When you form your business, the legal structure you select impacts many aspects of your organization, from taxation to liability.
As regulations can vary among different states, it is important for you to understand how business structures work in Minnesota. In addition, choosing the appropriate structure for your business can help you prevent issues and control expenses, making it easier to pursue growth and success.
Business formation in Minnesota
There are several legal structures that Minnesota businesses can use. Often, small businesses start off as sole proprietorships. If you are launching your organization with someone else, you can create a partnership. You do not need to file any paperwork to start operating as a sole proprietorship or partnership; however, business partners can benefit from having written documentation to guide their relationship. To establish a limited liability, you should file articles of organization with the Minnesota secretary of state. You can also found a corporation in Minnesota. To do so, you should submit articles of incorporation and draft your company bylaws.
Selecting a legal structure
Many small businesses can thrive as sole proprietorships or partnerships. However, if your business involves potentially risky activities, consider founding an LLC to gain personal liability protection. As an LLC owner, you can separate yourself legally from your business while retaining control of operations. Starting an LLC can also help you attract investors. For some companies, incorporating can provide important structural and tax advantages that enable growth. However, running a corporation can also be more administratively complex.
When you establish a business, it is beneficial to choose a legal structure that suits your company’s needs. In Minnesota, you can form your business as a corporation, LLC, partnership or sole proprietorship.