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Minnesota Business License Basics

Minnesota Business License Basics

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Minnesota Business License Basics

Starting a small business in Minnesota often means registering with several federal, state, and local agencies. Let’s review common Minnesota business license registrations so your business starts off right.

Related: Guide to starting a business in Minnesota 

Setting Up the Business

Sole proprietorship: In Minnesota, a sole proprietorship is an unincorporated business owned by a single individual. The owner has complete control over the business but is personally liable for all debts and obligations. No formal registration is required, making it the simplest and most common form of business structure.

General partnership: A general partnership in Minnesota is an unincorporated business owned by two or more individuals who share management responsibilities, profits, and losses. Partners have unlimited personal liability for the partnership’s debts and obligations. No formal registration is required, but a partnership agreement is recommended to outline the partners’ roles and responsibilities

Corporation: A corporation in Minnesota is a legal entity separate from its owners, providing the owner’s (shareholders) limited liability protection. Corporations are the most complex business structure to set up and have specific administrative requirements. 

Limited Liability Company (LLC): An LLC in Minnesota combines aspects of sole proprietorships and corporations, offering flexibility in management and taxation. Owners, called members, have limited personal liability for the LLC’s debts and obligations, but they aren’t as complex as corporations. 

Related: Comparison of Business Structures

What Licenses Do Minnesota Businesses Need?

With the business structure out of the way, we can begin looking at the different types of registrations businesses in Minnesota may need. There isn’t a standard business license, as requirements vary depending on where the business is located and what it does. Here is a general overview of the different registrations your business may need.

General Business License

There is no general state of Minnesota business license. However, many cities require businesses to be licensed in order to operate. Rules for business registration vary depending on location and what the business does. Below are a few cities that have licensing requirements.

  • Minneapolis: The Office of Business Licenses & Consumer Licenses issues business licenses for businesses operating in the City of Minneapolis and regulates certain types of businesses, such as contractors, dry cleaners, food-related businesses, tanning salons, and more.
  • St. Paul: The City of St. Paul requires business licenses for businesses such as auto body shops, bakeries, bed and breakfasts, restaurants, and others.
  • Rochester: Businesses such as contractors, ice cream vendors, mobile food vendors, tree trimmers, and more will need to register with the City Clerk.
  • Duluth: Business Licenses are required for any business operating within the city limits of Duluth. Some businesses requiring licensing include bowling alleys, garbage collectors, massage therapists, and towing services.
  • Bloomington: The Bloomington City Clerk’s Office issues city licenses for businesses offering garbage services, massage therapists, pawnbrokers, tanning salons, and more.
Take the guesswork out of figuring out what licenses and permits are required to start your business with license research packages from Bizee and LegalZoom.

For as little as $99, you can save a lot of time and know your business is in compliance with local, state, and federal requirements. 

Assumed Name Registration

While not a business license, it’s common for sole proprietorships and partnerships in Minnesota that will operate under a business name different from the full name of the owner(s) to register for an Assumed Name (also known as a doing business as or DBA) with the Secretary of State.

Building & Zoning Permits

  • Zoning: Businesses should review the local zoning ordinances to determine if their intended use is permitted in the desired location and if any special permits or variances are required for home-based businesses. In Minnesota, zoning information can be obtained from the local planning and zoning department or the city/county clerk’s office.
  • Building Permit: Building permits ensure that construction, additions, alterations, and repairs comply with the building codes. In Minnesota, building permit applications are submitted to the local building department or the city/county clerk’s office, and the process includes plan review and inspections to ensure compliance with state and local building codes.
  • Signage Permit: Sign permits ensure that exterior business signage complies with local sign ordinances, which regulate the size, location, and design of signs. In Minnesota, sign permit applications are typically submitted to the local building department, planning department, or city/county clerk’s office.

Minnesota Tax ID Number

Minnesota businesses need to apply for a Minnesota Tax ID Number with the Minnesota Department of Revenue if they:

  • Sell products and taxable services (Learn more about the Minnesota Sales Tax Permit)
  • File as a partnership or corporation
  • Have employees
  • Are a vendor or receive payments from a Minnesota state agency

Certificate of Exemption

Businesses purchasing merchandise to resell usually want to obtain a Minnesota Certificate of Exemption to avoid paying sales tax on the inventory they purchase to resell to customers.

Professional License

A variety of professions in the state are regulated and need to be registered before offering certain services. A few common professions that require licensing in Minnesota include; cosmetologists, accountants, caterers, and many more. Additional information, fees, and licensing requirements for professions are available from the State of Minnesota.

Food Service Businesses

Every food service establishment or retail food business in Minnesota must comply with its local zoning ordinances and the state and local building, fire, electrical, food, and licensing codes. Food service businesses include restaurants, caterers, food producers, hotels, motels, and lodging establishments that serve food.

Contractor License

The state does not license commercial and general contractors, but many cities require them to register with the city and be bonded before the city will issue building permits or conduct inspections of their projects.

Employer Identification Number (EIN)

The Minnesota Employer Identification Number (EIN), also known as a Federal Tax Identification Number, is a unique nine-digit number assigned by the Internal Revenue Service (IRS) to businesses operating in Minnesota. It is used for tax filing and reporting purposes, similar to how an individual uses a Social Security number. Companies can apply for an EIN through the IRS website or by submitting a paper form.

Next Steps

These are some of the most common business licenses a new business in Minnesota will need to register for. Be advised that while it’s a good start, there are so many different licenses that may be needed, be sure to double-check with the City Clerk’s Office, Chamber of Commerce, and/or Economic Development office in your area before opening your doors.

Author

  • Greg Bouhl

    With over two decades as an entrepreneur, educator, and business advisor, Greg Bouhl has worked with over 2,000 entrepreneurs to help them start and grow their businesses. Fed up with clients finding and acting on inaccurate and outdated information online, Greg launched StartUp101.com to be a trusted resource for people starting a business.

Minnesota Business License Basics

Minnesota Business License Basics

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