Welcome to Minnesota, nicknamed “The Land of 10,000 Lakes!” Many entrepreneurs incorporate in Minnesota, which is bounded by the Canadian provinces of Manitoba and Ontario to the north, Lake Superior and Wisconsin to the east, South and North Dakota to the west, and Iowa to the south. You may also know this state as the home of the iconic Mall of America. The Mall of America includes over 400 stores and attracts nearly 40 million people to its location each year.
Minnesota is one of the rare states in our 50 lineup that comes very close to having a “perfect” business climate. The overall economy is incredibly stable and residents enjoy a high per capita personal income. There’s also a lot of support from fellow entrepreneurs and Minnesotans for small businesses throughout their given communities. High taxes, both on a personal and corporate income tax rate level, prove to be a big challenge for small businesses. However, it’s not an impossible one to overcome if you truly want to start a business in this state.
If you’re looking to set up shop here, here’s what you need to know before you incorporate in Minnesota
1. Choose a legal structure for your business.
Technically, this is second on the “how to start a business in Minnesota” list provided by the Minnesota Secretary of State. First, it is recommended that you write a business plan first. Then move into choosing a business type.
We, unfortunately, cannot tell you which legal structure would be best for your small business. However, we do recommend meeting with a legal professional beforehand to make the decision together. There are a few common business structures that entrepreneurs incorporate in Minnesota as. These include corporations, limited liability companies (LLCs), partnerships, and benefit corporations.
2. Pick the right name for your business.
How do you decide on the name for your small business? You’ll need to take into consideration the business type. You must also consider if the name is available for filing, and if any similar names are currently being used.
It is recommended that you conduct a name search first. This will allow you to check the availability of your business’s name. The state of Minnesota does note that for filing acceptance, business names must differ by at least one letter or numeral from other names already on file. While you’re conducting your name search, consider trademarks. If your business has any marks, it will need to file and register for them. You should also look into filing any necessary permits or licenses in order to stay in compliance.
3. Register for an EIN (Employer Identification Number).
One uses an EIN to hire employees. However, you can also use it to cover more aspects of your small business. The IRS assigns an EIN to your business and uses it to identify tax accounts.
You can use an EIN to open a bank account and establish a credit profile. In fact, most banks require you have an EIN before you open a bank account. You might want to go ahead and register for an EIN under the business name.
4. Figure out who will be your registered agent.
Some entrepreneurs choose to be self-sufficient. They may act as their own registered agent when they incorporate in Minnesota. This option, however, may not be feasible for all business owners. It presents the most problems if you cannot receive documents during business hours.
The state of Minnesota also lists some restrictions as to who can be a registered agent. If you work with a third party, keep in mind that their RA address must be within state lines and must be a physical address. The registered agent must also have permission to do business in the state.
5. Still seeking additional resources?
Minnesota is open to helping all of its small business owners. The state has many resources available to check out. The Minnesota Small Business Development Center is dedicated to helping small business across all industries from crafting a business plan to navigating tax codes.
Welcome back to the 50 States of Incorporation, Rebooted where we share what it takes to start a business in each of the 50 states. Join us biweekly for advice on how to start an LLC or corporation across the United States.