Just like many other states, Minnesota doesn’t issue a general business license that applies universally to all businesses.

While this does allow a minority of businesses to operate without any special constraints, it also means the majority of businesses need several licenses — particularly in more regulated industries.

With that in mind, this Minnesota Business License article will help make the process of identifying and obtaining the licenses your business needs a little easier by providing all of the information that you’ll need to get started.

Do I Need a Business License in Minnesota

In Minnesota, businesses are required to obtain various licenses and permits at the local, state, and federal levels. Here’s a general breakdown:

Type of Business

Below, we’ve detailed common ways in which your business type can dictate the licenses you’ll be required to obtain, as well as specific examples of these:

• Sales and Use Tax Licenses: One of the most common licenses businesses in Minnesota need is a Sales and Use tax license. If you plan to sell taxable goods or services in the state, you’ll need to obtain this license from the Minnesota Department of Revenue by filling out the application on the MN e-Services platform. This’ll then enable your business to collect sales tax
• Professional Licenses: Specific licensing boards in Minnesota regulate industries like accountancy, medicine, and cosmetology, among others, in order to hold professionals to a minimum standard and protect consumers
• Environmental Permits: If your business works within an industry that can potentially damage the environment or Minnesota’s natural resources, it’ll likely need to obtain specific permits in order to operate. For example, most businesses that generate hazardous waste must get a license from the Minnesota Pollution Control Agency (MPCA)

However, this is not the only factor influencing the exact combination of licenses you’ll need — the location of your business within Minnesota plays an important role as well.

Location

In this section, we’ve provided a succinct overview of the potential licenses and permits that your business may need due to local, state, and federal requirements:

• Local: The licenses and permits you may need can vary, depending on the municipality and county in which your business is based. To work in the trades or a skilled industry in the city of Minneapolis, for example, businesses often must get a specific license beforehand
• State: Minnesota also issues a number of licenses at the state level, such as those that food establishments must obtain from the Minnesota Department of Agriculture before they can legally begin operating
• Federal: If your business operates within certain industries or does specific types of work, you might need a license from the federal government. These include the alcohol, aviation, firearms and explosives, radio and television broadcasting, and transportation industries, among others

Since the exact permits and licenses your business will need are entirely unique to your situation, you’ll have to conduct thorough research into your own local, state, and federal regulations to smoothly launch your business.

Alternatively, many entrepreneurs opt to leverage the expertise of third-party services to handle this on their behalf.

How to Get a Business License in Minnesota

In order to get your business license(s) in Minnesota, you will need to complete the following steps:

• Form Your Business
• Obtain an Employer Identification Number (EIN)
• Apply for the Required Licenses and Permits

Let’s take a look at each step in more detail below.

Step 1: Form Your Business

Before setting out to obtain a business license in Minnesota, it’s pivotal that you first choose an appropriate structure for your business. Sole proprietorships, general partnerships, and corporations are all common choices, however it’s often seen as the most advantageous for small businesses in Minnesota to register as a Limited Liability Company (LLC). Here are a few reasons for why:

• Limited Liability: Members are protected from personal liability for business debts, safeguarding personal assets
• Tax Benefits: LLCs typically enjoy a pass-through tax treatment, avoiding the double taxation that corporations are subjected to
• Management Flexibility: LLCs allow for flexibility in management structure, either being member-managed or manager-managed based on the preferences outlined in the certificate of formation
• Ease of Formation: With the Minnesota Secretary of State providing forms that meet the minimum state law requirements and the option to file online, setting up an LLC is relatively straightforward

While you also can contact the Small Business Assistance Office within the Minnesota Department of Employment and Economic Development (DEED) for help, many small business owners opt to avoid the tricky process of forming an LLC by instead leveraging the help of third-party LLC formation services.

Step 2: Obtain an EIN

The second step you’ll need to complete before applying for your business license is to obtain your EIN. This is a unique nine-digit number assigned by the Internal Revenue Service (IRS) to businesses in the United States so that their financial transactions can be identified and tracked.

An EIN is often necessitated when applying for various permits and licenses as it allows local and state governments to ensure your business is operating within the confines of the law. You can obtain it in a number of ways:

• Online: You can apply for your EIN on the IRS’s official website by using the EIN Assistant. You should be granted your EIN shortly after completing this application
• By Fax/Mail: After completing Form SS-4, you can apply for an EIN by submitting it to the IRS via mail or fax
• By Phone: International applicants and businesses located outside US Territories are required to call the IRS at (267) 941-1099 to obtain their EIN — which they should receive during this call

Note: If you are a sole proprietor, you will be able to use your Social Security Number (SSN) instead (as long as you do not have employees).

Step 3: Apply for Licenses and Permits

After settling on the appropriate structure for your business and initiating the application for your EIN, the next step is to focus on securing the necessary licenses and permits to operate legally within your locale and industry.

• Local Licenses: Most cities and counties in Minnesota have their own business licensing requirements. For instance, the City of Rochester issues its own business permit that certain enterprises must obtain, including alcohol retailers and betting shops
• Statewide Licenses: You also need to pay attention to any statewide licenses your business may require. For example, businesses that make or sell alcohol in the state must obtain a liquor license issued by the Minnesota Department of Public Safety
• Federal Licenses: While the federal government doesn’t mandate licenses for general business operations, if your business falls under any government-regulated category, such as agriculture, fishing, firearms, and alcohol sales, it may be required to obtain additional federal licenses or permits

Note: For more detailed information on the federal licenses required by your business, it’s worth checking with the US Small Business Administration (SBA).

Step 4: Renewal of Licenses and Permits

Most business owners must renew their Minnesota business licenses either annually or every couple of years in order to keep them valid. It’s important to note that the exact renewal period, process and deadline will depend on the board that issued the license you need to review.

If you’re uncertain whether you need to renew any of your business’s licenses, make sure to reach out to the agency that issued your business license for clarification.

Alternatively, due to how complicated each step of applying for and renewing business licenses is, third-party services that handle this entire process are becoming an increasingly popular option.

How Much is a Business License in Minnesota

Registering for a sales tax license costs nothing in Minnesota, but the fees for other state and local level licenses can range from $15 to $1,000 based on your county and the industry in which your business operates. For instance, an initial athletic trainer’s license costs $183 while a physician’s license is $425.

If you plan to run an establishment that sells alcohol, the fee for a liquor license is even higher. It costs around $2,885, and you also may have to pay some extra charges like investigation fees. Make sure to consult the relevant agencies and local governments to determine the exact cost for your specific business licensing needs.

The best way to get a good idea of how much you’ll need to spend on your business’s federal, state, and local licensing requirements is to conduct detailed research into your particular business type and the city and county in which you plan to operate. However, many business owners opt to save both time and money by hiring a third-party service to do this on their behalf.