Setting Up a Manufacturing Relationship in Michigan

In Michigan, you can choose from several business structures including sole proprietorship, partnership, limited liability company (LLC), or corporation. Many manufacturing businesses opt for an LLC or corporation due to liability protection. Michigan has specific filing requirements through the Department of Licensing and Regulatory Affairs (LARA). Consider consulting with a business attorney to determine which structure best suits your specific manufacturing operation, tax situation, and liability concerns.

Manufacturing operations in Michigan typically require several permits and licenses, including: (1) Business registration with the Michigan Department of Licensing and Regulatory Affairs, (2) Environmental permits from the Michigan Department of Environment, Great Lakes, and Energy (EGLE) for air emissions, wastewater discharge, or hazardous waste handling, (3) Local zoning approvals and building permits, (4) Fire safety inspections, and (5) Industry-specific permits depending on what you're manufacturing. Contact your local municipality and the Michigan EGLE to determine your specific requirements.

Michigan has comprehensive environmental regulations administered by the Department of Environment, Great Lakes, and Energy (EGLE). Manufacturers must comply with air quality standards, wastewater discharge limits, and proper hazardous waste management. Michigan's proximity to the Great Lakes means water protection regulations are particularly stringent. The state offers the Michigan Business Pollution Prevention Program to help manufacturers implement environmentally friendly practices. New manufacturing facilities should conduct an environmental impact assessment early in the planning process to identify compliance requirements.

Manufacturing contracts in Michigan should clearly define terms including product specifications, quality standards, delivery schedules, pricing, payment terms, warranties, intellectual property rights, confidentiality provisions, and dispute resolution procedures. Michigan follows the Uniform Commercial Code (UCC) for sales of goods, which provides default rules that apply when contracts are silent on certain issues. Consider including choice of law provisions specifying Michigan law and include clear termination clauses. Have contracts reviewed by an attorney familiar with Michigan manufacturing law before finalizing.

Michigan manufacturers must comply with both federal and state employment laws. Key Michigan-specific requirements include: (1) Michigan minimum wage ($10.33/hour as of 2023, with scheduled increases), (2) Paid Medical Leave Act requiring employers with 50+ employees to provide paid sick leave, (3) Michigan Occupational Safety and Health Administration (MIOSHA) regulations, which may have industry-specific safety requirements, (4) Workers' compensation insurance requirements, and (5) Michigan Employment Security Act governing unemployment benefits. Manufacturing environments often have additional safety training and compliance requirements.

Michigan offers several tax incentives for manufacturers, including: (1) The Michigan Manufacturing Personal Property Tax Exemption, which eliminates personal property tax on manufacturing equipment, (2) Michigan Business Development Program providing grants, loans, and other economic assistance, (3) Renaissance Zones offering reduced state and local taxes in designated areas, (4) Industrial Property Tax Abatements (PA 198) reducing property taxes on new investments, and (5) Various workforce development incentives. Contact the Michigan Economic Development Corporation (MEDC) to explore available incentives for your specific manufacturing operation.

To protect intellectual property (IP) in Michigan manufacturing: (1) File for federal patent protection for inventions, processes, or designs, (2) Register trademarks for your brand names and logos with both the USPTO and Michigan's Department of Licensing and Regulatory Affairs, (3) Secure copyright protection for original works, (4) Use confidentiality and non-disclosure agreements with employees and business partners, (5) Implement trade secret protection protocols, and (6) Include IP ownership clauses in all manufacturing and employment contracts. Michigan courts generally enforce well-drafted IP protection provisions.

Michigan manufacturers face several liability concerns: (1) Product liability claims under Michigan's Product Liability Act, which follows a modified comparative negligence system, (2) Workplace safety liability under MIOSHA regulations, (3) Environmental liability for pollution or improper waste disposal, (4) Contractual liability with suppliers and customers, and (5) Intellectual property infringement claims. Michigan has a statute of limitations of three years for product liability claims. Manufacturers should maintain comprehensive insurance coverage, implement quality control systems, and maintain detailed documentation of safety protocols and product testing.

Michigan provides several sales and use tax exemptions beneficial to manufacturers: (1) Manufacturing machinery and equipment used directly in production may qualify for exemption, (2) Industrial processing exemptions apply to certain materials that become part of the finished product, (3) Research and development equipment may qualify for exemption, and (4) Utilities used in the manufacturing process may be partially exempt. To claim these exemptions, you must complete Michigan Treasury Form 3372. Keep detailed records of exempt purchases and be prepared for potential audits. Consider consulting with a tax professional familiar with Michigan manufacturing exemptions.