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Start Your Business in Minnesota
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The advantages of incorporating or forming an LLC in Minnesota:
Business incentives in Minnesota
States today must offer a credible package of incentives in order to remain competitive. Minnesota incentives are designed to encourage business growth:
- Contamination Cleanup and Investigation Grant Program
- Enterprise Zones with tax credits for job creation, retention and investment
- Minnesota Investment Fund providing below-market financing for businesses acquiring fixed assets
- Minnesota Job Skills Partnership Program
- Minnesota Pathways Program providing state grants to educational institutions for the development of training programs
- Redevelopment Fund
- Rural Challenge Grant Program
- Small Business Development Loan Program
- Urban Initiative Program providing matching grants to nonprofit organizations making low-interest loans to businesses in distressed areas
Forming an LLC in Minnesota
- Composite filing available.
Minnesota advantages
The justifiable desire for change is an inappropriate reason to discourage businesses from incorporating in Minnesota when it remains a sensible thing to do. Moreover, for corporations that have and will continue to have only one shareholder, the "problems" with the Minnesota Act have no relevance. Two "default" provisions detailed in the article are the statutory presumptions of cumulative voting -- which permits minority shareholders to elect directors -- and preemptive rights, which give shareholders the right to participate in future stock offerings. We agree that these should not be default provisions. However, they easily can be waived at the time of incorporation, and business lawyers routinely recommend adopting language that does so. A problem that is so easily overcome should not lead to a conclusion to incorporate outside of Minnesota.
True, someone who incorporates without hiring a lawyer may not know to waive these provisions. But many such people simply are looking to establish their business entity while spending as little time and money as possible. For them, incorporating elsewhere isn't a good option because it likely will cost more money and take more time. Ongoing expenses also will be greater, as a Minnesota venture that incorporates in another state must hire a registered agent in that state to receive legal mailings and notices and then must pay again to register as a foreign corporation in Minnesota. The article gives the most weight to the potential liability risks companies face from employee shareholders under Section 751. That section gives a shareholder the right to seek a court-ordered buyout of his or her shares if those in control have treated the shareholder "in a manner unfairly prejudicial."
We agree that this provision might be troublesome. The risk, however, needs to be considered as part of the larger question that most Minnesota companies face: whether to incorporate in Minnesota or Delaware. (Only in very rare circumstances will a Minnesota venture consider incorporating in a state other than Minnesota or Delaware.) The corporate laws of Minnesota and Delaware each have advantages and disadvantages. The relative cost of starting and maintaining a corporation in Delaware is higher. Delaware charges an annual "franchise tax" based on the number of shares authorized by a corporation or the gross assets per outstanding share. Minnesota only requires an initial filing fee and no annual payment.
Incorporating in Minnesota might afford a company greater flexibility in some areas. These include the ability to easily issue shares for services or promissory notes and the ability of corporate boards to act without a meeting by majority written action (unless the action also requires shareholder approval). Delaware requires unanimous consent for directors to act without a meeting. Minnesota also gives corporations greater protection from corporate takeovers than Delaware does. That can be good or bad, depending on the circumstance.
In addition, Minnesota law mandates indemnification of directors, officers and committee members. Minority shareholders in Minnesota corporations have more rights and protections than under Delaware law. That's good for shareholders, but can create headaches for the corporation. Delaware also allows shareholder written actions to be approved by less-than-unanimous consent, whereas Minnesota requires unanimous consent. Finally, as mentioned previously, there is the potential of liability in Minnesota under Section 751, while Delaware has no comparable statute.
As you can see, there are potentially good reasons to incorporate in either Minnesota or Delaware. While there are provisions of the Minnesota Corporation Act that should be improved, it is an effective and inexpensive alternative for many Minnesota businesses. Each Minnesota venture pondering incorporation should weigh the advantages and disadvantages, and then incorporate in the state that is likely to be most advantageous for its situation.
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Incorporate in Minnesota
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Form a Corporation (INC.) in Minnesota.
Be the president of your corporation! Incorporate your business now. |
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Form an LLC in Minnesota
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Form a Limited Liability
Company (LLC.)
Protect your assets forming a legal entity which limits your liability in Minnesota!
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Start Your Business in Any State
Read detailed information on the advantages of forming a Corporation or Limited Liability Company in your state. Please click on the state you are interested in.
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Incorporate your business 
Legal entities explained 