How to Start a Business in Minnesota

Healthcare and Medical Devices account for more than 350,000 jobs in Minnesota. The state is the global hub for medical device manufacturing, led by Medtronic, Boston Scientific, and 3M Health Care.

Food and Agriculture contribute over $35 billion annually to the state economy. Minnesota is the nation's top producer of sugar beets, turkeys, and sweet corn.

Technology and Software employment in the Twin Cities has grown by more than 15% over the past five years. Companies like Target (tech division), Optum, and numerous startups fuel this growth.

Financial Services and Insurance employ more than 160,000 Minnesotans. U.S. Bancorp, Ameriprise, and Securian Financial are headquartered in the state.

Manufacturing remains strong with over 300,000 workers across advanced manufacturing, machinery, and printing. Minnesota ranks in the top 10 for manufacturing output per capita.

Clean Energy and Sustainability is a fast-growing sector, with the state targeting 100% clean electricity by 2040. Incentives and grants are available for green startups through DEED.

Minnesota's individual income tax has four brackets. The lowest rate is 5.35% on income up to $30,070 (single filers), and the highest rate is 9.85% on income exceeding $183,340. LLC and sole proprietor profits flow through to your personal return at these rates.

The state sales tax rate is 6.875%. Local jurisdictions can add up to an additional 2%, bringing the combined rate above 8% in some areas of the Twin Cities metro.

Minnesota does not impose a separate franchise tax on most LLCs. However, multi-member LLCs taxed as partnerships must pay a minimum fee based on Minnesota property, payroll, and sales, starting at $0 for smaller operations. Details are available at the Department of Revenue minimum fee page.

C-Corporations pay a flat corporate income tax rate of 9.8%. S-Corps pass income through to shareholders, who pay at individual rates.

Businesses expecting to owe more than $500 in state taxes must make quarterly estimated payments (due April 15, June 15, September 15, and January 15). Register for all tax obligations at the Minnesota Department of Revenue.

Clothing and most groceries are exempt from Minnesota sales tax. This exemption benefits retailers who can market tax-free clothing purchases to consumers.

Minnesota's overall cost of living index is approximately 97 (national average = 100), making it slightly below average nationally. The Twin Cities metro is more expensive than outstate areas, with median commercial rent in Minneapolis running $20 to $30 per square foot for office space.

The state's minimum wage is $11.13 per hour for large employers (those with annual gross revenue of $500,000+) as of 2026, which is above the federal minimum. Median wages across all occupations are approximately $48,000 per year, roughly on par with the national median.

Energy costs in Minnesota are moderate, averaging about $0.13 per kWh for commercial electricity. The state's central location provides cost-effective logistics for businesses that ship across the Midwest and nationally.

For businesses with employees, the average workers' compensation rate in Minnesota is competitive relative to neighboring states. Lower real estate costs in cities like Rochester, Duluth, and Saint Cloud offer significant savings compared to the Twin Cities.

The Minnesota Small Business Development Center (SBDC) provides free business consulting and helps entrepreneurs access financing. Over 30 SBDC locations serve communities across the state.

The SBA Minnesota District Office in Minneapolis supports SBA 7(a) and 504 loan applications. These loans offer below-market rates and longer repayment terms than conventional bank financing.

Minnesota DEED administers the Minnesota Small Business Loan Guarantee Program, which guarantees up to 80% of a bank loan to reduce lender risk. The Minnesota Angel Tax Credit provides a 25% credit (up to $125,000) to investors who fund qualifying startups.

Local organizations like SCORE Minneapolis offer free mentorship from experienced business owners. Launch Minnesota, the state's innovation initiative, connects startups with grants, accelerators, and networking events.

In your first 30 days, open your business bank account, register for Minnesota sales and income tax accounts at the Department of Revenue, and obtain any city-level business licenses required in your area. If you plan to hire, register for unemployment insurance and workers' compensation insurance immediately.

Within 60 days, set up your accounting system, draft your LLC operating agreement (not filed with the state but essential for internal governance), and secure general liability insurance. File your assumed name certificate if you operate under a name different from your LLC's legal name.

By day 90, launch your website, claim your Google Business Profile, and begin marketing. Mark December 31 on your calendar for your first free annual renewal filing with the Secretary of State.