Just as employers must withhold tax and report it to various government agencies, so must individuals who work for themselves or are self-employed. You are self-employed if you operate a trade, business, or profession, either by yourself or as a partner. As a sole proprietor or a general partner, the owner pays taxes on the income from the business on a personal income tax return with the state and federal governments. You will also file an additional schedule which identifies income and expenses of the business. Partners file a partnership return in addition to the personal income tax return which distributes profits and losses between the partners according to the partnership agreement.
Corporations pay taxes on the business income at corporate tax rates.
In Michigan, it is easy to register for taxes. This form allows a business to register for sales, use or withholding taxes, the single business tax, motor fuel or tobacco products tax. The Michigan sales tax is 6 percent of retail sales receipts. When liable for sales tax, an application for a license should be filed with the Sales, Use and Withholding Division of the Michigan Department of Treasury. It was enacted to replace several business taxes, including a corporate net income tax, franchise tax, personal property tax on business inventories and others.