How to Start a Business in Minneapolis (Step-by-Step)

Minneapolis is one of the most business-forward cities in the Midwest. With a highly educated workforce, a deep corporate ecosystem, strong community business resources, and a culture that values entrepreneurship, the Twin Cities are an excellent place to launch. Here’s exactly how to do it.

Step 1: Validate Your Business Idea

Before filing any paperwork, validate your concept in the Minneapolis market:

• Know Your Customer: The Twin Cities has distinctive demographics — highly educated, health-conscious, community-oriented. Validate that your product or service resonates with the local market.
• Research the Competition: Minneapolis markets often have strong local incumbents in retail, food, and professional services. Understand how you differentiate.
• Talk to SCORE Mentors: SCORE Twin Cities (scoretc.org) provides free mentorship from experienced business executives. An excellent first resource before investing money.
• SBDC Resources: The Minnesota Small Business Development Center (mnsbdc.com) offers free consulting to help you validate and refine your concept.

Step 2: Choose Your Business Structure

Your entity type affects taxes, liability, and how you can raise money. Key options in Minnesota:

• Sole Proprietorship: No filing required — but you have unlimited personal liability. Fine for testing a freelance business before formalizing.
• LLC: The most popular choice for small businesses. Protects personal assets, allows pass-through taxation, and is simple to operate. Minnesota LLC filing fee: $155 online through the MN Secretary of State.
• S-Corporation: Can reduce self-employment tax for business owners paying themselves a reasonable salary. Requires more administrative overhead than an LLC.
• C-Corporation: Required for VC-backed startups and businesses planning to issue stock options. Venture investors typically require Delaware C-Corps.
• Benefit Corporation (B-Corp): Minnesota recognizes benefit corporations — valuable for mission-driven businesses that want legal protections for considering stakeholders beyond shareholders.

Need help with formation? LegalZoom handles Minnesota LLC and corporation setup. Or use Northwest Registered Agent for flat-fee formation with privacy protection and registered agent service.

Step 3: Register Your Business in Minnesota

File your entity with the Minnesota Secretary of State at sos.state.mn.us:

• LLC: Articles of Organization — $155 online, $135 by mail
• Corporation: Articles of Incorporation — $155 online
• DBA (Assumed Name): If operating under a trade name different from your legal entity name — file with Hennepin County (for Minneapolis businesses). Fee: ~$50.
• Registered Agent: Minnesota requires a registered agent with a Minnesota street address. Can be you, an attorney, or a registered agent service.
• Annual Renewal: Minnesota LLCs must file an Annual Renewal ($55) to stay in good standing.

Step 4: Obtain Your Federal EIN

Get your Employer Identification Number (EIN) from the IRS at irs.gov/ein — free and immediate online. You need this to:

• Open a business bank account
• Pay employees
• File business taxes
• Apply for most business licenses

Step 5: Register with Minnesota Department of Revenue

Register at revenue.state.mn.us for:

• Minnesota Sales Tax: Required if you sell taxable goods or services in Minnesota
• Employee Withholding: Required as soon as you hire employees
• Unemployment Insurance: Register with DEED (mn.gov/deed) when hiring employees

Step 6: Get Your Minneapolis Business Licenses

Check Minneapolis license requirements at minneapolismn.gov/licenses:

• General Business License: Required for most businesses operating in Minneapolis
• Food Service License: Required for all food-handling businesses — contact Minneapolis Environmental Health
• Liquor License: Administered through Minneapolis Licenses and Consumer Services — significant lead time required
• Contractor/Trade Licenses: Required for construction, electrical, plumbing, HVAC — contact Minneapolis Inspections
• Home Occupation Permit: If operating from a residential address in Minneapolis
• Sign Permit: Required for most exterior business signage

Step 7: Open a Business Bank Account

Keep business finances separate from personal finances. Top choices for Minneapolis businesses:

• U.S. Bank: Minneapolis-headquartered, strong local relationships
• Bremer Bank: Well-respected regional bank with strong small business support
• Sunrise Banks: CDFI bank with community focus and excellent service
• Affinity Plus FCU: Credit union option with competitive rates and lower fees

Step 8: Set Up Your Accounting and Tax System

• Set up accounting software (QuickBooks, Wave, FreshBooks) from day one
• Open a dedicated business credit card to track expenses
• Find a Minnesota CPA who understands state taxes — see our guide to Minneapolis Tax and Financial Services
• Set aside quarterly estimated tax payments (federal + Minnesota)

Step 9: Secure Your Workspace

Options for Minneapolis entrepreneurs:

• Home Office: Practical for service businesses. Register for home occupation permit if in Minneapolis proper.
• Coworking: Minneapolis has excellent options from $200/month. See our Minneapolis Coworking Spaces guide.
• Commercial Lease: For retail or office needs. See our Minneapolis Commercial Real Estate guide.

Step 10: Build Your Minneapolis Network

Minneapolis is a relationship-driven business city. Key networking resources:

• Minneapolis Chamber of Commerce: minneapolischamber.org
• MN Cup (startup competition): Annual pitch competition with prizes and visibility
• Beta.MN: Minnesota’s startup community organization
• North Loop Neighborhood Association: For businesses in the North Loop
• SCORE Twin Cities: Free mentorship and workshops

Minneapolis Business Start-Up Checklist

• [ ] Validate business idea and market
• [ ] Choose business structure (LLC, Corp, etc.)
• [ ] Register entity with MN Secretary of State
• [ ] Obtain Federal EIN from IRS
• [ ] Register with MN Department of Revenue for taxes
• [ ] Register with DEED for unemployment insurance (if hiring)
• [ ] Obtain Minneapolis business license(s)
• [ ] Open business bank account
• [ ] Set up accounting software
• [ ] Secure workspace
• [ ] Get business insurance
• [ ] Build your local network

Ready to launch in Minneapolis? Join Hustler’s Library free for curated tools, checklists, and resources for Twin Cities entrepreneurs.