You are able to take advantage of Michigan Flow-through Tax if your business (side gig) is structured as an LLC with 2 or more members, partnership, or an S-Corp. Your W-2 wages do not affect this. You can have multiple W-2s and businesses.
As a side note, an LLC is automatically considered a partnership unless you elect to have it treated as an S-Corp. An LLCs with only 2 - 100 members can elected to be treated as an S-Corp.
There are a number of pros and cons to determine which structure is best for you - continuing as a sole proprietorship or restucture into a partnership or S-Corp. It is recommended that you talk to a tax expert who specializes in tax anaylsis and can provide a report which illustrates the tax affect based on your actual business financials. Such reports will show which structure would provide the best and highest tax advantage for you.
Taxes for partnerships and S-Corp are based on the net income passed through to your personal return. Note that with an S-Corp you are also required to pay yourself Reasonable Compensation as a W-2 employee of your own S-Corp. Partnerships allow for Guaranteed Payments and/or distributions/draws.
Depending on your overall taxable income which would include W-2 wages, investment income, and business income, you may or may not be required to pay estimated tax payments during the tax year.
Here are some links which will be helpful:
Michigan PTET Link: https://www.michigan.gov/taxes/business-taxes/flowthrough-entity-tax
Business Structures: https://www.irs.gov/businesses/small-businesses-self-employed/business-structures
Estimated Tax Payments: https://www.irs.gov/businesses/small-businesses-self-employed/estimated-taxes
