How to Start a Business in Minnesota in 2022: The Ultimate Step-by-Step Guide
Minnesota is ranked 5th in the United States for Fastest Start Growth. Therefore, starting a business in Minnesota is a great choice for entrepreneurs.
With a population of 5.64 million, your new startup in Minnesota is about to blossom.
All that is required is to learn the legal steps to start that business in Minnesota and quickly gain financial and personal independence.
Forbes reiterated the strength of Minnesota's economy saying it ranks third in quality of life. There is also an unemployment rate of 3.2%.
Start already, you have an adequate clientele to patronize this business!
What is a small business in Minnesota?
In Minnesota, a small business is a business with less than 500 employees. This does not mean a business run from home but with the number of employees.
How much does it cost to start a business in Minnesota?
The cost to form a Limited Liability LLC in Minnesota is $155 online and in person or $135 by mail.
These fees are paid to the Minnesota Secretary of State when filing the LLC's Articles of Incorporation.
Also, there are basically two ways to apply for the formation of an LLC in Minnesota.
First, you can hire a professional LLC formation service to set up your business. They charge an additional resort fee.
Second, you can use the free LLC form to guide you.
Do I Need a Business License to Start a Business in Minnesota?
Not all Minnesota businesses require a license. However, many types of businesses can or must be licensed.
In general, businesses that fall under the types of businesses we will list below will need a license to get started.
Do I Need a Minnesota Tax ID to Start a Business?
Most businesses require a Minnesota tax ID number. However, a sole proprietorship or single-member limited liability company that has none of these tax obligations does not need a Minnesota tax ID.
How to start a business in Minnesota?
According to the Minnesota Secretary of State's Office, there are three basic steps to starting a business in Minnesota. They look quite easy and we will describe them in detail.
This answers the question most people have: how hard is it to start a business in Minnesota? The simple answer is no. Although the process can be rigorous, it does not involve many steps.
Let's start.
Starting a business in Minnesota requires these three basic steps:
Write a business plan.
Choose a business type.
Register your business.
#1 Write a business plan
In Minnesota, to start a business or non-profit organization, you must write a business plan. This is one of the first steps in planning your business start-up.
A written plan for starting and operating your business is essential to your success. A well-prepared business plan gets you off to a solid start, makes you more attractive to potential lenders, helps you make sound management decisions, and better positions your business for growth.
Each business plan should contain an executive summary, a financial plan, an operational and management plan, and a marketing strategy.
In Minnesota, anyone starting a business should have a basic understanding of accounting and revenue forecasting.
You need to read this: Starting a business after college | 10 avoidable mistakes to watch
#2 Choose a business type
Before choosing a type of business, you should know the main business structures in Minnesota. Although we list them below, you can always consult a lawyer if you are unsure of what type of business to form.
The types of companies are:
a. Assumed names/DBAs
This type of business is for sole proprietors or general partners who do not do business with the full names of every person doing business with them. They must file an alias certificate.
Similarly, any corporation, limited partnership, or LLC that carries on business under a name other than the entity's exact legal name, must file an assumed name certificate.
b. Minnesota trading companies
This type of business is formed when two or more people come together to form a corporation. The company has a general commercial object and has its own legal power.
vs. Minnesota Nonprofits
Anyone wishing to form a nonprofit corporation in Minnesota must file articles of incorporation to state that there will be no monetary gain and no dividend payments to members. You can also apply for a tax exemption if you start a non-profit organization.
Foreign companies (companies, non-profits, cooperatives)
D. Minnesota and Foreign LLCs
LLC can be formed by two or more people. It is a commercial organization that combines flow-through taxation and limited liability.
This means that it is a business that enjoys the liability shield (owners are legally liable for business debts only for the amount of capital they have invested) of a corporation and the flexibility and tax advantages of a partnership.
e. Foreign and Minnesota LLCs
For you to start this type of business in Minnesota, an existing partnership will register for the benefits of a limited liability company.
F. Minnesota Public Benefit Corporations
A public benefit corporation is a new type of for-profit business to start in Minnesota in which the business promises to provide a general or specific benefit to the society.
This benefit is not necessarily tied to the business operated by the corporation. The company will submit an annual report that details how it has achieved its public benefit.
There are no tax benefits to being a public benefit corporation or investing in a corporation. There are no tax deductions for investors and the company pays corporation tax on all profits.
Finally, you must file a public benefit corporation in person. It cannot be done online.
#3 Register/deposit your business
You registered your startup in Minnesota by mail or in person. Before I continue to mention how to register your business, business registration does not give you a tax ID. You must file it separately with the Minnesota Department of Revenue (for a state tax ID).
This will help you:
What is a trade name for a company? Registration, Procedures.
How to Register Your Business in Minnesota
Almost all Minnesota businesses must register with the Minnesota Secretary of State's office.
Before registering your business, you need to decide what structure/type of business you want to register.
Step 1: Create an online account
Create an online account and log in. Create an online account here.
Step 2: Choose a business structure
Go to Online Business Filings page and click on the business structure you want for your business.
Step 3: answer the questions
Answer questions about association status and professional status.
Step 4: Check the company name
Check if the name you want your business to have is available. To do this, simply type the proposed name in the search box. You don't need to type the entity ending (LLC, Corporation, etc.) at the end, just use the drop-down menu to choose how you want the suffix to display.
Take note of the following information regarding names;
The words “Bank” or “Trust” are not permitted unless used in such a way as not to refer to a financial institution.
A name that contains the word “Insurance” must also include the modifier “Agency”, “Broker”, “Brokerage” or “Services” or similar modifiers to indicate that this business is not engaged in underwriting.
Banks and insurance companies do not file with the Secretary of State. Instead, they must file with the Minnesota Department of Commerce .
Step 5: Upload documents
Enter other requirements. For documents, it is recommended to save them in PDF format and the size should be less than 2 MB.
The file name must be 10 characters or less and contain no punctuation marks, spaces, or special characters.
Again, at the bottom of the forms is a place for signatures, entering your name satisfies this requirement.
Step 6: Submission
Be sure to review the file before clicking submit. After that, you will receive an order number specific to your depot. Save the order number before continuing. Then click on the “Go to US bank” button.
Once on the US Bank page, you will have the option to create an electronic service account with US Bank. The US Bank Electronic Service Account will store your credit card information for future transactions.
You can bypass the US Bank's electronic services registration by clicking "pay without registering". This allows you to process a one-time payment with your credit card.
Step 7: Confirmation step
After payment, you will receive a confirmation page with a payment confirmation number. Print the confirmation page or save the confirmation number. You will receive an email when the deposit is processed and an email for payment from US Bank.
Step 8: Final step
You will receive an email indicating that your file has been processed, it contains a link where you can download a copy of the file.
All deposits are kept in your transaction history for 90 days. After which it is automatically deleted. You can access transaction history by logging into your online account that you created in step 1 and clicking on Transaction History. Click on the order number on the right and you will be given the option to download the file.
#4 Define the brand
Creating a brand builds customer loyalty. It eliminates competition in the business world.
Make sure you have a unique selling point, a strong online presence, and excellent advertising channels.
#5 Establish a web presence
Social media will create awareness for your brand that you may not be able to leverage locally a year from now. It allows you to reach your target audience faster and even cheaper.
Additionally, a professional website is essential to the long-term success of your business, regardless of your industry. It allows customers to find your products and services.
Consider creating social media accounts, signing up for a Google profile, and creating accounts on review sites like Google Reviews.
Use social media to your advantage!
Conclusion
The process of starting a business in Minnesota is simple. And we have explained everything there is to know.
It requires only three steps namely: writing a business plan, choosing the business structure you want to form and registering it. That's basically all. However, you need to register for taxes, brand your business, open bank accounts, and build a strong online presence.
The Secretary of State will inform you of any other process if necessary. In conclusion, remember to ask for your tax identification number.
The circle of wealth cares!
References
SOS status
How to Start an LLC
Mngov
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