipment or are expanding their current building or relocating to a new site. Other select incentives for qualified businesses include grants for workforce training and infrastructure improvements.
A: Most incentives are targeted to benefit businesses that are in the manufacturing sector. Included within this group are businesses that are manufacturing-related (such as R&D, engineering and prototyping) and those businesses that are primarily technology-based. Among the available incentives are tax exemptions, tax credits, grants and industry specific programs. The most commonly awarded incentives include tax abatements, Brownfield Tax Increment Financing, the Michigan Business Tax Credit, and the Michigan Economic Growth Authority program. (Hot link to Macomb business site for more info)
A: In general, a “tax abatement” or Industrial Facilities Exemption Tax (IFET) is a 50 percent reduction in the real and/or personal property tax liability of a qualified business, for a period of up to 12 years (per Michigan Public Act 198 of 1974). The granting of the abatement and the term of years is determined at the discretion of the local unit of government. Other tax exemptions provided for by enabling legislation in the State of Michigan include plant rehabilitation, economically distressed / Core Communities, and air/water pollution control. (Hot link to Macomb business site for more information)
A: The Department of Planning and Economic Development’s Economic Development Services Group is the authoritative resource for identifying which exemptions are available to your company and for helping you to secure those exemptions. As a free and confidential service, the EDSG will provide you with turnkey management of the application process. This relieves you from the most time consuming and labor intensive elements of the process.
A: Brownfields are abandoned, idled, or under-utilized industrial or commercial properties where expansion or redevelopment is hindered by real or perceived environmental conditions. The state has made available incentives that encourage and provide financial assistance for the redevelopment of such sites. This allows potential developers to rejuvenate sites that have the necessary infrastructure already in place. To determine whether your expansion or relocation project qualifies for brownfield redevelopment incentives, contact the EDSG at 586.469.5285.
A: Under the Michigan Renaissance Zone Act the Michigan Economic Development Corporation can designate up to 35 tax free zones within the state. The zones allow companies to operate tax free for up to 15 years enhancing their ability to compete globally. In order for a property to be designated as a T&DRZ it must be owned/leased by a qualified tool and die business. Also, the local government must agree to abate the business’ local taxes, and the business must join a qualified collaborative. To determine whether your business qualifies for potential T&DRZ benefits, contact the EDSG at 586.469.5285.
A: Tax-Exempt Industrial Development Revenue Bonds, available to qualified manufacturers, are issued through the Macomb County Economic Development Corporation to provide low-interest financing for investments of $2.0 million or more (up to $40M). Bond proceeds may be used to finance fixed assets (real and personal property). The bonds are limited obligations payable solely from revenues or other funds provided by the manufacturing company. The first step in securing IDRB financing is to obtain a letter of credit from a bank or other rated financial institution. To learn more about IDRB financing and determine whether your planned investments qualify, contact the EDSG at 586.469.5285.
A: Items that can be financed with Tax-Exempt Industrial Development Revenue Bonds include manufacturing facilities, both new and existing, including land, buildings, site work, and new machinery and equipment. Manufacturing is defined as any facility that is used for the production of tangible personal property or is engaged in a process that results in a change in the condition of such property. Typically, any process that results in a change in, or adds value to, raw materials or other products can be considered a “manufacturing
A: Finding the right site or building for a business can be a most labor intensive and time consuming task. The department’s Economic Development Services Group understands that your deliberations regarding where to locate are directly affected by our ability to provide you with the information that you require: suitable sites and facilities, transportation network, workforce, and the availability of state and local incentives. The EDSG will serve as your local site consultant, working with real estate professionals, developers, utilities, local utilities and any other resources necessary to bringing in professional realtors and developers when needed.
A: The department has access to a wide variety of data that are valuable to business. These include U.S. Census, consumer demographics, market segmentation, consumer spending, and business information for manufacturing and service industries. Additionally the department maintains commercial property databases used to assist you in selecting the right site or building for your business. All of these data are available without charge to qualified clients.