What Michigan Small Businesses Need to Know About Taxes in 2023

If you own a small business in Michigan, it’s important to stay up-to-date on tax laws and regulations. As we head into 2023, there are several changes that small business owners need to be aware of to ensure they are compliant with state and federal tax requirements.

One major change is the implementation of Michigan’s new Paid Medical Leave Act, which requires employers to provide paid sick leave for their employees.

Additionally, the state’s income tax rate will decrease from 4.25% to 4.05%, which may affect how much you owe in taxes.

It’s crucial for small business owners to understand these updates and plan accordingly to avoid penalties or fines come tax season.

As 2023 approaches, Michigan small businesses should prepare in advance for any potential changes in tax laws that could affect their operations and income, including updates to michigan small business taxes.

In this article, we’ll outline what Michigan small businesses need to know about taxes in 2023 so you can stay informed and prepared for any changes that may arise.

The New Paid Medical Leave Act

Starting in 2023, Michigan small businesses will be required to comply with the new Paid Medical Leave Act.

This act mandates that eligible employees receive paid time off for certain medical and personal reasons.

To determine paid leave eligibility, businesses must understand the criteria outlined by the law.

Employees who work at least 40 hours per week or have accrued more than 35 hours in the previous year are eligible for up to 40 hours of paid leave annually.

Employers are responsible for tracking these accruals and ensuring that employees are aware of their rights under the law.

In addition, employers must provide notice of these benefits and maintain records of employee leave requests and usage to remain compliant with state regulations.

Failure to comply with these requirements can result in legal action against the employer.

Changes To Michigan’s Income Tax Rate

Michigan’s Income Tax Rate is set to change in 2023, which has the potential to affect small businesses throughout the state.

Under the new legislation, Michigan will reduce its current tax brackets from four to two. This means that there will be a lower rate for those earning less than $175,000 and a higher rate for those who earn more than that amount.

The impact on small business profits will depend on each individual business’s income and tax bracket.

Those who fall into the higher tax bracket may see an increase in their tax liability, resulting in a reduction of profits. However, those who fall into the lower tax bracket may benefit from a decrease in their tax liability, which could lead to an increase in profits.

It is important for small businesses to consult with a tax professional to determine how these changes will specifically impact them and plan accordingly.

Deductible Business Expenses

Let’s start our discussion by looking at how to track deductible business expenses.

Then, we’ll move on to discussing the different categories of business expenses that are deductible.

Tracking Expenses

As a small business owner in Michigan, it’s important to make sure you’re taking advantage of all the tax deductions available to you.

One key aspect of this is record keeping – keeping track of your business expenses throughout the year so that you can deduct them come tax season.

This includes everything from office supplies and equipment to travel expenses and professional services.

By keeping detailed records of these expenses, you’ll be able to claim the maximum deduction possible and ensure that you’re not overpaying on your taxes.

So be diligent about tracking expenses and stay organized throughout the year – it could save you a significant amount of money in the long run.

Business Expense Categories

Now that we’ve discussed the importance of tracking expenses for maximizing allowable deductions, let’s dive deeper into the specific categories of business expenses that are deductible.

From advertising and marketing costs to rent and utilities, there are a variety of expenses that can be written off come tax season.

It’s important to understand which expenses qualify as deductible and which do not, as well as any limitations or restrictions that may apply.

By familiarizing yourself with these business expense categories, you can ensure that you’re taking full advantage of all allowable deductions and minimizing your tax liability.

Filing Deadlines And Procedures

As a small business owner in Michigan, it is important to not only understand the taxes you owe, but also the deadlines and procedures associated with filing your tax return.

Failure to file on time can result in tax penalties that can quickly accumulate and cause significant financial strain on your business. On the other hand, taking advantage of available tax credits can help reduce your tax liability and potentially boost your bottom line.

The deadline for filing federal income tax returns for small businesses falls on March 15th each year. However, Michigan has its own set of requirements and deadlines that small business owners must adhere to.

In Michigan, small businesses are required to file their state income tax return by April 30th. It is important to note that if you miss either of these deadlines, you may be subject to late-filing penalties and interest charges.

To avoid this, it’s crucial to work with a professional accountant or tax preparer who can help ensure that your taxes are filed correctly and on time while maximizing any available tax credits.

Seeking Professional Help For Tax Planning And Preparation

Now that you know the filing deadlines and procedures for taxes in 2023, it’s time to focus on maximizing your tax deductions and making estimated payments.

Tax deductions are expenses that can be subtracted from your business’s taxable income, reducing the amount of tax you owe. Common deductions for small businesses include rent, utilities, supplies, and employee wages.

Making estimated payments is another important aspect of tax planning. These are quarterly payments made to the IRS throughout the year based on an estimate of how much tax you will owe. By making these payments, you can avoid penalties for underpayment at the end of the year.

Seeking professional help from a CPA or tax attorney can be beneficial in identifying all potential deductions and ensuring accurate estimated payments are made.


In conclusion, small businesses in Michigan need to be aware of the tax changes coming in 2023.

The New Paid Medical Leave Act will require employers to provide paid sick leave for their employees, which may affect their bottom line.

Additionally, changes to Michigan’s income tax rate and deductible business expenses could impact small businesses’ profits and taxes owed.

To stay on top of these changes, small business owners should make sure they understand the filing deadlines and procedures for their taxes.

Seeking professional help for tax planning and preparation can also ensure that they are taking advantage of all available deductions and credits.

As a virtual assistant, I can assist with tracking deadlines and ensuring proper documentation is available for accounting purposes.

By staying informed and seeking assistance when needed, Michigan small businesses can navigate these upcoming tax changes with confidence.

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