How to Start an S-Corp in Minnesota


Steve Goldstein
Steve Goldstein
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Steve Goldstein runs LLCBuddy, helping entrepreneurs set up their LLCs easily. He offers clear guides, articles, and FAQs to simplify the process. His team keeps everything accurate and current, focusing on state rules, registered agents, and compliance. Steve’s passion for helping businesses grow makes LLCBuddy a go-to resource for starting and managing an LLC.

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Start an S-corporation in Minnesota

Minnesota, popularly known as The North Star State, offers a bunch of benefits for business owners, especially the state capital Saint Paul has a lot to offer to the rising entrepreneurs in the state. If you want to start a business in Minnesota, you must choose an appropriate corporate structure. You can have a corporation or a sole proprietorship or set up an LLC in Minnesota. There are a few guidelines that you should be aware of when it comes to starting an S-Corporation. In Minnesota, S-Corporation is businesses’ most common corporate structure, especially start-ups. It was developed in order to give companies limited liability protection while preserving the advantages of being a distinct legal organization.

In this article, you will learn about how to start an s-corporation in Minnesota. You will also learn whether an s-corporate business structure suits your business. Please read all the points carefully before starting your business in Minnesota.

What is an S-Corp in Minnesota?

An S corporation (S-corp) is not a type of corporate entity, unlike a limited liability company (LLC) or other business structures. It’s a tax classification that might result in significant financial savings for both corporations and LLCs but in different ways. S-corp is similar to LLC, except that the IRS treats it as a corporation for tax purposes.

If you want an S corp status for your business, you can always form an LLC to protect your personal assets from business debts. It takes some basic steps to have a successful s-corporation in Minnesota. S-Corps do pay corporate income taxes, but they are still treated as disregarded companies for federal tax purposes.

S-corps pay corporate taxes that LLCs do not have to pay. If you want to have an S-corp status, then we would recommend you have an LLC instead. This will protect your personal assets from your business liabilities and you don’t have to pay any corporate taxes.

LLCBuddy Editorial Team

Limitation and Requirements of S-Corp in Minnesota

As you have decided to have an S-Corp structure for your business, you must know the limitations and requirements to qualify for S-Corp status. We have listed some important points to consider following for your reference-

  • Be a domestic corporation.
  • Not be an ineligible corporation, such as specific financial institutions, insurance providers, or domestic corporations engaged in overseas sales.
  • Have just one type of stock.
  • Have a maximum of 100 shareholders or members.
  • Have only permitted individuals, certain trusts, and estates as stockholders or members.

If you are qualified for the limitations and requirements, you can apply for an S-Corp in Minnesota.

How to Start an S-Corporation in Minnesota?

To create S-Corp in Minnesota, you must follow the below guidelines that include forming a business name, hiring a Registered Agent, filing your Articles of Organization, creating an operating agreement in Minnesota, requesting an EIN, filing a form 2553.

Step 1: Register a Business Name in Minnesota

After you have decided on the idea to start an S-Corp in Minnesota, deciding the name for your corporation is significant. Legal procedures should be taken into account when choosing your partnership name. Choose a business name that will enable you to develop a strong brand identity.

If you want to set up an LLC, there is a complete guide on Minnesota LLC name guidelines for a proper LLC name. Here are some guidelines you must follow while naming your S-corp.

  • Avoid profanities
  • The name should be available, and no other entity should have the same name in Minnesota.
  • Limit of restricted words that need a license in Minnesota, for example, doctors, attorneys, etc.
  • Do not use a business name that sounds like a government agency or entity (like “police,” “county,” and “state”)

Step 2: Hiring the Minnesota Registered Agent

The next step in starting an S-corp in Minnesota is hiring a Minnesota Registered Agent, a person that accepts legal paperwork on behalf of your business. This person or business will receive important tax forms, legal documents (such as subpoenas), all notices of lawsuits, and other official government correspondence in Minnesota. Forming an LLC and an S-corp will be easier if you have Registered Agent in Minnesota.

Step 3: File Your Minnesota Articles of Organization

The Articles of Organization is an important document to start your limited liability company (LLC). Minnesota Articles of Organization is a simple document that contains the business name and address as well as the name and address of the person who received lawsuits on behalf of the organization. In order for the “Articles of Organization” to be filed, you need to pay a filing fee to the state. In Minnesota, the filing fee is $155 (online and $135 by mail or in-person).

In California, along with the Articles of Organization, you must send the Statement of Information to file your company. The statement of information is a mandatory document in California, but other states do not have this document.

Step 4: Creating an Operating Agreement in Minnesota

After you have filed your Articles of Organization in Minnesota, the next step is to create an LLC operating agreement in Minnesota. The Minnesota LLC operating agreement is essential and necessary since it will cover your corporation’s important documentation and rules. The operating agreements usually include the following-

  • Article I: Organization
  • Article II: Management and Voting
  • Article III: Capital Contributions
  • Article IV: Distributions
  • Article V: Membership Changes
  • Article VI: Dissolution

After creating the LLC operating agreement, you can benefit in several ways since it will discuss how decisions for the business will be made, including management and member voting structure. For more details about how an operating agreement works, please check Operating Agreement.

Step 5: Request for EIN in Minnesota

After documenting the operating agreement, you should get or request an Employer Identification Number (EIN). An EIN will serve as the tax ID for your general partnership. EIN can be obtained from the Internal Revenue Service (IRS). It is a 9-digit number similar to Social Security Number. EIN, however, is distinct from SSN. It is only used for business-related activities, particularly for submitting general taxes. The form must be completed and uploaded to the IRS website.

The application of an EIN in Minnesota can be through the following:

  • Apply Online- You can apply for EIN online, the most desirable and fastest method for users.
  • Apply by Fax- Another method of obtaining EIN is to fax Form SS-4 (PDF) after entering all the correct information to (855) 641-6935.
  • Apply by Mail- The EIN application Form SS-4 can be filed via mail. The processing time frame to receive the mail is 4 weeks.
  • Apply by Telephone-International Applicants – International applicants may call 267-941-1099 (not a toll-free number) from 6 a.m. to 11 p.m. (Eastern Time) Monday through Friday to obtain their EIN.

If you would like to be assisted in getting an EIN in the Internal Revenue Service, we can get your EIN for you. Our EIN service is quick and hassle-free. For more details about EIN for your business, check why you need EIN.

Step 6: File Form 2553 for Your S-Corp Business in Minnesota

Once you have obtained your EIN and Articles of Organization to form an S-Corp, you must file Form 2553, Election by a Small Business Corporation, to apply for S-corp status. Filing a form 2553 should be done 75 days after the formation of your S-Corp, or not more than 75 days after the beginning of the tax year in which the election is to take effect.

If your LLS-Corp has passed the deadline of 75 days, you must also file Form 8832, Entity Classification Election, in order to opt to be taxed as a corporation. Then you would send Form 2553 and Form 8832 jointly by certified mail from the USPS. In Minnesota, you can send your form 2553 to the Department of the Treasury Internal Revenue Service Center – Ogden, UT 84201 Fax: 855-214-7520 .

Advantages of Starting an S-Corporation in Minnesota

Filing an S-Corp in Minnesota has numerous benefits and advantages.

  • Writing Off Losses: With S-corp, owners can deduct business losses from their individual income statements. If the company loses money in the first few years, it may balance its other sources of revenue. Even so, understand the shareholder loss limitations set by the IRS.
  • Pass-Through Taxation: Starting an S-Corp is the widely known advantage in forming this kind of business structure since an s-corp uses a pass-through taxation structure. The company does not pay twice the tax in this kind of taxation. Because of this structure, most start-ups and entrepreneurs in Minnesota apply for an S-Corp LLC.
  • Qualified Business Income Deduction: A qualified business income, or QBI, is the total of all qualified items of income, gain, deduction, and loss from any qualified trade or business, including S-Corp. With this, S corp owners may deduct up to 20% of their eligible earnings under the Tax Cuts and Jobs Act.

FAQs

How do I start an S-Corp in Minnesota?
To start an S-Corp in Minnesota, you must file the Articles of Incorporation with the Minnesota Secretary of State.
What documents do I need to start an S-Corp in Minnesota?
In Minnesota, you will need to submit the Articles of Incorporation and the Registration of Business Name form.
What is the fee to start an S-Corp in Minnesota?
The fee to start an S-Corp in Minnesota is $155.
What forms do I need to file with the IRS to start an S-Corp in Minnesota?
You will need to file Form 2553 with the IRS in order to start an S-Corp in Minnesota.
What are the tax requirements for an S-Corp in Minnesota?
An S-Corp in Minnesota is subject to Minnesota corporate income tax and must file Form M4 with the Minnesota Department of Revenue.
What are the Minnesota state laws for S-Corps?
Minnesota state law requires that an S-Corp must maintain its registered office in the state and file annual reports with the Secretary of State.
What is an LLC in Minnesota?
An LLC (limited liability company) in Minnesota is a legal entity that provides limited personal liability protection to its owners and offers tax advantages similar to those of a corporation.
What is the difference between an LLC and an S-Corp in Minnesota?
The main difference between an LLC and an S-Corp in Minnesota is that an LLC offers limited liability protection and pass-through taxation, while an S-Corp offers limited liability protection, but requires shareholders to pay taxes on their share of the company’s profits.
What are the advantages of forming an S-Corp in Minnesota?
The advantages of forming an S-Corp in Minnesota include limited personal liability protection, tax advantages, and ease of filing and compliance.
What are the disadvantages of forming an S-Corp in Minnesota?
The disadvantages of forming an S-Corp in Minnesota include the cost of formation, the requirement to maintain a registered office in the state, and the need to file annual reports with the Secretary of State.
What are the requirements for a Minnesota S-Corp?
The requirements for a Minnesota S-Corp include filing the Articles of Incorporation with the Secretary of State, registering the business name, filing Form 2553 with the IRS, and maintaining the registered office in the state.
What are the requirements for an LLC in Minnesota?
The requirements for an LLC in Minnesota include filing the Articles of Organization with the Secretary of State, registering the business name, filing Form 2553 with the IRS, and maintaining the registered office in the state.
What is the filing fee for a Minnesota S-Corp?
The filing fee for a Minnesota S-Corp is $155.
What is the filing fee for an LLC in Minnesota?
The filing fee for an LLC in Minnesota is $155.
What is the deadline for filing taxes for an S-Corp in Minnesota?
The deadline for filing taxes for an S-Corp in Minnesota is April 15th.
What is the deadline for filing taxes for an LLC in Minnesota?
The deadline for filing taxes for an LLC in Minnesota is April 15th.
What are the liability protections for an S-Corp in Minnesota?
An S-Corp in Minnesota offers limited liability protection to its shareholders, meaning that their personal assets will not be held responsible for any debts or liabilities of the company.
What are the liability protections for an LLC in Minnesota?
An LLC in Minnesota offers limited liability protection to its owners, meaning that their personal assets will not be held responsible for any debts or liabilities of the company.
What is the Minnesota corporate income tax rate for an S-Corp?
The Minnesota corporate income tax rate for an S-Corp is 9.8%.
What is the Minnesota corporate income tax rate for an LLC?
The Minnesota corporate income tax rate for an LLC is 9.8%.
Are there any special filing requirements for an S-Corp in Minnesota?
Yes, an S-Corp in Minnesota must file Form M4 with the Minnesota Department of Revenue.
Are there any special filing requirements for an LLC in Minnesota?
Yes, an LLC in Minnesota must file Form M4 with the Minnesota Department of Revenue.
What is the process for changing the registered office of an S-Corp in Minnesota?
To change the registered office of an S-Corp in Minnesota, you must file an amendment to the Articles of Incorporation with the Secretary of State.
What is the process for changing the registered office of an LLC in Minnesota?
To change the registered office of an LLC in Minnesota, you must file an amendment to the Articles of Organization with the Secretary of State.
What are the advantages of forming an LLC in Minnesota?
The advantages of forming an LLC in Minnesota include limited personal liability protection, pass-through taxation, and ease of formation and compliance.
What are the disadvantages of forming an LLC in Minnesota?
The disadvantages of forming an LLC in Minnesota include the cost of formation and the need to maintain a registered office in the state.
What is the process for starting an S-Corp in Minnesota?
The process for starting an S-Corp in Minnesota involves filing articles of incorporation, appointing directors, adopting bylaws, and obtaining the necessary licenses and permits.
What are the benefits of forming an S-Corp in Minnesota?
The benefits of forming an S-Corp in Minnesota include limited liability protection, tax savings, and flexibility in managing the company.
What documents are required to form an S-Corp in Minnesota?
The documents required to form an S-Corp in Minnesota include articles of incorporation, bylaws, and a registered agent.
Is there a fee associated with forming an S-Corp in Minnesota?
Yes, there is a filing fee associated with forming an S-Corp in Minnesota.
What is the tax rate for S-Corps in Minnesota?
The tax rate for S-Corps in Minnesota is the same as the state’s corporate income tax rate, which is 8.84%.
Are there any additional fees associated with maintaining an S-Corp in Minnesota?
Yes, there are additional fees associated with maintaining an S-Corp in Minnesota, including annual filing fees and state taxes.
What is the time frame for forming an S-Corp in Minnesota?
The time frame for forming an S-Corp in Minnesota is typically 2-4 weeks.
What is the annual report filing requirement for S-Corps in Minnesota?
S-Corps in Minnesota are required to file an annual report with the Secretary of State each year.

Also Read

Why Minnesota S Corporation is So Important

One of the key advantages of choosing an S Corporation structure is pass-through taxation. Unlike traditional C Corporations, S Corporations do not pay corporate income tax. Instead, profits and losses are passed through to shareholders, who report them on their individual tax returns. This can lead to significant tax savings for business owners, allowing them to reinvest more money back into their companies or take home larger profits.

With pass-through taxation, S Corporations also provide owners with the ability to avoid double taxation on profits. In a C Corporation, the company pays taxes on its profits, and then shareholders are taxed again on dividends received. This can result in a higher overall tax burden for both the company and its owners. By electing S Corporation status, business owners can minimize their tax liabilities and retain more of their hard-earned money.

Minnesota S Corporations offer owners greater flexibility in structuring their businesses. S Corporations are not subject to the same restrictions as C Corporations on the number and types of shareholders they can have. This allows business owners to tailor their ownership structure to meet their specific needs and goals, whether that be bringing in new partners, seeking outside investment, or passing down ownership to family members.

In addition to tax benefits and flexibility, S Corporations also offer liability protection for their owners. Like C Corporations, S Corporations provide owners with limited liability, meaning that their personal assets are generally protected from the debts and liabilities of the business. This can provide peace of mind to entrepreneurs and investors, knowing that their personal finances are not at risk if the business runs into financial trouble.

Furthermore, S Corporations can also attract more investors and funding opportunities. Many investors prefer to invest in pass-through entities like S Corporations because they offer more favorable tax treatment and greater flexibility compared to C Corporations. By electing S Corporation status, businesses can make themselves more attractive to potential investors, helping them secure the capital they need to grow and expand.

Overall, the benefits of choosing a Minnesota S Corporation structure are clear. From tax advantages and flexibility to liability protection and increased funding opportunities, S Corporations offer small businesses and startups a multitude of advantages that can help them succeed in today’s competitive business environment. It is no wonder why Minnesota S Corporations are so important to the state’s economy and why they continue to be a popular choice for entrepreneurs looking to achieve their business goals.

Conclusion

In conclusion, starting an S-corp in Minnesota is a strategic choice for entrepreneurs seeking the benefits of limited liability and favorable tax treatment. One can successfully establish an S-corp by following the outlined steps, including selecting a unique name, filing the Articles of Incorporation, obtaining necessary licenses, and adhering to state-specific regulations. Ultimately, this corporate structure offers a strong foundation for business growth and protection, making it a worthwhile consideration for those looking to launch a venture in Minnesota.

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