Navigating Sales Tax Compliance in Michigan: A Guide for Small Businesses
Sales tax compliance is a critical responsibility for every Michigan business, but the rules can feel complex—especially for small firms in rural communities. Staying compliant not only keeps you out of hot water with state authorities, but also builds trust with customers and streamlines your operations. Here’s what small business owners need to know for 2025.
Michigan’s Sales Tax Basics
Michigan’s sales tax rate is 6% statewide (no additional local sales taxes).
Businesses with physical or economic nexus—over $100,000 in sales or more than 200 Michigan transactions per year—must register, collect, and remit sales tax.
The state participates in the Streamlined Sales Tax initiative, making compliance for online and remote sales easier.
What’s Taxable and What’s Not?
Taxable items:
Tangible personal property (furniture, electronics, clothing)
Prepared foods (restaurant meals, catering, takeout)
Digital goods (prewritten software, e-books, downloads)
Rentals and leases (equipment, automobile rentals)
Some services (amusements, telecom, certain repairs)
Not typically taxable:
Groceries (basic unprepared food items)
Prescription medications
Recent Exemption Updates (2024-2025):
Feminine hygiene products and some firearm safety devices are now exempt.
Family vehicle transfers may qualify for exemption.
Filing and Payment Deadlines
Monthly: If your annual sales tax collected is $108,000 or more. Due the 20th of the following month.
Quarterly: For $9,000–$108,000 collected. Due the 20th of the month after each quarter ends.
Annually: If $9,000 or less collected. Due February 28 of the following year.
All returns are filed electronically with the Michigan Department of Treasury.
Key Compliance Requirements
Register for a Michigan sales tax permit before collecting tax.
Always charge the correct 6% on all taxable sales.
Keep clear records of sales, exemptions, and returns.
Pay collected tax on time—late filings can lead to penalties or audits.
When making exempt sales, obtain and store a valid exemption certificate for at least four years.
Special Considerations
Online & Marketplace Sales: If you sell on Amazon, Etsy, or other platforms, these companies usually collect and remit Michigan sales tax for you. You’re still responsible for collecting tax on your own Michigan sales.
Remote Sellers: Out-of-state sellers meeting Michigan’s nexus threshold must register and collect Michigan sales tax.
Use Tax: If you buy equipment or goods online without Michigan sales tax being charged, you may owe use tax.
Tips to Stay Compliant
Double-check which sales are taxable or exempt each month.
File returns even if you had no sales or no tax due that period—zero returns are required.
Review your procedures annually or when laws change; consult a CPA if you have questions.
At Raymond & King CPAs, we help rural Michigan businesses stay compliant and stress-free. Contact us for sales tax support tailored to your company!