How to Start a Minnesota Corporation (original) (raw)

Start a Minnesota Corporation

When you plan to start a business in Minnesota, you must decide on the appropriate structure. Starting a corporation may be more complicated than creating an LLC in Minnesota or a sole proprietorship. However, it is not that difficult as well. There are a few guidelines that you should be aware of when it comes to creating Minnesota corporation. Starting a corporation involves a legal process, that is, the process of incorporation.

In this article, I will share a step-by-step guide to start a corporation in Minnesota. I will also enlighten you on the advantages and disadvantages of having a corporation. Some people consider starting a corporation in Minnesota more than other business structures since it has many advantages over other forms.

What is a Corporation in Minnesota

In definition, a corporation is a formal organization established by stockholders, shareholders, or other people to make a profit. Like individuals, corporations can undertake contracts, own assets, sue and be sued, pay taxes, limit state and federal taxes, and loan funds from banking institutions.

Common Types of Corporations

Before you start with the process of forming a corporation, you should know what type of corporation you will form. There are several different forms of corporations you can take into consideration, depending on your corporation’s objectives and ownership structure.

C-Corporation: C-Corporation is the most known type of incorporation. They have almost all corporate distinguishing characteristics. Profits are distributed to corporate owners who are taxed at an individual level. The corporation is taxed similarly to a business unit.
S-Corporation: An S-Corporation is set up similarly to a C-corporation but has different tax implications and owner limits. S-corps have no more than 100 stockholders and are not taxed separately. These business units must also file paperwork with the Internal Revenue Service (IRS) to obtain their status.
Non-profit Corporation: Nonprofit businesses are frequently used by religious, educational, and charity institutions to run their operations without making a profit. Thus, a nonprofit corporation is exempt from paying taxes. The nonprofit organization’s gifts, contributions, or cash are reinvested in the company to fund its growth, future endeavors, or operations. Read how to start a nonprofit corp in Minnesota to learn about nonprofit corporations.

If you have a small business, it is recommended that you form an LLC instead of a corporation in Minnesota. LLCs have more tax benefits than other structures. Besides, LLCs protect your personal assets. However, it is wise to consult a legal expert before you start setting up your business in Minnesota.

– LLCBuddy Editorial Team

How to Start a Corporation in Minnesota

To start a corporation in Minnesota, you must follow the below steps that, include forming a corporation name, appointing a board of directors, filing for Articles of Incorporation, drafting corporate bylaws, meeting with the board of directors, issuing stocks, creating a shareholders agreement, requesting for an EIN, and getting a license and permit. All these steps are basic ones. It can be changed depending on the type of corporation you form and the nature of your business.

Step 1: Choose a Corporation Name in Minnesota

Naming your business is one of the most crucial activities during the startup phase. Your corporation name serves as the foundation for your brand. Legal procedures should be taken into account when choosing your corporation name. Choose a corporation name that will enable you to develop a strong brand identity without being hampered by irrelevant factors.

If you are forming an LLC, there is a complete guide on Minnesota LLC name guidelines for a proper LLC name. Here are some guidelines you must follow while naming your corporation in Minnesota-

Your business name must contain entity identifiers, such as “Incorporated,” “Limited,” “Corporation,” or “Company,” or an abbreviation, such as “Inc.,” “Co.,” or “Ltd.”
Exclude any words in your business name, such as “Trust,” “Bank,” “Credit Union,” or “Trustee,” or words related to a government agency, such as “FBI,” “State Department,” or “Treasury.”

Step 2: Board of Directors Initial Appointment

To form a corporation in Minnesota, you must appoint an initial board of directors before making them permanent once the corporation is formed. In Minnesota, you may appoint at least Three board of directors. The initial board of directors is in charge of guiding the overall strategy of your business. The structure, responsibilities, and powers given to a board of directors are determined by the bylaws of a company or organization. So, appointing your corporation’s initial board of directors in Minnesota is a big step in forming a corporation.

Step 3: Filing the Articles of Incorporation in Minnesota

After you appoint the initial board of directors in your Minnesota corporation, the next step is to write and file a Articles of Incorporation. In writing, the Minnesota Articles of Incorporation, the corporation name, principal place of business, the purpose of business, Minnesota Registered Agent contact information, and the names and addresses of incorporators and/or initial board members, should be written.

Filing a Articles of Incorporation in Minnesota may be done with three ways, online, by mail and in-person. The Articles of Incorporation fee may vary from different states. However, in Minnesota, it costs 155forfilingonlineandin−person,and155 for filing online and in-person, and 155forfilingonlineandin−person,and135 for filing by mail.

Online Filing: Get the online form from Secretary of State, fill it up, and submit. Don’t refresh the page during the process. It will erase everything.
Offline filing: Send the form by mail or drop it off in person to Minnesota Secretary of State — Business Services, Retirement Systems of Minnesota Building, 60 Empire Drive, Suite 100, St Paul, MN 55103.

Step 4: Draft Corporate Bylaws

Now you are done filing a Articles of Incorporation in Minnesota, the next step is to draft corporate bylaws. Corporate bylaws are the basic rules that control a corporation. It includes the organization’s structure, processes, laws, and rules. As a result, all personnel, managers, and corporation members must obey the firm’s rules.

In creating corporate bylaws, you should include the following on how the decisions will be made-

The responsibilities are given to each officer.
How will judgments in business be made?
Where and when are the annual shareholder meetings?
The minimum number of shareholders required for decision-making.
Location and timing of dividend payments.

Step 5: Hold the First Board of Directors’ Meeting

After drafting the corporate bylaws, gather all the board of directors for the first meeting. This meeting will be finalized by appointing directors to manage the company’s daily operations, approve the bylaws, choose the corporation’s accounting year, and approve the stock issue. All board meetings should have minutes taken and stored with the company’s records.

Step 6: Issuing Stock in a Corporation

After starting your Minnesota corporation, one of the first official corporate actions is issuing stock to the shareholders. Keep track of the number of shares issued to each shareholder and the purchase price. A corporation in Minnesota is managed by its shareholders, who contribute to the business in exchange for ownership shares.

Step 7: Draft and Finalize a Shareholders Agreement

Even though drafting and finalizing a shareholders agreement is unnecessary, I suggest you still comply since it will benefit your corporation and its shareholders. A small business’s shareholders enter into a shareholder agreement contract. It establishes how ownership will be handled in unexpected situations, like a shareholder passes away, retires, becomes disabled, or quits the corporation. Early on in the life of your Minnesota corporation, signing a shareholders’ agreement can help maintain corporate continuity and prevent future disputes.

Step 8: Request an EIN in Minnesota

After everything is in place, you should get or request an Employer Identification Number (EIN). An EIN will serve as the tax ID for your Minnesota corporation. EIN can be obtained from the Internal Revenue Service (IRS). It is a 9-digit number similar to Social Security Number. EIN, however, is distinct from SSN. It is only used for business-related activities, particularly for submitting general taxes. The form must be completed and uploaded to the IRS website.

The application of an EIN in Minnesota can be through the following:

Apply Online- The EIN online application is the preferred method for customers to apply for and obtain an EIN.
Apply by Fax- Taxpayers can fax the completed Form SS-4 application to the appropriate fax number), after ensuring that Form SS-4 contains all of the required information.
Apply by Mail- The EIN application For m SS-4 can be filed via mail. The processing time frame to receive the mail is 4 weeks.
Apply by Telephone-International Applicants – International applicants may call 267-941-1099 (not a toll-free number) from 6 a.m. to 11 p.m. (Eastern Time) Monday through Friday to obtain their EIN.

After you have your EIN number, you can benefit in a number of ways. It will give your corporation the final advantage necessary to operate at full capacity without encountering legal or judicial issues.

Step 9: Get Licenses and Permits for your Corporation in Minnesota

Before your corporation operates in Minnesota, you must have a business license. A business license is a document issued by a government agency that permits you to operate your business in the geographic region that that agency governs. To legally operate your corporation, you’ll need a business license. Numerous corporate licenses need to be filed and renewed regularly. Check out how to get business licenses and permits in Minnesota to know more.

You must also register a DBA name if you intend to conduct business using a name other than your corporation’s legal name. The DBA name is sometimes known as “doing business as” or a “fictitious business name.” Depending on your location, you may need to register the DBA with your state, city, and county. You can skip this step if your business solely uses your legal company name.

Important Information

Paying your Taxes in Minnesota

Even if you have established your corporation in Minnesota, pay your taxes and keep everything up to date so you won’t pay any penalty. Unlike an LLC, there is a corporate tax that every corporation in Minnesota has to pay. On the other hand, they must pay income taxes based on their business income. Some other types of taxes in Minnesota are sales tax, franchise tax (not applicable to all the states), and other state taxes.

Cost of Forming a Corporation in Minnesota

A filing and annual fee must be paid to form a corporation in Minnesota. Without it, your corporation won’t operate. The initial filing fee for a corporation may vary depending on the state. However, in Minnesota, it costs 155forfilingonlineandin−person,and155 for filing online and in-person, and 155forfilingonlineandin−person,and135 for filing by mail. The corporation in Minnesota also has to file an annual report (though it might not be mandatory, it is recommended to file one). Ensure you comply with all the necessary fees and costs so your corporation will run successfully and smoothly. If, in the future, you make any changes to your corporation, you must file the Minnesota Amendment. It costs $35.00 to file an amendment in Minnesota.

Advantages of Starting a Corporation in Minnesota

Limited Liability: The biggest advantage of setting up a Minnesota corporation is that the shareholders are not personally responsible for the debts of the company. As a result, when you incorporate as a corporation, personal assets like homes, vehicles, and other possessions are prohibited. One of the main benefits of setting up a corporation over a general partnership or sole proprietorship business structure is that neither the business nor the owners are held legally responsible for the obligations of the business, even if it means giving up their personal assets.
Limitless Corporation: The fact that a corporation’s existence is independent of its owners is another significant benefit of incorporation. In other words, a corporation has an endless life and will continue operating normally even if the owner dies or decides to sell their ownership.
Advantages in Tax: The deduction of health insurance premium payments made on behalf of an owner-employee is one of the many financial benefits to which corporations are entitled. Corporations also save on self-employment taxes since their revenue is not subject to workers’ compensation, Social Security, or medical taxes. Tax rates on corporate profits are lower than those on individual income.

FAQs

How do I incorporate a business in Minnesota?

You will need to file Articles of Incorporation with the Secretary of State, which requires certain information about your business.

What is the filing fee for incorporating in Minnesota?

The filing fee is $155.

When is the deadline to incorporate in Minnesota?

You must file your Articles of Incorporation with the Secretary of State within 15 days of making your initial payment.

What are the steps I need to take to incorporate in Minnesota?

You will need to file Articles of Incorporation with the Secretary of State, obtain a registered agent, obtain a federal tax ID number, obtain a state tax ID number, and obtain a business license if it is necessary.

Do I need to have a registered agent in Minnesota?

Yes, you must have a registered agent in Minnesota in order to incorporate your business.

What is the cost of a registered agent in Minnesota?

The cost for a registered agent in Minnesota varies, but is typically around $125 per year.

Do I need to have a business license to incorporate in Minnesota?

Depending on the type of business you are incorporating, you may need to obtain a business license in Minnesota.

What are the corporate taxes in Minnesota?

The corporate income tax rate in Minnesota is 9.8% and the corporate franchise tax rate is 0.15%.

What types of corporations are available in Minnesota?

In Minnesota, you can incorporate a C-corporation, an S-corporation, or a Limited Liability Company (LLC).

What is a C-corporation in Minnesota?

A C-corporation is a business entity that is separate from its owners and is taxed as a separate entity.

What is an S-corporation in Minnesota?

An S-corporation is a type of corporation that is eligible for special tax treatment.

What is a Limited Liability Company (LLC) in Minnesota?

A Limited Liability Company (LLC) is a business structure that combines the advantages of a corporation and a partnership.

How long does it take to incorporate in Minnesota?

It typically takes about five to seven business days to incorporate in Minnesota.

Does Minnesota require annual reports?

Yes, Minnesota requires corporations to file an annual report with the Secretary of State.

Does Minnesota require corporations to hold annual meetings?

Yes, Minnesota requires corporations to hold annual meetings.

Does Minnesota require corporations to keep minutes?

Yes, Minnesota requires corporations to keep minutes of all board and shareholder meetings.

Does Minnesota require corporations to maintain a corporate seal?

Yes, Minnesota requires corporations to maintain a corporate seal.

Does Minnesota require corporations to file reports of change?

Yes, Minnesota requires corporations to file reports of change with the Secretary of State whenever there is a change in the corporation’s name, address, officers, or directors.

Does Minnesota require corporations to have bylaws?

Yes, Minnesota requires corporations to have bylaws, which are the internal rules of the corporation.

Does Minnesota require corporations to file tax returns?

Yes, Minnesota requires corporations to file state and federal income tax returns.

Does Minnesota require corporations to pay franchise taxes?

Yes, Minnesota requires corporations to pay franchise taxes.

Does Minnesota require corporations to pay estimated taxes?

Yes, Minnesota requires corporations to pay estimated taxes.

Does Minnesota require corporations to pay estimated sales taxes?

Yes, Minnesota requires corporations to pay estimated sales taxes.

Does Minnesota have a minimum capital requirement?

No, Minnesota does not have a minimum capital requirement for corporations.

Does Minnesota require corporations to have a board of directors?

Yes, Minnesota requires corporations to have a board of directors.

Does Minnesota require corporations to have officers?

Yes, Minnesota requires corporations to have officers.

Does Minnesota require corporations to have shareholders?

Yes, Minnesota requires corporations to have shareholders.

Does Minnesota require corporations to have an annual audit?

No, Minnesota does not require corporations to have an annual audit.

How do I start a corporation in Minnesota?

To form a corporation in Minnesota, you must file Articles of Incorporation with the Minnesota Secretary of State. The filing fee is $155 and you should receive approval within approximately one week.

Are there any special requirements for a corporation in Minnesota?

Yes. Corporations in Minnesota must have a registered office and a registered agent, both of which must be located in Minnesota.

What information is required to file Articles of Incorporation in Minnesota?

The Articles of Incorporation must include the name of the corporation, the number of shares it is authorized to issue, the street address of the registered office, and the name of the registered agent.

What other documents may be needed to form a corporation in Minnesota?

The corporation may also need to file a Statement of Assumed Name, Business License Application, and Corporate Franchise Tax Return.

What are the ongoing requirements for a corporation in Minnesota?

Corporations in Minnesota must file an annual report with the Minnesota Secretary of State, which requires an annual filing fee of $25.

Why Minnesota Corporation is So Important

One of the key reasons why Minnesota Corporation is so important is its ability to create job opportunities for people in the state and across the country. By establishing and expanding their businesses in Minnesota, corporations are able to employ a significant portion of the workforce, providing individuals with stable and rewarding careers. This not only benefits the employees themselves but also contributes to the overall prosperity of the state by boosting consumer spending and stimulating economic activity.

Furthermore, Minnesota Corporation plays a crucial role in advancing innovation and technology. Many corporations based in the state are leaders in their respective industries, consistently pushing the boundaries of what is possible and driving progress in various fields. Their research and development efforts often result in groundbreaking discoveries and inventions that have the potential to change the way we live and work. By fostering a culture of innovation, Minnesota Corporation helps to keep the state at the forefront of technological advancements and ensures its continued competitiveness in the global marketplace.

In addition to economic and technological contributions, Minnesota Corporation also plays an important role in supporting the local communities in which they operate. Many corporations in the state are actively involved in philanthropic initiatives and charitable causes, giving back to the community in meaningful ways. Whether through monetary donations, volunteer efforts, or partnerships with local organizations, these corporations demonstrate a commitment to social responsibility and making a positive impact on society.

Moreover, Minnesota Corporation is a key player in the global economy, engaging in trade and business dealings with companies and markets around the world. By exporting goods and services to international markets, these corporations help to increase the state’s economic growth and enhance its reputation on the global stage. Their participation in global commerce helps to create opportunities for partnerships and collaborations that can benefit both local and international stakeholders.

Overall, the importance of Minnesota Corporation cannot be overstated. From creating job opportunities and driving economic growth to fostering innovation and supporting the community, these corporations play a vital role in the prosperity and well-being of the state and beyond. As such, it is essential to recognize and celebrate the contributions of Minnesota Corporation and continue to support their efforts to make a positive impact on society and the economy.

Conclusion

When determining which corporate form is best for you, be selective. You must know which business structure is bet-fitted for your product/service in Minnesota. Consult a legal professional before you take the first step while setting up your business. Finding the ideal ratio of corporate advantages and legal protection that meets your unique needs is very important. In forming a corporation in Minnesota, you need to ensure that every detail is well-formed so that your corporation will be successful. And if you have any questions, share them in the comment section below.