A Guide To STARTING A BUSINESS IN MINNESOTA 35th Ed …

A Guide To STARTING A BUSINESS IN MINNESOTA

A Guide To

STARTING A

BUSINESS IN

MINNESOTA

Small Business

Assistance Office

Minnesota Department

of Employment and

Economic Development

ISBN 1-888404-74-4

A Guide To STARTING A BUSINESS IN MINNESOTA is updated annually.

Copies are available without charge from the Minnesota Department of Employment

and Economic Development (DEED), Small Business Assistance Office, 1st National

Bank Building, 332 Minnesota Street, Suite E-200, St. Paul, MN 55101-1351.

Telephone: (651) 556-8425 or (800) 310-8323 | Fax (651) 296-5287

Email: deed.mnsbao@state.mn.us | Website:

Upon request, this publication can be made available in alternative formats by

contacting (651) 259-7476.

The Minnesota Department of Employment and Economic Development is an equal opportunity

employer and service provider.

Printed on Recycled Paper

With a Minimum of 10% Postconsumer Waste

A Guide To

STARTING A

BUSINESS IN

MINNESOTA

Thirty-fifth Edition, January 2017

Charles A. Schaffer

Madeline Harris

Mark Simmer

Copyright ? 2017, Minnesota Department of Employment and Economic Development

ISBN 1-888404-74-4

PREFACE

This thirty-fifth edition of A Guide to Starting a Business in Minnesota, like its predecessors, is

intended to provide a concise, summary discussion of the major issues faced by those starting a

business in Minnesota. This edition of the Guide contains three major sections: the narrative text;

a Resource Directory, which provides addresses, telephone numbers, and website addresses of

organizations referenced in the text; and the Directory of Licenses and Permits, which lists all

business licenses and permits required by the State of Minnesota, the state agency which issues

or administers the license or permit, and a telephone number for obtaining more information.

Topics presented in the narrative text are presented in the order in which the new business owner

typically must address them. Note that a business that will have operations or a physical presence

(with the possible inclusion of an Internet presence) in another state should check with the

government authorities in that state to obtain information on licensing, tax and other issues. We

hope this organization is useful.

While no one publication can answer every question for every kind of proposed business, this

Guide does respond to the questions and concerns most frequently raised. While it tries to be

both timely and comprehensive, this Guide is not intended as a final statement on any one subject.

In particular, users should be aware that the formal legal requirements for business start-up and

operations may change from time to time. Specific updates and additional information may be

obtained from the many sources listed.

Before engaging in any business venture, it is advisable to seek both legal counsel and advice

from an accountant. Both professionals can advise you as to the best course you might take in

establishing your business. The information provided in this Guide is not intended to replace that

kind of advice and assistance.

Charles A. Schaffer

Madeline Harris

Mark Simmer

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TABLE OF CONTENTS

Preface ......................................................................................................................................................... i

Choosing the Form of Business Organization........................................................................................ 1

Tax and Non-Tax Considerations ................................................................................................... 1

Naming the Business Entity........................................................................................................... 32

Forming a Sole Proprietorship....................................................................................................... 38

Forming a Partnership ................................................................................................................... 38

Forming a Minnesota Business Corporation .............................................................................. 43

Forming a Minnesota Limited Liability Company..................................................................... 50

Special Types of Business Organizations .....................................................................................54

Filing Documents with the Office of the Minnesota Secretary of State ........................................... 6

Secretary of State Fee Schedule...................................................................................................... 63

Regulatory Considerations...................................................................................................................... 67

Securities Registration..................................................................................................................... 67

Franchise Registration..................................................................................................................... 73

Evaluating a Business Opportunity.............................................................................................. 76

Business Licenses and Permits....................................................................................................... 78

Environmental Protection Programs ........................................................................................... 81

Intellectual Property Protection............................................................................................................ 102

Business Plan........................................................................................................................................... 103

Accounting for the New Business........................................................................................................ 108

Basic Accounting Principles......................................................................................................... 108

Income Forecasting Techniques................................................................................................... 110

Business Grants....................................................................................................................................... 114

Business Loans ....................................................................................................................................... 115

Public Sources of Financing ¨C Federal Programs...................................................................... 117

Public Sources of Financing / Tax Credits ¨C State Programs ...................................................124

Public Sources of Financing ¨C Local Programs.......................................................................... 138

Private Sources of Funds............................................................................................................... 138

Insurance ................................................................................................................................................. 140

Issues for Employers .............................................................................................................................. 143

Who is an Employee?.................................................................................................................... 143

Employment Agreements............................................................................................................. 148

Labor Standards............................................................................................................................. 150

Rest Breaks and Leave Time......................................................................................................... 168

Employee Testing and Background Checks............................................................................... 174

Employment of Minors................................................................................................................. 178

Protection of Employees Who Report Violations of Law ....................................................... 182

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