Last Updated on Dec 7, 2023

How to Start a Business in Minnesota

Minnesota is a great place to do business, and an even better place to call home! The state has a fantastic overall quality of life, making it easier to attract talent. MN also has great access to funding and venture capital, along with one of the fastest startup growth rates in the nation. All of this means that Minnesota is a great place to do business.

But how do you start a business in Minnesota? There’s a lot to learn about the process, but this guide will walk you through everything you need to know about starting a company in Minnesota.

First and foremost, you’ll need to decide what kind of business you want to start. Chances are you already have something in mind, but if not, here are some things to consider:

  • What are you talented or naturally skilled at? Could this talent make you well suited to a certain type of business?
  • What business does your community need? Have you talked to people to find out?
  • What are you interested in? Can you combine any of your passions with a business idea?
  • Is this going to be a full time business, or more of a side hustle?

These are questions to ask yourself when deciding on a business idea. Once you have decided, move on to the next step.

Now it’s time to start planning. This means coming up with a business plan, naming your business, researching locations, and more. There’s a lot to cover here, so let’s break it down:

Select a business name

The first concrete step that you must take is to decide on a name for your business. This process will require some research and brainstorming, as chances are your first choice name will not be available.

You will want to find a name that is relevant to your line of business, and memorable for your customers (or clients). And of course, you want a name that you like and that you would be proud to call your own. 

Most importantly, the name you choose must be unique. This means that it must be distinguishable from the names of other businesses already registered in the state of Minnesota. To confirm availability, you can search the business entity listings database online with the state of Minnesota. The MN Secretary of State also has a useful guide explaining how to search for business names. 

Besides finding a unique name, there are other business naming rules to consider, as well: 

  • The business name must be unique from other businesses already registered in the state
  • Names for LLCs need to contain “limited liability company”, or select approved abbreviations such as “LLC” or “L.L.C.”
  • Names for corporations need to contain “corporation”, “incorporated”, or select approved abbreviations such as “corp” or “inc”
  • The use of certain financial words, such as “bank” or “trust”, may require additional written permission
  • Other rules may apply. See the Naming Your Business page and the Name Availability Guidelines for details 

You can move on to the next step in the process once you’ve found a business name that you would like to use.

If you’re not quite ready to move on, but you don’t want to lose access to the name, you can also reserve the business name for up to 12 months by filing the Request for Reservation of Name. This option saves the name while giving you some time to think about things before finalizing the business registration. 

Minnesota trade names

Minnesota also allows businesses that are already registered in the state to register trade names, otherwise known as assumed names, or doing business as (DBA) names. Registering a Minnesota DBA can allow you to do business under a new name that is not your formal business entity name, providing some more flexibility in how you brand and market your business. Learn more about Minnesota DBAs here.

Register a domain name

Once you choose a name, you should immediately register a domain name for your new business. In most cases, getting a .com domain name is ideal, but there are many other extensions (.biz, .net, etc.) that are worth considering. 

You can use a tool like Namechk to search for an available domain name and find a great deal on the registration cost. You may find that your desired names are taken, so you may need to get creative. 

Complete market research

Once you have an idea, you’ll want to do some market research. You want to gain a better understanding of who your customers – and competitors – are. You can achieve this by conducting online research, running focus groups, sending out surveys, and more. There are also companies that can help you complete market research, for a fee. 

Select a business location

Unless you plan to run a remote/virtual business, you will need to find a physical location for your company. Research commercial property in your area, and take note of typical costs. For customer-facing businesses (retail and some services), location is very important, so take your time in selecting the right area for your business. 

Create a business plan

You will now need to create a detailed business plan for your new venture. This plan is helpful for your own purposes, and will also be necessary in order to obtain funding from a bank. A good business plan should contain these elements:

  • Finances: How much funding does the business need to get started? How many sales does it need each month to break even on expenses?
  • Product: What do you plan to sell? Is it a product or a service? What problem does your business solve, and how is it distinct from your competitors?
  • Marketing: How will you drive sales? What marketing and sales efforts do you plan to employ? How much money will you set aside to fund marketing efforts?
  • Staff & Partnerships: How many people will you need to hire, and what skill sets do they need to have? Will you have any partnerships or arrangements with other local businesses? 

If you need help, you can find business plan templates online that will help walk you through the steps you need to take to draft a detailed business plan. If you plan to seek funding, you may also wish to call your bank to see what they require in terms of business plans. 

Before you form your business as a legal entity, you will need to decide which business structure you will use. There are a few different types of businesses, each with its own pros and cons.

Sole proprietorship

Sole props are single-person operations. Examples include freelancers, gig economy workers and consultants. A sole proprietorship business is very easy and inexpensive to form, and tax reporting is also fairly simple. As a sole proprietor, your business taxes are reported as part of your personal tax return.

The downsides to a sole prop are that you cannot hire employees, and you don’t have the legal liability shield that something like an LLC or corporation would provide. 100% of the debts and liability of a sole proprietorship go to the sole owner: you. 


A general partnership is an unincorporated business structure similar to a sole proprietorship, except with two active owners/participants. Partnerships do not have liability protection. 

Limited Liability Company (LLC)

A limited liability company, or LLC, is a popular choice for business owners because it provides liability protection to the owners. It separates the business from the owners, which means the personal assets of owners will not be at risk if the company gets sued or goes into bankruptcy. 

LLCs are also a bit easier to form than corporations. Even so, there is definitely more work involved with an LLC than there is with a sole proprietorship. 


A corporation is owned by its shareholders and is a separate entity. There are a few different types of corporations (C-corp, S-corp, etc), with the main differences being the way they are treated tax-wise. 

Corporations are more regulated than LLCs, which makes them more attractive to outside investors. For this reason, most large companies are corporations. The downside is that it takes more effort, and more paperwork, to form a corporation. 


A nonprofit is a legal entity that is set up with charitable status, meaning that its goal is not to make a profit, but rather to address a certain cause. Nonprofits are funded by donations, rather than investors, and are subject to many regulations. They are exempt from most forms of taxation, although tax returns must still be filed. 

The next step is to formally register your new company with the state of Minnesota. This process involves working directly with the Minnesota Secretary of State’s office, or using a business formation service (more on this below).

You will need to submit some paperwork and make sure you meet all the requirements for a new business entity in MN. In the guide below, we’ll show you exactly how to complete this process. 

You have two options here:

  • You can file the necessary paperwork themselves (see below)
  • You can hire a professional business formation service to help them

Using a service is recommended for many entrepreneurs, simply because it can save you a lot of valuable time – and ensure that everything is done correctly.

Services such as Northwest Registered Agent, ZenBusiness, and Bizee are all great choices. These companies specialize in forming new businesses and can help walk you through everything you need to do to finalize your business formation.

Plus, these services can also be your Registered Agent. Each MN LLC or corporation is required to appoint a registered agent when registering their business. This agent is responsible for receiving important legal documents, lawsuit notices, etc. on behalf of your business. 

If you choose to complete the formation process on your own, the steps are laid out below (the process differs for each different business entity type). 

Form a Minnesota sole proprietorship

Follow these steps:

  1. Decide if you will operate under your legal name, or use a trade name
  2. If you use a name other than your own, you may need to register a trade name
  3. Apply for a Minnesota state tax ID number, if needed
  4. Apply for a business license and/or other necessary permits from local governments (city/county)
  5. More information here

Form a Minnesota LLC

Follow these steps:

  1. Name your new LLC 
  2. Choose a Minnesota Registered Agent (or use a service such as Northwest Registered Agent)
  3. File the LLC Articles of Organization online, and pay the $155 filing fee. You can also choose to file this form by mail for a reduced fee of $135
  4. Draft an LLC operating agreement
  5. Apply for an EIN with the IRS

Form a Minnesota corporation

Follow these steps:

  1. Decide on your desired corporate tax structure (S corp or C corp) 
  2. Name your new corporation 
  3. Choose a Registered Agent (or use a service)
  4. Hold an organizational meeting and appoint directors
  5. File the Minnesota Articles of Incorporation online, and pay the filing fee ($155). You can also choose to file this form by mail, with a reduced $135 filing fee
  6. Apply for an EIN from the IRS

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Registering your business and forming an LLC or corporation is an important part of starting your business – but in order to operate legally, you will likely also need to obtain certain permits and/or business licenses

The specifics vary depending on the type of business you are running, as well as your location. For example, restaurants will need health permits, bars will need liquor licenses, and medical service providers will need various professional licenses and federal permits. You will need to research the specifics that relate to your business type.

There are different requirements at each level of government:

  • Local: Cities and counties may require certain business licenses or permits. Contact your county clerk for details.
  • State: Minnesota may require additional permits and/or licenses in order to operate legally in the state. Check the Minnesota Business License & Permit page for details. 
  • Federal: Federal permits/licenses may be required for certain regulated industries, such as construction, medicine and legal services. Check the Small Business Administration (SBA) guide for more details. 

At this time, you should also apply for an Employer Identification Number (EIN). An EIN is a federal tax ID that is required to hire employees. You can apply for an EIN online with the IRS – the application is free and quick. 

For most businesses, some startup funding will be necessary in order to get started. In step #2, you should have calculated your funding needs while drafting a business plan. Use this information to determine how much funding you need to raise.

For bootstrapped companies, you may be able to get by with your own personal savings, or some seed investments from friends and family. If your funding needs are small, this is likely your best route.

If your business plan indicates that substantial funding is needed, you will likely need to apply for a loan and/or a grant.

  • Small business loans are offered by banks, credit unions and other lenders. They can range from as little as a few thousand to hundreds of thousands. Specifics will depend on your business, as well as your personal creditworthiness. Most small business loans are issued in a lump sum, and paid back on a monthly basis, with interest.
  • Small business grants are offered by government agencies and some nonprofits. They are essentially business loans that don’t need to be paid back – but they usually have substantial fine print. It’s worth looking into, however, as there may be grants available, particularly for businesses serving an important social need, or for underprivileged entrepreneurs starting their first business. 

Beyond securing funding, there are other routine tasks that you need to take care of to get your business’ finances in order. This includes:

  • Opening a business checking account. You should have a separate business bank account that you use solely for business purposes. You can open this account at most banks, credit unions and financial institutions. Call ahead to see what documents will be required to open this account.
  • Open a business credit card or line of credit. This is not strictly necessary, but most businesses can benefit from having a business credit card, and/or a business line of credit. This can be used for day-to-day expenses and purchases, and may also earn you some rewards. 
  • Set up your accounting system. As a business owner, you will need to keep very detailed records about all revenue and expenses. To do this, you’ll want to set up the proper foundation from day one. This could be investing in an account software such as QuickBooks or Xero, hiring a bookkeeper, or at the very least establishing a spreadsheet to track everything. If you do not have any accounting experience, it’s wise to hire a professional to help. 
  • Purchase business insurance. Most businesses should have some form of liability insurance, and potentially other forms of business insurance as well. Insurance policies can help protect your equipment and buildings from costly damage, and help shield your company from liability if a worker or customer is injured or otherwise harmed. Speak with a local business insurance provider to get started. 

In this day and age, having a solid web presence for your business is very important. And social media profiles, while important, are no replacement for an actual website. You will want to build a professional business website that you can use to drum up business, inform your customers, and stay connected with your clientele. 

The simplest way to build a website is to use a website builder from a web hosting provider. When you register a new domain name, look for a provider that also offers web hosting and a site builder, so that you can purchase everything at once and get your site set up quickly.

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Unless you plan to operate a solo business (with you as the only worker), you will likely need to hire employees. To do this, you will need a federal employer identification number (EIN), which is a free tax ID number issued by the Internal Revenue Service (IRS).  

Once you have your EIN (the primary federal requirement for hiring employees), it’s time to tackle the state-level requirements for employers. 

Whenever you hire someone, you must report it to the MN New Hire Reporting Center. You should also ensure that the employee holds all the relevant permits or licenses required for their position (foodservice workers will need health permits, for example).

There are also employer tax requirements to be aware of. This includes unemployment insurance tax, withholding tax, and others. Speak with your accountant for details.

At this point, you also should look into setting up your payroll system – whether you handle it yourself, or use a payroll service. 

Now it’s time to get down to business and engage with the day-to-day activities that are sure to bring your business success. This means marketing your products and services, maintaining good relationships with your return customers, and setting yourself apart from the competition.

Still have questions about running a business in Minnesota? Here are some answers to frequently asked questions.

What are some business resources in Minnesota?

Business owners in MN have many useful business resources to choose from. One great option to start with is the Minnesota Small Business Development Center (SBDC). This valuable resource provides free business advisor services, webinars and training, and many other useful resources. SCORE Twin Cities is another quality resource. The Small Business Administration (SBA) also has a detailed guide on various business resources in the state.

What is the minimum wage in Minnesota?

The Minnesota minimum wage depends on the size of the employer. Large employers (gross revenue of over $500,000 per year) must pay $10.08 per hour as of 2021, which is set to increase to $10.33 per hour in 2022. Small employers (less than $500,000 gross revenue per year) may pay $8.21 per hour, which is set to increase to $8.42 per hour in 2022. 

This lower $8.21 per hour wage also applies to youth employees age 17 or under, and to 18 and 19-year-olds during training for the first 90 days of employment. 

Individual cities or counties are also able to impose their own minimum wage laws that may exceed Minnesota’s minimum wage. For example, the Minneapolis minimum wage is $12.50 per hour for small businesses and $14.25 per hour for large businesses. Check with local government officials in your area to ensure your business is compliant with all local rules.

What business taxes does Minnesota have?

Minnesota businesses must pay a variety of business taxes in the state. Any business that sells taxable goods or services must pay the Minnesota sales tax, and taxable goods consumed by a business may be subject to use tax. 

Minnesota businesses may also be subject to Corporation Franchise tax, unemployment insurance tax, withholding tax, and potentially others. See the Minnesota Department of Revenue website for more information.

How do I dissolve an LLC or Corporation in Minnesota?

To close a business in Minnesota, you must “dissolve” it. This will involve filing some dissolution paperwork with the Secretary of State (the Notice of Intent to Dissolve for an LLC, or this version for a corporation).

There will likely be other steps as well, including filing any outstanding tax returns and shutting down your business tax accounts. It’s recommended to work with a CPA for this process, as closing a business can be complex.