Minnesota is a great state to live, secure a dream job in, or start and operate a business or franchise. If you want to begin your entrepreneurial journey and start your new company, registering a business in the state is a fairly straightforward process due to the state’s constant support for new and developing businesses, among many other pro-business incentives.
There are numerous benefits to starting a business in Minnesota, especially when it comes to corporate tax laws, which are made suitable for just about any industry your business will operate in. There are also many helpful networking accelerators and development plans to help businesses large or small thrive in the current U.S. climate.
With access to teams of SCORE professionals, low corporate tax rates, low Minnesota Secretary of State registration fees, and speedy filling times, it is no wonder why so many people register a business in Minnesota and start their journey to entrepreneurial success.
For an affordable fee, you can get your new business started and registered in Minnesota quickly and conveniently. Not only is Minnesota pro-business, but it also boasts some great cities (Minneapolis being one), breathtaking landscapes, and stunning natural beauty spots.
How to Register a Business Name in Minnesota – 7 Easy Steps
The Minnesota Secretary of State makes it reasonably easy to register your business name. There are three ways you can do this:
- 1. Do it yourself directly on their website.
- 2. Pay a document filing company that can register everything online for you – there is a modest fee for this but it saves a lot of time and ensures it is done correctly.
- 3. Hire an attorney or accountant to file and register your new company – there are higher fees associated with this.
Step 1 – Determine your registered name
Firstly, you must determine that your business name is unique and not being used by someone else. A business registration company can do this research on your behalf or alternatively, you can register on the Minnesota Secretary of State website.
Once you have established your name is available you can register a business name in Minnesota directly on their website if you are comfortable with the process and filling out forms. Or, if you want a company to do this for you that specializes in this, you can use an online registration service that will get it done correctly for you and according to the law.
These document filing companies usually offer a free registered agent service for one year with most of their business registration packages which is often a necessity for new businesses and those being registered by foreigners with no U.S. address.
Before doing any of this, you must decide on the right structure.
Step 2 – Choose the right entity
You need to choose the right type of business to register and the most common options are a limited liability company (LLC) or an incorporated company (Inc.). If you are keeping things really small and simple (one or two people), then you may consider a sole proprietorship or a general partnership.
Even if you plan to be a solopreneur, it is usually more beneficial for you to register a Minnesota LLC to make sure, as the owner, you have limited liability under this structure, and so you can benefit from the pass-through tax advantages.
Here is a quick rundown of the various options and what they might mean to you:
- Limited Liability Company: A Minnesota LLC is often the best route for most entrepreneurs because the structure comes with personal asset protection, no double taxation, is fairly easy to maintain, and does not have high registration or annual renewal costs. Through LLC formation you have better tax flexibility and income can be taxed as a pass-through entity like a sole proprietor or partnership, or as a corporation.
- Incorporated Company: A Minnesota Corporation offers personal asset protection and your company can own property, vehicles, incur liabilities, and is responsible for its own debts and can conduct business without the owners risking their personal assets such as their homes, cars, personal savings, retirement, etc. On the flip side, owners of sole proprietorships or partnerships face unlimited liability for both business and personal assets.
Step 3 – Make sure your name is not being used by another company
This may seem obvious, but if you check the Minnesota Secretary of State website and see that your chosen business name is available, that is all well and good, but that doesn’t mean someone else is not using that same or similar name, particularly in another state.
Many people register an “official business entity name” and trade under a different name. This is called a Minnesota dba, or “doing business as” name or assumed trading name, and needs a separate DBA certificate.
You will want to do a Google search for your official name and your desired trading name (if different) to make sure no one else is using this name. Most importantly, you will want to make sure you can get an easy-to-remember website domain name that is not being used by someone else.
Having an awesome name or trading name for your business can be crucial to your success, so making sure the domain name is available too, and registering it right away, is equally as important.
Finally, if you go to the Minnesota Secretary of State website and discover that someone else has registered the name you would like, you can search for variations of that name by adding a word before it or after it, or using some other variations until you find a name that is available and acceptable for you.
Step 4 – Request an Employer Identification Number (EIN)
Once you have registered your new business in Minnesota you will need to get an EIN for a number of reasons. These include paying taxes for your business, opening a bank account, obtaining credit cards or lines of credit, establishing terms with vendors and suppliers, hiring employees, and more.
There are only a few instances where you likely won’t need an EIN. More often than not, many business activities are just not possible without having an EIN.
An EIN is the business equivalent of a social security number and is used to track your business dealings. Even if you do not intend to hire employees, you will almost certainly still need an EIN for your Minnesota company and it protects you from having to use your social security number.
An EIN (also known as a federal tax id) is free to obtain from the IRS, and you can apply online but if you are not comfortable filling in forms you can use a third-party document filing service to do this for you for a small fee. This ensures you are 100% compliant with the law and they handle everything with the IRS so you don’t have to.
Step 5 – Obtain the Required Business Licenses and Permits
To operate your business in Minnesota you must comply with federal, state, and local government regulations. Minnesota does not require all businesses to have a “general” license to operate but depending on the type of business you start, or the location of your business within the state, you might need certain licenses and permits.
You will, however, need specific permits for certain businesses. For example, if you open a restaurant or similar food-related business you will most likely need a health permit, sales tax permit, facilities permit, and others. If you plan to sell alcohol, you will need a liquor license, essentially it all depends on the type of products and services your business is going to offer.
The business licenses you will need to acquire after you have registered a business in Minnesota will also differ depending on the location of the business.
You must find out how to obtain the necessary Minnesota business licenses and permits, this link will enable you to search for your type of business to familiarize yourself with the permits and licenses you will need to operate in Minnesota. You can also access the relevant forms you will need to complete.
Alternatively, you could hire a professional document filing company to do this for you. It eliminates a lot of time and hassle and ensures you are correctly complying with Minnesota law. After all, there are a few Minnesota licenses that you will need to have to operate legally, meaning that your business must be compliant with all requirements.
Step 6 – Determine Your Business Employer Requirements
There are several things you need to check regarding your responsibilities as an employer in Minnesota because there are requirements you must meet at the federal and state level.
These could include various workforce commissions, safety, and state tax obligations, as well as labor law requirements including the minimum wage in Minnesota and employee rights and remedies under the Minnesota minimum wage act.
To learn more about Minnesota employer resources take a look at the Minnesota Department of Labor and Industry website.
Step 7 – Open a Business Bank Account for your Minnesota Company
As a new business owner, you should seriously consider separating your personal and business bank accounts to make it easier to track and account for your income and expenses. For certain business types, such as an LLC or a Corporation, it is essential that you open a separate business bank account to maintain your liability protection.
Once you have your EIN and your company registration documents, coupled with your driver’s license, you are ready to go to the bank and open your checking account.
Don’t worry, this won’t be expensive or leave you burdened with hefty monthly fees to pay – there are many free business bank accounts out there for you to choose from. Each has its different features and benefits, so you can decide what bank and checking account best suits your needs.
Summarizing Registering a Business in Minnesota
Minnesota may not have the largest economy or most notable corporate entities out of all 50 states, but what it does have is a strong and solid business ecosystem for businesses both large and small. There are many incredibly useful resources at the state’s disposal, with the sole focus on supporting small businesses and those just starting out.
Small Businesses thrive in Minnesota because of its manageable state tax burden (9.8% is the flat corporate income tax rate for businesses), an ever-growing and stable economy, readily available office space and other commercial space, a highly skilled workforce (47% college-educated), and multiple cooperative laws suitable for businesses in most industries.
The state fee for registering a business in Minnesota is an affordable $155 for an LLC and $155 for a corporation. The annual filing fee to maintain your company in Minnesota is a reasonable $45 for a corporation and $45 for an LLC.
The Land of 10,000 Lakes is committed to your success and has many resources at your disposal that you can take advantage of.
Resources for Small Businesses in Minnesota
Whether you decided to register as an LLC, Corporation, or simply as a Sole Proprietor in Minnesota you are going to need to tap into the resources available to you to drive your small business forward.
Minnesota has a multitude of small business development centers that are dedicated to supporting the development and retention of small businesses. The support they provide to entrepreneurs covers everything from crafting business plans to navigating the state’s tax codes. Visit the Minnesota Small Business Development Center website to find out more.
Here are some additional small business resources in Minnesota:
- SCORE Minnesota: Not only are there small business development centers tailored around working with small businesses and startups for growth and development, but SCORE’s volunteer business professionals and expert mentors are readily available and are free to use for those looking to begin their entrepreneurial journey.
- Minnesota SBA: The U.S. Small Business Administration (SBA) helps small business owners and entrepreneurs pursue the American dream. The SBA is dedicated to small businesses and provides counseling, capital, and contracting expertise as the nation’s only go-to resource and voice for small businesses.
These services are very useful and cost-efficient, and it makes perfect sense to arm yourself with all the help and information you can get.