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How to Start a Business in Minnesota

Are you planning on starting a new business in the state of Minnesota, but having some trouble getting started? Are the endless websites and paperwork making you feel overwhelmed? That happened to us, too.

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Minnesota has been praised for a strong economic climate and high quality of life. 62 percent of the state’s population resides in the Minneapolis-St. Paul area. Minneapolis is also the state’s economic hub, with the headquarters of companies such as Target, General Mills, and 3M located there. Minnesota ranks high on education, with 92.6 percent of adults having a high school degree (second highest in the country). With the 6th lowest unemployment rate in the country, quality schools, and a healthy population, Forbes magazine rates Minnesota as the first state overall for quality of life.

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How to Start a Business

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General resources for starting a business in Minnesota

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Fun facts about starting a business in Minnesota

Famous business founded in Minnesota Target

Target Corporation is the second-largest discount retailer in the United States, behind Walmart, and is a component of the S&P 500 Index. Target was founded by George Dayton and is headquartered in Minneapolis, Minnesota. The first Target store opened in Roseville, Minnesota in 1962.

Famous entrepreneur born in Minnesota J. Paul Getty

Jean Paul Getty (1892-1976) was an American entrepreneur and industrialist. He founded the Getty Oil Company, and in 1957 Fortune magazine named him the richest living American. At his death, he was worth more than $2 billion (approximately $8.3 billion in 2015). Getty was an avid collector of art; his collection formed the basis of the J. Paul Getty Museum in Los Angeles, California, and over $661 million (approximately $2.7 billion in 2015) of his estate was left to the museum after his death.

My formula for success is rise early, work late, and strike oil. – J. Paul Getty

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Which type of legal structure is best for my business in Minnesota?

At bizHUMM, we strongly recommend you incorporate, but you must consider the tax, legal, and liability implications carefully before deciding on the right legal structure for your business.

Here are 5 helpful steps to determine the best structure for your business:

Click one of the buttons below to learn more about the different types of business legal structures and how to start them in the state of Minnesota.
LLC (Limited Liability Company)
An LLC is a hybrid business organization that combines the pass-through taxation of a sole proprietorship or partnership with the limited liability of a corporation. Each owner of an LLC has limited liability, like a stockholder of a corporation.

Steps to starting an LLC in Minnesota:

  • Step 1 — Give you LLC a name.
  • Step 2 — Prepare and file Articles of Organization.
  • Step 3 — Appoint a Registered Agent.
  • Step 4 — Prepare and sign an Operating Agreement.
  • Step 5 — Comply with any publication requirements.
  • Step 6 — Comply with other tax and regulatory requirements.
  • Step 7 — Annual Report Filings -- not required in Minnesota.
  • Step 8 — Register foreign LLCs doing business in Minnesota.

For help forming your LLC in Minnesota we recommend CorpNet (there are fees for their service).

Or, you can visit the Minnesota Secretary of State website.

Other Minnesota resources for LLCs:

Secretary of State Business Name Database: Search for the availability of your LLC name here.
File your Name Reservation here.
File your “Articles of Organization” here.

IRS EIN Online: Apply for an Employer Identification Number (EIN) for your LLC here. If your LLC has more than one member, you must get an EIN, even if you have no employees.

Minnesota Department of Revenue: If you will be selling goods or will have employees, you’ll need to register here.

Sole Proprietorship
A sole proprietorship is a one-person business that is very popular among individual self contractors or business owners. Even though there aren’t complicated start-up requirements for establishing a sole proprietorship, there may be local registration, business license, or permit laws you need to comply with to make your sole proprietorship legitimate. The owner of the sole proprietorship is entitled to all profits, and is responsible for all the business’s debts, losses, and liabilities.

Steps to starting Sole Proprietorship in Minnesota:

  • Step 1 — Name your business.
  • Step 2 — File a Certificate of Assumed Name with the Secretary of State.
  • Step 3 — Obtain licenses, permits, and zoning clearance.
  • Step 4 — Get an Employer Identification Number (EIN).

For help forming your sole proprietorship in Minnesota we recommend CorpNet (they have fees for their service).

Alternatively visit the Minnesota Secretary of State website.

Other Minnesota resources for Sole Proprietorship:

Secretary of State Business Name Database: Search for the availability of your business name here. A sole proprietor may use his or her given name, or an assumed business name.
File your “Certificate of Assumed Name Registration” here.

U.S. Patent & Trademark Office: Federal database for existing trademark registrations. Click on the “TESS” link to conduct a search.

IRS EIN Online: Apply for an Employer Identification Number (EIN) for your sole proprietorship here. If you hire employees, you will need an EIN.

Minnesota Department of Revenue: If you will be selling goods or will have employees, you’ll need to register here.

Partnership
A partnership is a single business where two or more people share ownership. Each partner contributes to all aspects of the business, including money, property, labor, or skill. In return, each partner shares in the profits and losses of the business.

Steps to starting Partnership in Minnesota:

  • Step 1 — Choose a business name for your partnership.
  • Step 2 — File an assumed business name.
  • Step 3 — Create a partnership agreement.
  • Step 4 — Obtain licenses, permits, and zoning clearance.
  • Step 5 — Obtain an Employer Identification Number (EIN).

For help forming your partnership in Minnesota we recommend CorpNet (they have fees for their service).

Alternatively, you can visit the Minnesota Secretary of State website.

Other Minnesota resources for Partnership:

Secretary of State Business Name Database: Search for the availability of your business name here. A partnership may use the surnames of the individual partners, or a fictitious business name.
File your “Certificate of Assumed Name Registration” here.

U.S. Patent & Trademark Office: Federal database for existing trademark registrations. Click on the “TESS” link to conduct a search.

IRS EIN Online: Apply for an Employer Identification Number (EIN) for your partnership here. Partnerships must have an EIN, whether you have employees or not.

Minnesota Department of Revenue: If you will be selling goods or will have employees, you’ll need to register here.

S Corporation
With an S corporation (or S corp), income and losses are passed through to shareholders and included on their individual tax returns. As a result, there's just one level of federal tax to pay. The shareholders must report the income or loss on their own individual income tax returns. An eligible domestic corporation can avoid double taxation (once to the corporation and again to the shareholders) by electing to be treated as an S corporation.

Steps to starting S Corporation in Minnesota:

  • Step 1 — Name your corporation.
  • Step 2 — Prepare and file Articles of Incorporation.
  • Step 3 — Appoint a registered agent.
  • Step 4 — Set up a corporate records book.
  • Step 5 — Prepare corporate bylaws.
  • Step 6 — Appoint initial corporate directors.
  • Step 7 — Hold your first Board of Directors meeting.
  • Step 8 — Issue stock.
  • Step 9 — Comply with Minnesota annual renewal requirements.
  • Step 10 — Comply with other tax and regulatory requirements.
  • Step 11 — Register foreign corporations doing business in Minnesota.

For help forming your S corporation in Minnesota we recommend CorpNet (they have fees for their service).

Or, you can visit the Minnesota Secretary of State website.

Other Minnesota resources for S Corporation:

Secretary of State Business Name Database: Search for the availability of your corporate name here.
File your “Name Reservation Form” here.
File your “Articles of Incorporation” here.
File your Annual Renewal here.

IRS EIN Online: Apply for an Employer Identification Number (EIN) for your corporation here.

IRS S corporations: Specific instructions for your tax requirements as an S corp.

Minnesota Department of Revenue: Register here to fullfill your corporate tax requirements.

C Corporation
A C corporation, under United States federal income tax law, refers to any corporation that is taxed separately from its owners. A C corporation is distinguished from an S corporation, which generally is not taxed separately. C corporations are subject to double taxation; that is, one tax at the corporate level on the corporation's net income, and another tax to the shareholders when the profits are distributed.

Steps to starting C Corporation in Minnesota:

  • Step 1 — Give your corporation a name.
  • Step 2 — File Articles of Incorporation.
  • Step 3 — Find a registered agent.
  • Step 4 — Set up a corporate records book.
  • Step 5 — Prepare corporate bylaws.
  • Step 6 — Appoint initial corporate directors.
  • Step 7 — Hold your first Board of Directors meeting.
  • Step 8 — Issue stock.
  • Step 9 — Comply with Minnesota annual renewal requirements.
  • Step 10 — Comply with other tax and regulatory requirements.
  • Step 11 — Register foreign corporations doing business in Minnesota.

For help forming your C corporation in Minnesota we recommend CorpNet (they have fees for their service).

Or, visit the Minnesota Secretary of State website.

Other Minnesota resources for C Corporation:

Secretary of State Business Name Database: Search for the availability of your corporate name here.
File your “Name Reservation Form” here.
File your “Articles of Incorporation” here.
File your Annual Renewal here.

IRS EIN Online: Apply for an Employer Identification Number (EIN) for your corporation here.

Minnesota Department of Revenue: Register here to fullfill your corporate tax requirements.

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Why choose Minnesota for my business?

  • 1

    CNBC: “Minnesota is 2015’s Top State for Business”
    “Minnesota scores 1,584 out of a possible 2,500 points, ranking in the top half for all but two of our 10 categories of competitiveness. But what may be most instructive are the categories where Minnesota does not do well. Both involve cost. Indeed, the birthplace of Spam, Scotch Tape and the supercomputer marks a new first this year. Never since we began rating the states in 2007 has a high-tax, high-wage, union-friendly state made it to the top of our rankings. But Minnesota does so well in so many other areas—like education and quality of life—that its cost disadvantages fade away.”

  • 2

    NerdWallet: “Best Places to Start a Business in Minnesota”
    “With a strong economy and highly educated workforce, the Gopher State is a solid place to start a business, a NerdWallet analysis has found. Minnesota has the sixth-lowest unemployment rate in the country at 3.6%, according to the U.S. Bureau of Labor Statistics.”

  • 3

    Minnesota Tax Credits and Business Incentives
    Tax credits, loans, and grants available in the state.

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