Professional Services & Consultants Bookkeeping in Michigan

Whether professional services & consultants services are taxable in Michigan is the question that catches people out — states differ enormously, and several have been broadening what counts. No local sales tax, and sales and use tax are reported on a combined return with withholding. We code service revenue separately from any product revenue so the treatment is explicit rather than assumed.

Economic nexus in Michigan is $100,000 in sales or 200 transactions. For professional services & consultants, that threshold is the one to watch, because it is reached by selling into the state — no office, no staff, no physical presence required. Once you cross it you are expected to register with the Michigan Department of Treasury and begin collecting. We track your Michigan sales against it and tell you before you cross, not after.

Registering to do business in Michigan runs through the Michigan Department of Licensing and Regulatory Affairs, with tax accounts through the Michigan Department of Treasury and employer accounts through the Michigan Unemployment Insurance Agency. Michigan treats these as wholly independent, so being in good standing with one says nothing about the others — and the sales tax account is the one that accrues a real balance while you are not looking.

The Michigan statewide base rate is 6%. Local rates stack on top and are generally sourced to the delivery address, so the effective rate varies within the state. Getting sourcing right is what keeps the liability account matching what you actually collected.