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Advantages of Incorporating a Business in Minnesota
Minnesota is a state that provides every start-up and small and medium sized enterprise with several advantages including a bright and sunny business climate. Forbes ranked Minnesota as the 15th best state to establish and operate a business. Some of the factors that provide the most favorable conditions for a start-up company in Minnesota to grow include competitive tax rates, strong pro-business policies, streamlined regulatory processes, and a low operating expense. Apart from this, businesses can benefit from an educated and highly skilled workforce.
Advantages of setting up an LLC Or Corporation
When you register a new company in Minnesota, your business entity gets the much needed platform and opportunities in the form of advantages and benefits that will drive economic change and overall growth. One of the major factors behind the growing economy of the state is innovation and based on this, it is ranked seventh in the nation.
If you are planning to form an LLC or a Corporation in Minnesota then what advantages or benefits can the business benefit from? Let’s look at the advantages of the most common forms of formal associations:
Advantage#1: Salient benefits of Corporation or LLC formation
Corporation
- Favorable Tax Advantage: If you register a new business in Minnesota, you can take advantage of the fact that the state does not tax the following:
– Personal property
– Utilities
– Inventories
– Internet access
– Custom-created software
– Information services - Change in Ownership: If you have formed an S Corporation in Minnesota then sale, purchase, as well as gifting of stock can facilitate changes in ownership. The changes can take place without disturbing the ability of the corporation to conduct its business.
- Independent Life: If you register a new business in Minnesota as an S Corporation then the most important advantage is that it will enjoy an independent life. The business entity will continue operations undisturbed even if it is faced with the death of one of its stockholders.
LLC
- Resources for Entrepreneurs: A start-up company in Minnesota can benefit from different resources that will be available to help in the journey towards innovation and growth. These resources are being implemented through several programs initiated by Minnesota Department of Employment and Economic Development (DEED).
- Limited Liability: The owner of a Minnesota LLC will be able to enjoy limited liability protection, which means creditors can sue the LLC but not the owner or investors.
No Minutes of meetings: Unlike a corporation, an LLC startup company Minnesota will not be required to maintain any minutes of the meetings or resolutions.
Advantage#2: Business Incentives
Once you register a new company in Minnesota as an LLC or a C or S Corporation, there are a variety of incentives and state based programs that you can benefit from. Let’s take closer look at the most popular incentives for businesses in Minnesota:
- Minnesota Opportunity Zones: This is a type of new community development program that has been established to encourage long-term investments from a start-up companies in Minnesota in a low-income community. A business entity located in an opportunity zone will be eligible to receive the following:
– Temporary tax deferral on capital gains
– Permanent exclusion from taxable income on capital gains
Map of Opportunity Zones - DEED Financing Programs: There are a number of financing programs introduced by Minnesota Department of Employment and Economic Development (DEED) to help businesses in creating high quality jobs and retain existing jobs. The fund amount varies from one program to another. For instance, the ceiling amount for the Minnesota Job Creation Fund is $1 million while the Minnesota Innovation Loans for Entrepreneurs (MILE) provides a maximum of $20,000 to $50,000. Know More
If you register a new business in Minnesota, there are several other incentive programs that you can benefit from including Minnesota Foreign Trade Zones, Emerging Entrepreneur Loan Program, Greater Minnesota Business Expansion Tax Credits, Border Cities Enterprise Zones, Tax Abatement Program, Bioscience Incentive Program, and Research and Development Tax Credit among others.
Are there any Disadvantages of Incorporating in Minnesota?
A start-up company in Minnesota, whether domestic or foreign will enjoy more benefits in the state. Of course there are a few disadvantages. For example, incorporation may lead to higher overall taxes. The good news is that the disadvantages will not have any negative impact on business growth in the long run.