How to start a business in Minnesota

Get a federal EIN

Apply free on the IRS website and get the number immediately. You'll need it for the state tax registration, a business bank account, and payroll. Opening a new location? You already have one; the same EIN works in every state.

Sign an operating agreement

This internal document sets out who owns what, how decisions get made, and what happens if an owner leaves. It isn't filed with the state, but banks often ask for it, and it helps protect your liability shield. Single-owner LLCs need one too.

Open a business bank account

Bring your EIN letter, filed formation documents, and operating agreement or bylaws. Keeping business and personal money separate is one of the main things that protects your personal assets.

Check industry licenses and permits

Many businesses need a license or permit before opening, separate from registering the company. Check three levels: the state licensing board for your field, your city or county, and any federal agency that regulates your industry.

• Trades and construction: general contractors, electricians, plumbers, HVAC and roofers usually need a state or local license, and often a bond
• Personal services: salons, barbers, nail and esthetics shops need a shop license plus licensed staff; massage and tattoo studios are licensed too
• Professional services: accounting, engineering, architecture, law, real estate and insurance require state licenses for the people and sometimes the firm
• Child care, elder care and home care need a state facility or agency license and background checks
• Retail with restricted products: alcohol, tobacco and vape, cannabis, firearms (federal FFL), pawn and secondhand dealers
• Auto, transport and logistics: auto dealers and repair shops, towing, movers, and trucks that need a USDOT number
• Money and finance: lenders, mortgage brokers, debt collectors and money transmitters are licensed by the state, often through NMLS
• Local permits for almost everyone: city business license or tax registration, zoning or home occupation permit, sign permit and fire inspection

Decide on S corp tax treatment (optional)

If you want S corp taxation, file IRS Form 2553. The deadline is tight: generally within 2 months and 15 days after the start of the tax year you want it to apply. See Business basics for when it makes sense.

File Articles of Organization with the Secretary of State

Minnesota LLCs are formed under Minn. Stat. ch. 322C. File online through Business Filings Online or by mail. You'll need a Minnesota registered office address (not a P.O. box).

Name a Minnesota registered office and agent

Required on your filing. The agent must be a Minnesota resident, a Minnesota entity, or a foreign entity authorized to do business in Minnesota. A P.O. box alone isn't accepted. If you have no one local, a commercial registered agent service works.

File an Assumed Name if the location uses a different name

Only needed if you'll operate under a name other than your registered legal name.

Get a Minnesota Tax ID from the Department of Revenue

Register through Revenue's e-Services (Business Tax Registration) or by phone at 651-282-5225. Add the accounts that apply:

• Withholding tax, if you'll have employees in Minnesota
• Sales and use tax, if you'll make taxable sales (many health care services aren't taxable, but retail products are)

Check city and county licenses

Some Minnesota cities, including Minneapolis and St. Paul, require their own business licenses or permits and may have local sales taxes. Call or check the website of the city where the location sits.

Register to collect sales tax

Minnesota calls it a Minnesota Tax ID Number with a Sales and Use Tax account. Register with the Minnesota Department of Revenue through e-Services (Business Tax Registration) before you make your first taxable sale in Minnesota. You'll collect tax from customers and send it to the state.

• State rate: 6.875%
• Local taxes: Cities, counties and transit areas add local sales taxes, reported on the state return. Some special local taxes (lodging, food and beverage, admissions) are run by the city or county and filed with them instead.
• Some services are taxed, including admissions, building cleaning, laundry, lodging, massages, parking, pet grooming and telecom. Digital products and prewritten software are taxable.

Buy items you resell tax-free with a resale certificate

Give your supplier Form ST3, Certificate of Exemption so you don't pay tax on inventory you'll resell. The buyer gives it to the seller with a Minnesota tax ID or FEIN; it does not expire unless details change, but the state suggests updating it every 3 to 4 years. The MTC form is accepted for resale only. Keep certificates your own customers give you, too.

• Accepts the Streamlined Sales Tax multistate certificate
• Accepts the MTC Uniform Sales and Use Tax Resale Certificate

Selling into Minnesota from another state? Watch the threshold

Out-of-state sellers must register once sales into Minnesota pass $100,000 or 200 transactions (prior 12-month period), even with no office here.

• Only retail sales shipped to Minnesota count, and sales from all channels, including marketplaces, are added together.
• Marketplace providers such as Amazon and Etsy collect and report tax on sales they make for marketplace sellers, so the seller does not collect on those sales.

Note this Minnesota sales tax rule

Health care providers also pay the MinnesotaCare provider tax on patient service receipts, which was 1.8% for 2025.

Complete Form I-9 and W-4 for each hire

Form I-9 is never mailed to the government. You keep it in your own files and show it only if ICE or the Department of Labor asks for an inspection.

• The employee completes Section 1 by their first day of work
• You review their original documents and complete Section 2 within 3 business days of the start date
• Keep it for 3 years after the hire date or 1 year after employment ends, whichever is later
• Store I-9s together, separate from personnel files, so an inspection doesn't expose other records
• Remote hire? Have an authorized representative check documents in person, or, if you use E-Verify, use the DHS remote video inspection option
• Also collect a federal W-4 for withholding

Post federal workplace notices

Federal posters (minimum wage, EEO, FMLA if you have 50+ employees, and others) go alongside the state ones.

Register for Unemployment Insurance with DEED

Register online at ui.mn.gov after you pay your first covered wages in Minnesota, and before your first quarterly wage report is due. Have your FEIN and Minnesota Tax ID ready.

• 2026 taxable wage base: first $44,000 per employee
• New employers get a rate based on their industry (about 1.0% to 8.9%), plus a 0.40% base tax
• A 14% additional assessment applies on top of the tax owed in 2026
• Your rate notice is mailed each December for the next year

Set up Minnesota Paid Leave

Minnesota's paid family and medical leave program started January 1, 2026, and runs through the same employer system as UI.

• 2026 premium: 0.88% of wages. Employers pay at least half and may deduct up to half from employees.
• Employers with 30 or fewer employees pay 0.66%.
• Wages are reported quarterly through the joint UI and Paid Leave account.
• Give each new hire the written Paid Leave notice within 30 days and get a signed acknowledgment.
• Designate a Paid Leave administrator in your employer account.

Check income tax reciprocity

Minnesota has reciprocity with Michigan and North Dakota. An employee who lives in one of those states and works in Minnesota can give you Form MWR each year. You then withhold their home state's income tax instead of Minnesota's.

Buy workers' compensation insurance

Required from your first employee. Minnesota has no minimum headcount, so one part-time employee counts. Buy a policy from a private carrier or get approval to self-insure.

Report each new hire

Report employees who live or work in Minnesota within 20 days of hire, rehire, or return from a break of more than 60 days. Online upload is the fastest option.

Give the written employee notice at hire

Minnesota's wage theft law requires a written notice of pay rate, pay schedule, and employment terms at the start of employment. Keep a signed copy for each employee. DLI offers an example form.

Set up Earned Sick and Safe Time

Covers employees expected to work at least 80 hours a year in Minnesota, including part-time and temporary staff.

• Accrual: 1 hour for every 30 hours worked, up to 48 hours a year (you can allow more).
• Show hours available and used on each pay statement.
• Include the ESST notice at hire and in your handbook.

Pay at least Minnesota minimum wage

$11.41 an hour in 2026 for all employers. A $9.31 training wage is allowed for workers under 20 during their first 90 days. Minneapolis and St. Paul set higher city minimums, so check those if your location is there. The rate adjusts for inflation each January.

Follow Minnesota pay timing rules

Minnesota's wage payment rules are stricter than federal law on final paychecks.

• Pay at least once every 31 days on a regular payday set in advance
• Overtime after 40 hours a week for most employees under federal law (Minnesota's own law uses 48 hours, which only matters for the few employers outside federal coverage)
• Fired employees: final pay is due immediately, with penalties if unpaid 24 hours after a written demand
• Employees who quit: final pay by the next regular payday

Register for Minnesota Secure Choice or claim an exemption

Employers with 5 or more employees must offer a retirement plan or enroll employees in the state's Roth IRA program. Already have a 401(k)? You still request an exemption on the state site. Employees are auto-enrolled at 5% and need notice 14 days before deductions start.

• 100+ employees: June 30, 2026
• 50 to 99: end of 2026
• 25 to 49: June 30, 2027
• 10 to 24: December 31, 2027
• 5 to 9: June 30, 2028

Adopt a harassment policy (training recommended)

Minnesota doesn't require harassment training for private employers. A written policy and a yearly refresher are still the best defense if a claim is filed.

Post Minnesota workplace notices

Minnesota's employment law posters, plus the Paid Leave poster in English and any language spoken by five or more of your workers. Download them free from DLI and DEED; see the Posters & training tab for laminated all-in-one options.

Check city and county sick leave laws

These local laws apply to employees who work within the city or county, on top of the state rules. Where they differ, follow whichever is more generous to the employee. Not in force: Duluth (repealed), Bloomington (repealed).

• Minneapolis: All employers regardless of size; employees who work 80+ hours a year in Minneapolis; 1 hour per 30 hours worked; cap 48 hours earned per year; bank up to 80 hours.
• Saint Paul: All employers regardless of size; employees who work 80+ hours a year in Saint Paul; 1 hour per 30 hours worked; cap 48 hours earned per year; carryover up to 80 hours.

Collect a W-9 before the first payment

The W-9 gives you the contractor's legal name and tax ID for their 1099. Check the classification first: if you control how and when they work, they may legally be an employee.

Send Form 1099-NEC to contractors

File with the IRS and send the contractor a copy by January 31. For payments made in 2026 and later, the reporting threshold is $2,000 per contractor per year (it was $600 before).

File Minnesota copies of 1099s that show Minnesota withholding

Minnesota only requires 1099s from you when they report Minnesota tax withheld. If more than 10 W-2s and 1099s combined, file electronically through e-Services.

Double-check contractor classification

Independent contractors aren't covered by ESST or unemployment insurance, so misclassifying an employee can create back premiums and penalties. When the work looks like a regular staff role, treat the person as an employee.

Skip the FinCEN BOI report (U.S. companies are exempt)

FinCEN's final rule, effective August 14, 2026, permanently exempts companies formed in the U.S. from beneficial ownership reporting. Ignore letters or emails demanding a BOI filing fee; they're a common scam. Only companies formed outside the U.S. still file.

File the annual renewal with the Secretary of State

Due once each calendar year. Free for LLCs and domestic corporations in good standing; foreign corporations pay a fee. Missing it can lead to dissolution or revocation and a reinstatement fee.

File quarterly UI and Paid Leave wage reports

One wage detail report covers both programs. Also file and pay withholding tax on the schedule Revenue assigns you.

Deposit Minnesota withholding and send W-2 data to Revenue

Deposit Minnesota income tax withheld on the schedule Revenue assigns, through e-Services. Send Minnesota a copy of your W-2 information by January 31. More than 10 W-2s and 1099s combined must be filed electronically.

File sales tax returns on time

Based on average monthly tax: under $100 files annually by February 5, $100 to $500 quarterly, and over $500 monthly by the 20th of the next month. File a zero return if you had no sales; skipping it can bring penalties.