How Much Does It Cost to Start a Business in Minnesota

How Much Does It Cost to Start a Business in Minnesota

How Much Does It Cost to Start a Business in Minnesota

Starting a business in Minnesota costs anywhere from $135 to several thousand dollars, depending on your structure, industry, and complexity. This guide breaks down the exact fees you'll encounter at the state and local level.

State Formation Costs

Minnesota's filing fees are straightforward. You pay once to register your business structure with the Secretary of State, and that's it, no separate state business license required.

LLC Formation

A Minnesota Limited Liability Company (LLC) costs $155 to file online or in person, or $135 by mail. The difference is speed: online and in-person filings are treated as expedited service (though the Secretary of State doesn't publish a guaranteed turnaround time). Mail filings are processed without expediting.

You'll file an Articles of Organization through the Minnesota Secretary of State using their Business Filings Online portal (MBLS). Your LLC name must include "limited liability company" or "LLC," cannot contain "corporation" or "incorporated," and must be distinguishable from every other LLC, LLP, corporation, and limited partnership already registered in Minnesota.

Corporation Formation

Incorporating in Minnesota costs $155 online or in person, same as an LLC. You'll file Articles of Incorporation through the Secretary of State.

Assumed Name (DBA)

If you want to operate under a name different from your legal business name (called a DBA or "Doing Business As" in most states, here called a Certificate of Assumed Name), expect $50 online or in person, or $30 by mail. After filing with the Secretary of State, Minnesota requires you to publish the certificate in a qualified legal newspaper in your county for two consecutive issues. This publication is not free and typically costs $50 to $300 depending on the newspaper. Failure to publish may invalidate the certificate. The certificate must be renewed annually at no charge.

Name Reservation

If you want to reserve a business name before you're ready to file your formation documents, Minnesota charges $55 for a 12-month reservation, renewable for additional 12-month periods. Reserve through the Secretary of State's name reservation form.

Annual Renewal and Compliance Costs

Minnesota's annual compliance costs are minimal compared to many states.

LLC Annual Renewal

An active LLC in good standing pays zero to renew annually. You must file a renewal by December 31 each year, but there is no fee. If you miss the deadline, your LLC terminates without further notice, and reinstatement costs $65 by mail or $85 online or in person.

Corporation Annual Renewal

Corporations also renew for free if active and in good standing, due by December 31. Missed deadlines result in dissolution, and reinstatement costs $25 by mail or $45 online or in person.

Federal and Tax Registration Costs

There's no separate federal fee to start most small businesses, but you'll need to register in a few places.

Federal Employer Identification Number (EIN)

Free. Apply online at the IRS website. You'll get your EIN instantly if you apply online.

Minnesota Tax Registration

If you plan to make taxable sales, you must register with the Minnesota Department of Revenue for a Minnesota Tax ID and a Sales and Use Tax account. Registration is free.

Expect to pay sales tax on purchases (Minnesota's state rate is 6.875 percent, plus any local sales tax, typically bringing the total to 7 to 7.875 percent). You'll collect this from customers and remit it to the state, this is not a cost to you, but a compliance obligation.

Payroll Tax Registration

If you'll have employees, register with the Department of Revenue for payroll withholding (free). This is separate from your sales tax registration.

Professional Licenses and Industry-Specific Permits

Minnesota issues no general statewide business license, but many occupations require one. Costs vary widely by profession.

Examples include: contractor licenses (typically $100 to $400 depending on type and county), professional licenses like CPA or attorney ($50 to $300), and health-related licenses ($100 to $1,000 plus). Retail businesses in certain locations may need local health permits. Beauty and cosmetology licenses cost $100 to $500.

Browse all required licenses by industry at License Minnesota (mn.gov/elicense), which lets you search by topic, agency, or A to Z index.

Ongoing Costs: Taxes and Fees

Individual Income Tax

Minnesota's personal income tax is graduated across four brackets: 5.35 percent, 6.80 percent, 7.85 percent, and 9.85 percent. If you structure your business as a sole proprietorship, partnership, or LLC taxed as a partnership, you'll pay individual income tax on your business's net income. This is not a separate tax on the business itself, it flows to your personal return.

LLC and Partnership Franchise Tax

Minnesota has no separate franchise tax on LLCs taxed as partnerships or disregarded entities. Income passes through to the owner's individual return, where you pay individual income tax.

C Corporation Franchise Tax

If you elect to be taxed as a C corporation, you'll pay a flat 9.8 percent corporation franchise tax on your net income. Additionally, all C corporations, S corporations, and partnerships (including single-member LLCs filing as corporations) must pay a minimum fee under Minnesota Statutes 290.0922. For 2026, this fee is zero dollars if your Minnesota property, payroll, and sales combined are below 1,280,000 dollars. The fee increases in brackets, reaching a maximum of 12,830 dollars for businesses at 51,280,000 dollars and above. Single-member LLCs reporting only on the owner's individual return are exempt from this minimum fee.

Sales Tax Liability

If you make taxable sales, you must collect and remit sales tax. Minnesota's state rate is 6.875 percent. You typically send this to the state monthly, though less frequent filers may remit quarterly or annually depending on your sales volume. This is not a cost, it's tax you collect from customers and forward to the state.

Optional Costs That Often Make Sense

Registered Agent or Registered Office

Minnesota requires an LLC or corporation to have a registered office (a physical Minnesota street address), but naming a registered agent is optional for domestic entities. You can use your own address. If you prefer privacy or a professional business address, third-party registered agent services cost 50 to 300 dollars per year. This is not required but popular with businesses that operate remotely or want to keep their home address private.

Business Accounting and Tax Preparation

Budget 500 to 2,500 dollars per year for bookkeeping and tax filing, depending on complexity. Sole proprietorships may cost less; corporations or businesses with employees typically cost more. A CPA can also help you choose the right tax structure before you form, potentially saving far more than you spend on advice.

Business Insurance

General liability insurance typically costs 300 to 1,000 dollars annually for a small business. Professional liability, property insurance, and workers' compensation (required if you have employees) add to this. Insurance is not a state requirement to form your business, but it protects you after you do.

Sample Startup Cost Scenarios

Solo Service Business (Sole Proprietorship or Single-Member LLC)

  • LLC formation: $155
  • Assumed name (if needed): $50
  • Business license (varies by city/industry): $0 to $200
  • Business insurance: $300 to $600 per year
  • Total first-year estimate: $505 to $1,005

Retail or Food Business

  • LLC formation: $155
  • Business license: $50 to $400
  • Health permits: $100 to $500
  • Business insurance: $500 to $1,500 per year
  • Initial inventory and equipment: $2,000 to $50,000+
  • Total first-year estimate: $2,805 to $52,555+ (excluding inventory/equipment)

Corporation or Multi-Owner Business

  • Corporation or LLC formation: $155
  • CPA consultation on structure: $300 to $1,000
  • Registered agent (optional): $100 to $300
  • Business insurance: $500 to $2,000 per year
  • Accounting and tax prep: $1,500 to $3,000 per year
  • Total first-year estimate: $2,555 to $6,455+

Resources for Minnesota Business Startup

Final Thoughts

Minnesota's startup costs are reasonable compared to many states. Filing an LLC or corporation runs 135 to 155 dollars. Annual renewals are free as long as you stay compliant. The biggest cost variables are industry-specific licenses, professional services (accounting, legal), and insurance. Many first-year costs depend on what you do, not where you do it.

Disclaimer: This guide is informational and does not constitute legal or tax advice. Minnesota startup costs and requirements change; verify current fees with the Secretary of State and Department of Revenue before filing. Consult a qualified attorney and CPA for advice specific to your business structure and situation.