Are you looking to form a corporation in Minnesota, but you’re not familiar with the formation process? There are quite a few important steps you’ll need to take to create your Minnesota corporation and maintain it, so this guide will outline the rules and regulations involved with this process.
To get started, please reference our 11-step guide below or hire a professional business incorporation service.
1) Choose a Name
One of the most important aspects of the incorporation process is naming your business. There are three major elements to consider when choosing a name:
When naming a corporation in the state of Minnesota, you will need to include one of the following words or abbreviations: incorporated, corporation, limited, company, Inc., Corp., Ltd., or Co. Your corporation’s name also cannot include any words or abbreviations that indicate other business types, like the phrase “limited liability company” or the initials “LLC.” You also are not allowed to include words that refer to certain types of businesses (like “bank” or “law office”) unless your business fits those descriptions.
In addition to the legal considerations, you might want to identify your line of business or your mission in your company name. For example, you can display any closely held values in your name, like using the word “green” for environmentally friendly businesses.
A Name You’re Proud of
Keep in mind that this is your business, so you should choose a name that you’re proud of, and that you enjoy sharing with potential customers. You should also make sure it sounds good when spoken aloud, and also looks good when written down.
Check whether your preferred name is available: Visit the search of business filings to check whether it is already in use. If it’s not unique enough, you may need to tweak it or come up with a new name altogether.
Reserve Your Name
The formation process can take some time so it can be a good idea to go ahead and reserve your corporation’s name. You can reserve your name with the Minnesota Secretary of State by filling out the Application for Reservation of Corporation Name. You will need to send a check or money order for $55 alongside the form to the following address: Minnesota Secretary of State – Business Services First National Bank Building 332 Minnesota St, Suite N201 Saint Paul, MN 55101. Once you successfully reserve your name you will have 120 days until your reservation expires.
If you’d like a closer look at how this process works, see our walkthrough guide.
2) Select a Registered Agent
Minnesota corporations must designate a person or business to receive legal notices on behalf of the company. This important point of contact is known as the registered agent. You will be required to list the registered agent’s name and address when filing the Articles of Incorporation in step three.
Who can be my Registered Agent?
A registered agent must have a physical address within the state of Minnesota where mail and legal notices can be served during regular business hours. You can hire a service to act as your Registered Agent, serve as your own registered agent, or even use an accountant or other business professional’s address – with their consent, of course.
The Minnesota Secretary of State says that,
The registered agent accepts service of process or notice(s) sent to the entity. The registered agent(s) must be a person residing in Minnesota, a Minnesota entity, or a foreign entity authorized to do business in this state…an entity may not act as its own agent.”
Our Recommendation: We recommend hiring a professional service to act as your registered agent. Doing so will help eliminate junk mail and more importantly, keep your personal and/or business address off the public record.
3) Complete Your Articles Of Incorporation
This is THE document that formally registers your corporation with the state of Minnesota.
You can file this form online or by mail by filling out this pdf.
Keep in mind that you are acting as the incorporator when you fill out and submit the Articles of Incorporation. You should sign as the incorporator before submitting the document.
4) Establish a Corporate Record
Corporations are required under Minnesota law to document and keep a permanent record of all important company decisions. Some things that are required to be kept in the corporate record include:
- Articles of incorporation and any amendments
- Bylaws and any amendments
- The last three years of minutes from shareholder meeting and any shareholders actions
- List of names, addresses, and contacts for the directors
- Most recent annual report
The official corporate record may be kept at the corporation’s principal place of business, or stored in a safe location elsewhere. You should take the opportunity to set up a secure digital or physical location for storing company records as soon as possible.
5) Designate a Board of Directors
The incorporator is responsible for selecting the initial director(s) of the corporation.
Unless initial directors were specified in the Articles of Incorporation, the incorporator should record initial director appointments in a signed document and file it to the corporate record. This document is known as the “incorporator’s statement.” A sample incorporators statement can be found here.
The initial directors (every Minnesota corporation must have at least one initial director) will serve until new directors are elected at an annual shareholder meeting, or as otherwise indicated in the bylaws. The incorporator may serve as an initial director.
6) Create Corporate Bylaws
Corporate bylaws set out the rules and procedures for how the corporation will operate. Some important topics typically covered in the bylaws include:
- How shareholders will conduct votes
- The total number of directors and how each director will be elected
- How often the board of directors will meet
- The types of officer roles that will be appointed
- Procedures for resolving internal disputes
Minnesota does not require that all corporations establish bylaws, but it’s recommended.
Bylaws help your business run smoothly, and are sometimes required by financial institutions for opening business bank accounts or acquiring loans.
Either the incorporator or the initial directors may prepare the company bylaws. The bylaws should be recorded in an internal company document, signed by the incorporator or a director, and filed to the corporate record. The bylaws are not filed with the state of Minnesota.
If you’d like a solid framework for creating corporate bylaws, there are plenty of services and free templates available online.
7) Hold First Board Meeting
After designating a board of directors and preparing bylaws, every corporation is legally required to call for an initial board meeting and to have an annual board meeting going forward. The incorporator often arranges and attends this first meeting. During the first board meeting, the initial directors should plan to cover the following topics:
- Review and approve corporate bylaws
- Designate officers to manage day-to-day business affairs
- Choose a bank
- Approve issuance of stock certificates
- Determine whether the company should elect to be taxed as a C corporation or S corporation (see step Nine for more details)
Recording Meeting Minutes: a detailed record of all key discussions and decisions during the board meeting should be prepared and distributed to all board members for their review and approval. This record is known as the “minutes”. A copy of the minutes should be sent to each director for review and filed in the company record.
8) Handle Tax Obligations
You’ll need a federal tax ID number (EIN) to operate a corporation in Minnesota. You can obtain your EIN from the IRS for free, and it’s a fairly painless and simple process. An EIN is required for your corporation to hire employees, file corporate taxes, open business bank accounts, and more.
A major decision for any corporation is determining whether to be taxed as a C corporation or an S corporation. Take a look at how these two formats differ:
- C Corp: The majority of corporations are C corporations, as they are subject to far fewer restrictions than S corps. With a C corp, profits are taxed at the corporate level, and again on the personal tax returns of the shareholders, resulting in what’s commonly referred to as double taxation.
- S Corp: This is only an option if your corporation has fewer than 100 shareholders, only issues one class of stock, is not owned by another business entity, and does not have any foreign shareholders. If your corporation meets these requirements, you can select the S corp’s pass-through taxation which eliminates the double taxation issue of C corps. S corp dividends are not taxable.
On the state level, every Minnesota corporation is subject to the corporate franchise tax (9.8%). In addition, there are a variety of tax requirements that may or may not apply to your company, depending on the nature of your business. These include alcohol taxes, petroleum taxes, energy production taxes, etc.
Since you’ll have employees, you’ll also be expected to pay withholding taxes on employee wages. Essentially, you’ll keep back a small portion of wages from each paycheck and forward that money to the state. You can learn more about your withholding obligations with the Minnesota Department of Revenue.
If you’re a corporation involved in retail sales, you’ll also be responsible for the state’s sales tax. The usual tax rate for most items is 6.875%.
Keep in mind that your city and/or county may also have taxation requirements as well, so make sure to check with them to make sure you aren’t missing anything.For example, counties in Minnesota can charge additional sales taxes on top of what the state charges. Sometimes this additional fee totals 8.875%!
9) Obtain Business Licenses and Permits
The state of Minnesota does not have a general business license that applies to all companies operating in the state. You can reference our guide for any required permits or licenses.
That said, there may be other licenses you need to acquire to be compliant. For example, there are hundreds of industry-specific permits and licenses that you may need to acquire. Take a look at Minnesota Licensing, a state resource for businesses seeking permits. This page makes it easy to determine if any licenses or permits will apply to your corporation.
Much like you should check to see if your local government has tax requirements, there are also county-level occupational licenses that you may need to acquire. We recommend that you contact your local government office to make sure you don’t overlook any important licenses or permits.
For starters, here are some of the larger cities in Minnesota with local license requirements:
10) Acquire Insurance
Every business with employees located in the state of Minnesota is required by law to obtain two different kinds of insurance policies: workers’ compensation and unemployment insurance, even if they only have one employee on the payroll.
You can learn more about these insurance types with the Minnesota Commerce Department or Minnesota Unemployment Insurance. No matter what line of business you’re in, you need these policies.
In addition, you should also pursue general liability insurance and other more industry-specific types of insurance, but these are not legally required.
11) Open a Business Bank Account
To operate a corporation and receive the limited liability protection that comes with it, you have to keep your personal assets entirely separate from your business assets. Due to this requirement, it’s strongly advised that you acquire a business bank account for your corporation.
Failure to successfully keep your personal and business affairs separate could result in a court piercing the corporate veil and you being personally responsible for your corporation’s liabilities. If you need help finding the best business bank account check out our recommendations.
Get Help Forming a Corporation
The process of incorporating in any state can be a lengthy one. If you run into any trouble along the way, remember that there are plenty of organizations that can help you navigate the incorporation process.
Online Incorporation Services
If you would like to hire an affordable business incorporation service to create your corporation for you, services like ZenBusiness and Incfile can help you out. These service providers can handle most of the formation process, while still charging much lower rates than a business attorney’s fees.
There isn’t the same level of personalization that a lawyer can provide, but incorporation services can still be a tremendous help. The only major issue with these service providers is the fact that they can’t provide any actual legal advice, so you need to know what you want ahead of time.
Minnesota Business Attorney
There are some situations where hiring a business lawyer is a preferable route to using an online incorporation service. The corporation as a business structure can be highly complicated, and if you want to have the peace of mind that every single step was taken care of by a true expert, hiring a business attorney to form your Minnesota corporation is the way to go.
If you would like to pursue this route, there are some convenient services that can help you choose the right lawyer for your business. We like to use Avvo, which has extensive reviews and ratings for hundreds of Minnesota business lawyers, which can make it much easier to select an attorney who has your best interests in mind, and also has the expertise to get the job done right.
Form a Corporation in all States
We break down the corporation guidelines in every state. View all of our guides below.
- How to Form an Alabama Corporation
- How to Form an Alaska Corporation
- How to Form an Arizona Corporation
- How to Form an Arkansas Corporation
- How to Form a California Corporation
- How to Form a Colorado Corporation
- How to Form a Connecticut Corporation
- How to Form a Delaware Corporation
- How to Form a Florida Corporation
- How to Form a Georgia Corporation
- How to Form a Hawaii Corporation
- How to Form an Idaho Corporation
- How to Form an Illinois Corporation
- How to Form an Indiana Corporation
- How to Form an Iowa Corporation
- How to Form a Kansas Corporation
- How to Form a Kentucky Corporation
- How to Form a Louisiana Corporation
- How to Form a Maine Corporation
- How to Form a Maryland Corporation
- How to Form a Massachusetts Corporation
- How to Form a Michigan Corporation
- How to Form a Mississippi Corporation
- How to Form a Missouri Corporation
- How to Form a Montana Corporation
- How to Form a Nebraska Corporation
- How to Form a Nevada Corporation
- How to Form a New Hampshire Corporation
- How to Form a New Jersey Corporation
- How to Form a New Mexico Corporation
- How to Form a New York Corporation
- How to Form a North Carolina Corporation
- How to Form a North Dakota Corporation
- How to Form an Ohio Corporation
- How to Form an Oklahoma Corporation
- How to Form an Oregon Corporation
- How to Form a Pennsylvania Corporation
- How to Form a Rhode Island Corporation
- How to Form a South Carolina Corporation
- How to Form a South Dakota Corporation
- How to Form a Tennessee Corporation
- How to Form a Texas Corporation
- How to Form a Utah Corporation
- How to Form a Vermont Corporation
- How to Form a Virginia Corporation
- How to Form a Washington Corporation
- How to Form a Washington DC Corporation
- How to Form a West Virginia Corporation
- How to Form a Wisconsin Corporation
- How to Form a Wyoming Corporation