How to Incorporate in Minnesota (August 2024 Update)

Incorporating in Minnesota establishes your business as a legal entity separate from its owners. Like most U.S. states, Minnesota law allows businesses to incorporate in several different forms, with a corporation being the most common. Becoming a Minnesota corporation shields business owners from personal liability, allows for greater access to financing options, and conveys an enhanced level of credibility.

While incorporating requires more paperwork and regulations to follow than simply launching an unincorporated startup, the benefits often make the extra effort worthwhile for business owners seeking funding or planning long-term growth. This article will walk through the key requirements and steps to incorporate in Minnesota.

Choosing a Business Name

The first step when incorporating in Minnesota is to select your corporation’s official business name. You’ll want to check for name availability early on using the Secretary of State's online search tool. The database allows you to enter possible names and confirm whether they have already been taken by another Minnesota business entity.

Per state corporation laws, the formal name under which you incorporate must include a corporate designator at the end, such as: Corporation, Incorporated, Limited, or an abbreviation like Corp. or Inc. For instance: “Johnson’s Construction Incorporated” or “AACorp”.

Your chosen Minnesota business name also cannot be misleading about the nature of your company's commercial activities. So "Bob's Insurance Company Inc." would not be approved if Bob is actually founding a landscaping business instead of an insurance provider.

After finding an allowable name that remains unclaimed, you do have the option to reserve it for up to one year while preparing your additional incorporation documents. The reservation certificate for a corporate name costs $35 when done through the SOS website.

Appointing a Registered Agent and Office

Every Minnesota corporation must designate a registered agent and registered office located within state boundaries. The registered agent's core responsibility is to receive official mail and legal service of process notifications on behalf of the company. The registered office simply identifies the physical address where your agent can reliably receive such communications during normal business hours.

While you can save money by designating yourself as the registered agent, most business owners prefer using a third-party commercial agent service. This keeps your home address private on incorporation paperwork. It also ensures someone will always be available to receive important legal notices that might otherwise get missed.

Filing Articles of Incorporation

To formally register your Minnesota corporation with the Secretary of State, you must file a document known as Articles of Incorporation. This legal charter essentially gives "birth" to your corporation as a separate legal entity.

Your articles of incorporation form requires you to provide certain details and declarations about your new corporation like:

• Business name and corporate designator
• Number of shares authorized
• Name and address of each incorporator
• Designated registered office address
• Name of the registered agent located at the registered office

When filling out your Minnesota Articles of Incorporation, one decision you'll want to think carefully about is whether to use your personal name and contact information, or list third-party agents instead. Public accessibility of records means publishing your own name and home address risks attracting solicitors. However, many incorporation services will supply alternate business addresses if privacy is a primary concern.

Obtaining an Employer Identification Number

Soon after the state approves your corporate charter, you'll need to obtain a federal Employer Identification Number (EIN) from the IRS. Like an SSN for an individual taxpayer, the EIN uniquely distinguishes your business identity for tax and employer reporting purposes.

Without your EIN, you cannot open a business bank account, apply for financing, or hire employees later on. Thankfully obtaining this essential 9-digit ID code for your Minnesota corporation usually takes less than 15 minutes using the IRS online application. Just be sure to have details handy like your company mailing address and ownership/management structure. There's no fee assessed to obtain your EIN.

Drafting Corporate Bylaws

Another key task that goes along with incorporating in Minnesota involves writing your corporation's bylaws document. Think of bylaws as essentially an instruction manual defining organizational hierarchies plus administrative policies needed to legally operate your corporation. Subject matter covered typically includes:

• Frequency of shareholder/director meetings
• Voting procedures
• Policies for issuing dividends
• Powers/duties of corporate officers
• Amendment processes
• Internal financial control procedures

While creating exhaustive corporate bylaws from scratch requires significant legal expertise, many online services offer templates catered to Minnesota small business statutes. When customizing one of these Minnesota corporation bylaw templates, make sure all provisions align with the ownership structure and operational priorities laid out in your articles of incorporation.

Conducting an Organizational Meeting

Shortly after filing for corporate status with the SOS office, your listed incorporators should hold an initial organizational meeting. Standard agenda items include formally adopting the bylaws, authorizing stock certificate issuance, appointing company directors, and electing corporate officers.

You'll vote on accepting pre-drafted corporate bylaws, or ratify any modifications made to customize the language. Shareholder stock then gets formally issued to investors who provided seed funding, or reserved as treasury stock for attracting future investors. With bylaws enacted and shares distributed, you'll elect director and officer roles (often self-appointed initially) to comprise your governing board and management team.

All proceedings and outcomes from the organizational meeting must be logged into official minutes kept with the corporation's governing records. While not an overly complex process, navigating the legal formalities involved makes having a business attorney or incorporation service guide your initial meeting worthwhile.

Opening a Bank Account

Before your Minnesota corporation can begin actual operations or accept investor funds, you'll need to set up a business checking account. The banking paperwork to open your corporate account differs from opening a personal account. Be prepared to provide your bank with documents like:

• Filed Articles of Incorporation
• IRS-issued EIN
• Corporate bylaws & organizational meeting minutes
• Board resolution authorizing bank account opening

For verification purposes, banks want to see evidence you've completed all the necessary legal steps involved with organizing your corporation. Having a board resolution in the minutes explicitly authorizing account opening specifically in the corporation's name also avoids any ambiguity over who controls the money.

For more information, take a look at our article on the key benefits of business checking accounts.

Staying Compliant with Annual Reporting

Unlike simpler business structures like sole proprietorships or partnerships, new corporate obligations don't end after your initial formation process. Minnesota corporations must remain in good standing by providing annual reporting updates to the Secretary of State's office.

Your corporation could face involuntary termination if you miss strict filing deadlines or allow administrative gaps by ignoring annual requirements. To keep your corporation's legal status intact, you'll need to file periodic reports maintaining updated records on items like:

• Principal addresses for company leadership & registered agent
• Current corporate officers/directors
• Email or phone contact for official notices

The good news is Minnesota doesn't levy any mandatory fees for filing your annual report updates. Just be sure authorized leadership remembers completing the simple online form before the last business day of the year. Set digital reminders to avoid risking dissolution from forgetting this essential compliance task.

Conclusion

Incorporating a new Minnesota small business includes several more legal formalities compared to sole proprietorships, but provides rewards like liability protection and perpetuity benefits. By planning out required steps for establishing your corporation upfront, securing desirable names, designating a registered agent, issuing shares properly, and maintaining annual compliance, your corporation should thrive for decades or generations rather than just the lifespan of a single founder. Consult experienced advisors like attorneys or filing services so you can focus energy on executing the core business mission.