Business Start-Up In Minnesota

You have spent considerable time evaluating every painstaking detail of your dream of starting a business in Minnesota. You believe that you have got what it takes to be a successful entrepreneur. You’ve conducted your research and are ready to launch. After the planning stage, the first step in starting up a business in Minnesota is to organize. What will be the structure of your business? Differing business models offer specific advantages and disadvantages. These are the details that will affect how a business operates and may determine which type of legal entity a new business owner chooses.

Sole Proprietorship

In this business model the entrepreneur is the business. Sole proprietorships are the most common start-up business organization.
• Advantages
1. The entrepreneur gets all the credit for success and enjoys all the profits.
2. Freedom from complex regulatory laws.
3. Simple to set-up.
4. Easy to dissolve.
5. Minimal investment for start-up.
6. Complete control and authority.
7. Simpler tax liability.

• Disadvantages
1. The entrepreneur gets all the blame for failure.
2. All responsibility is upon the business owner.
3. Personal liability for all business debt.
4. Personally secured capital limits start-up or expansion capabilities.


For those considering partnerships, there are distinct advantages and disadvantages just as in a sole proprietorship. Although not required, it is advised that partnerships form through a written agreement.
• Advantages
1. Shared burdens: work, financial and risk.
2. Expansion of talent and expertise.
3. Pooling resources for start-up and expansion capital.
4. Freedom from complex regulatory laws.
• Disadvantages
1. Shared control.
2. More complex financial management.
3. Added complexity to tax liabilities.


A corporation is typically associated with big business. It becomes a legal entity with distinct advantages but also creates much more complexity. The differences between a “C” or an “S” corporation are in how income and expenses are reported, how profits are distributed and how the entity is taxed.
• Advantages
1. Shareholders exempt from personal liability.
2. Loss limited to personal investment in the business.
• Disadvantages
1. Complex start-up and operation procedures.
2. Penalties for failure to comply with law can be harsh.
3. Less freedom: Corporate decisions and operation procedures must comply with state regulatory law.
4. Lack of independent management: Board of directors manage business operation.
5. Complex tax liabilities.
Limited Liability Company (LLC)
This is one of the most popular business legal structures new companies are adopting. The LLC structure gives a business the freedom of a sole proprietorship with the personal liability protection of a corporation.
• Advantages
1. Personal liability protection in most cases.
2. Flexibility in enjoying profits.
3. Minimally complex tax liability.
4. Loss limited to personal investment.
• Disadvantages
1. Personally secured capital limits start-up or expansion capabilities.
2. Start-up expense equivalent of a corporation.
3. Governed by state regulations.
4. Personal liability in cases of fraud or wrongdoing.
5. Centralized management through board of governors.

Every legal entity will have requirements as to licenses, permits, tax identification numbers, etc. To make certain that all operating document requirements have been met, it is best to consult with a qualified professional. Not only will this provide an entrepreneur with confidence that they are starting off on the right foot, but it also simplifies the process with a single, trusted resource who manages all the necessary paperwork.
Getting The Right Help
Launching a new start-up in Minnesota involves many decisions. Many of these decisions can have far-reaching consequences and significant impact on the day-to-day operations of a business. Where regulatory and tax law are concerned, Minnesota’s Office of Secretary of State advises new businesses to seek the advice of a qualified attorney with experience in business law.
Professional guidance can help prevent business start-up disasters. Entrepreneurial experts list doing things all alone, without the benefit of professional help, as number one on the list for start-up failure. Expert advice from the outset will help a business make sound decisions for financial management, understanding the options of business legal structures, and how they will shape the business daily as well as long-term. Please contact us for all your business litigation needs. Our team of legal experts is committed to protecting the interests of our business clients.

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