If you buy or acquire a business, or the stock of goods of a business, you are a successor. Successors must notify the Minnesota Department of Revenue before the transfer takes place. If the seller does not notify Revenue, it may make the buyer of the business liable for tax debts or other debts Revenue is collecting from the business.
The business buyer must search for undisclosed tax liens before completing a purchase agreement. This will reveal any undisclosed tax obligations for the business the buyer intends to purchase. The law is in place to protect a buyer. ()
Revenue offers detailed successor liability information at these links:
Not yet. The comment period for those rules closed on February 7, 2022. The final version is expected before the end of 2022, but no date certain has been identified.
The Minnesota Department of Revenue announced in its COVID-19 FAQs for businesses that the Department will not seek to establish nexus for any business tax solely because an employee is temporarily working from home due to the COVID-19 pandemic.
This guidance does not change the requirement that all Minnesota employers are required to withhold resident income from all wages earned within the state if there are business operations within the state other than temporary teleworkers working from home due to COVID-19.
This announcement does, however, bring relief to Minnesota employers that otherwise could have been required to pay business taxes (e.g. sales and use tax, unemployment insurance) merely because employees are temporarily working from home within the state due to the COVID-19 emergency.
Yes. Partnerships, and S Corporations taxed like partnerships, have an informational return to file with the IRS. See Below:
K-1 Forms for business partnerships
For businesses that operate as partnerships, it’s the partners who are responsible for paying taxes on the business’ income, not the business. Each partner is responsible for filing an individual tax return reporting their share of income, losses, tax deductions and tax credits that the business reported on the informational IRS 1065 tax form. As a result, the partnership must prepare a Schedule K-1 to report each partner’s share of these tax items.
Schedule K-1 for S corporations
Similar to a partnership, S corporations must file an annual tax return on IRS Form 1120-S. The S corporation provides Schedule K-1s that reports each shareholder’s share of income, losses, deductions and credits. The shareholders use the information on the K-1 to report the same thing on their separate tax returns.
Minnesota’s minimum wage rates were adopted January 1, 2022, to $10.33 an hour for large employers and $8.42 an hour for other state minimum wages. The change in price index used for this purpose is an increase of 2.5%.
The most recent guidance for fully vaccinated persons was published on May 13, 2021. You can read it at the CDC website.
Yes. Employers can set their own standards for mask wearing that may be stricter than those advocated by the CDC. Employers can also have different mask requirements for different employees based on the nature of the employee’s jobs.
Certificates of Assumed Name, sometimes referred to as DBAs, and trademarks are two very different things and serve two completely different purposes. An assumed name allows you to do business using a fictitious name, which is any name other than your legal name or your legal corporate name. A trademark, on the other hand, is a type of intellectual property registration that protects your business's Branding. Though similar, there are major differences between the two.
Registering an assumed name is simpler than registering a trademark. Registering an assumed name in Minnesota is as simple as performing a name search, filling out a form, publishing a notice and paying a fee. The process for registering an assumed name is pretty straightforward whereas the trademark application process is more extensive, more expensive and can take many months to process.
An assumed name is cheaper than a trademark because it ultimately offer less protection in terms of location and all that is protected.
Assumed names only protect on a state level. Since everything is done at the state level for an assumed name, that's as high as the protection goes. Minnesota has laws preventing businesses from registering names that are too similar to another assumed name. However, if a business has the same name as you in another state there's probably nothing you can do.
A trademark offers more protection than an assumed name. Where an assumed name only reaches to the state level, a trademark is yours to use on a national level. However another trademark can use the same words as yours as long as the font and color or different, or a different image is used.
A trademark is your legal property. By registering your trademark, you have exclusive rights to use it. No one else can infringe on that right. When you register a trademark, it becomes your business's property and your business's property alone.
Where an assumed name only covers the use of a name, the trademark can be registered for different parts of your company's branding.
Trademarks have inherent value.
Both assumed names and trademarks keep other businesses from using your business name. The important thing to remember is they both do the same job. It's the amount of protection, what is being protected, and the process and cost the differ.
An operating agreement is an internal document that defines internal operating procedures and how the business owners (members) professionally relate to each other in terms of management and operations, whereas the articles of incorporation is a formal document that legally establishes a business as a corporation. Together those documents help to make up the legal framework of the Organization.
Operating agreements and articles of incorporation also differ based on legal structure, application, state requirements, tax outcomes and rigidity. Operating documents are less formal and easier to amend to.
Articles of incorporation are filed as of the date of creation and often not updated to include include shareholder information, profit distribution methods or ongoing business relations, whereas operating agreements can be more easily adjusted to stay correct within the current state of operations.
Although they serve a similar purpose, operating agreements differ slightly from a company's bylaws. Operating agreements tend to outline items in greater detail than the bylaws of a corporation would.
With corporations, it is common to have additional agreements created, often referred to as a shareholders agreement, which outlines in greater detail the information that would typically be contained inside an operating agreement.
An operating agreement is an internal document that outlines business owner relationships, and articles of incorporation legally define a business as a corporation within the state.
"Startup expenditures" are defined in the Internal Revenue Code [Section 195(c)] as amounts paid or incurred in connection with investigating the creation or acquisition of a business (for example, market studies) or with the actual creation of the business (for example legal fees or state filing costs).
No deduction is allowed for such expenditures unless the business files an election, at the time of filing its first year’s income tax return, in which case the business is allowed a deduction that first year for the lesser of $5,000 or $5,000 reduced by the amount that the expenditure exceeds $50,000. The remainder of any startup expenditures can be claimed as deductions ratably over the 180 month period that begins with the month in which the business begins active operation.
Expenditures that are "ordinary and necessary" in carrying on a trade or business are deductible in the tax year in which they were incurred. [Section 162] These expenditures can include cost of goods, management salaries, cost of labor, property rentals, supplies, advertising, and insurance.
For additional information on these questions refer to the IRS Publication 535 "Business Expenses."
Joint venture agreement are used when two more business entities or individuals enter into a temporary business relationship (joint venture) for the purpose of achieving a mutual goal, where they will each share the risks and rewards. It allows each business to grow without looking for outside funding. Other reasons businesses may enter into a joint venture relationship could be to gain access to wider markets, more financial and technical resources, share resources such as greater expertise and skills, fund the growth of another business, develop new products or services, or diversify. A joint venture agreement sets out the terms and obligations of the members of the joint venture.
A loan covenant is an agreement stipulating the terms and conditions of loan policies between a borrower and lender. The agreement gives lenders leeway in providing loans while still protecting their lending position. Similarly, due to the transparency of the regulations borrowers get clear expectations of the lenders.
In loan covenants, two commonly known types of agreements are affirmative loan covenants and negative loan covenants.
Th affirmative covenants are things that a small business or borrower must do while it is paying the business loan. Examples of affirmative covenants are very basic- Meet financial obligations, pay taxes, and maintain a positive cash flow. Other possible affirmative covenants are to maintain business insurance, maintain collateral, and accurate recordkeeping.
The bank may also ask the small business to maintain certain levels of particular financial ratios. Examples of financial ratios the banks may watch are the debt to equity ratio, the debt to asset ratio, and the company's net working capital.
Restrictive or negative loan covenants limit the borrowers behavior in favor of the bank. In other words the small business borrowing the money has to refrain from taking specific actions. The most common negative covenant requires the company not to borrow any money.
Companies the banks considered high risk will have more restrictive covenants. Companies the banks consider to be lower risk will have fewer restrictive covenants. The risk is determined on a number of factors by the bank such as financial statements, cash flow, collateral, business insurance, and the business plan.
"Loan Documentation: An Introduction for Small Businesses" provides a primer on the need for and uses of many of the terms and covenants used in commercial transactions. It is available for download on DEED's website at Publications.
Form 1099-K, Payment Card and Third-Party Network Transaction, is an IRS information return that tracks payments including those made with credit cards; cash apps; online payment services; and freelancing platforms that manage payments. It reports the gross amount of reportable transactions for both the calendar year and its corresponding months to the IRS and to the people who accept the payment cards or payments made by third-party settlement organizations.
Effective January 1, 2022, all third-party settlement organizations (TPSO) such as PayPal, Amazon, Venmo, cash app, or online market places like Etsy and eBay, are required to issue a 1099-K form for goods and services transactions totaling $600 or more in annual gross sales. This threshold has been dramatically reduced from $20,000 to $600 in 2022, with no minimum number of transactions, and may include those where the business owners have no tax liability.
The “gross amount” on the 1099-K is the total unadjusted dollar amount of the payment transactions made to you. This amount is not adjusted to account for any fees, refunds, or any other amounts before it’s reported on the 1099-K and to the IRS. This means that form 1099-K shows the value of the transactions processed for you in the past year, as well as any expenses paid on your behalf by your clients, such as processing fees deducted before payment reaches you, meaning that your 1099-K will include those expenses, reporting an income higher than you receive.
If you let customers receive cashback when they use the debit cards for purchases, your form 1099–K will include the cash back amounts as part of the gross amount of payment card transactions. Typically, cash back amounts would not be included on an income tax return or claimed as a business expense.
If a credit card terminal is shared with another person or business, the form 1099-K will include payment card transactions belonging to the person or business that shared your terminal, in addition to your own payments. When required, you’ll need to file and furnish information returns for those who you shared a card terminal with, including the total payment card transaction amount and any other income belonging to them.
We recommend reviewing your recordkeeping requirements with your business advisor.
According to Minn. Stat. § 33.01, Commercial Assumed Names, Any person who conducts or transacts business in Minnesota under a name that is different from the full, legal name of each owner or partner must register the name of the business by filing a Certificate of Assumed Name with the Office of the Minnesota Secretary of State. It is also required of corporations, limited partnerships, limited liability partnerships, limited liability companies that do business under a name that is different from their exact legal name.
The registration of a business name requirement is a consumer protection requirement - it is designed to protect consumers from business owners hiding anonymously behind the name of a business. It does not protect the business owner’s name. Once an assumed name is filed, filing for trademark protection may be appropriate.
The requirement and need to register an assumed name vary, depending on the type of business entity. Sole proprietorships and general partnerships are the most common entities to register for an assumed name. For sole proprietorships and partnerships the original name is the actual name of the owner or partners. This secondary name doesn’t replace the original name but acts as an additional legal name for the business. This name is known as their assumed name or trade name. Corporations and limited liability companies won’t typically register a fictitious name since a unique entity name is created during the formation process. Some will file if they have another business the want to operate under their corporate/LLC umbrella to keep the liability protection without having to form another entity.
The cost to register an assumed name in Minnesota is $30 when filing by mail or $50 when filing on line. The assumed name has to be renewed annually, however, there is no cost to do so. If allowed to lapse, there will be a reinstatement fee for the assumed name designation. Registering an assumed name does not change how your company is taxed. Please note that upon filing a Certificate of Assumed name, there is no certificate issued.
Name registration and name availability guidelines are available from the Secretary of State Office and can be checked at Search Business Filings.
Using the U.S. Trademark Electronic Search System (Tess) will tell you whether someone else has already trademarked your name.
It is also a good idea to check that here is a web domain name available for your assumed name as well.
While you do not need a business plan to open a business, we think it is a good idea for the following reasons:
For some, though not all, businesses the State may require a state issued license or permit to enter into business or conduct certain activities in that business. These can be issued for various purposes: to ensure the competency of practitioners of a business, trade or profession; to protect the physical well-being and welfare of the public; to prevent fraud or ensure the financial solvency of a party to financial transaction; to ensure the safety and efficacy of products or services; to promote the responsible use of natural resources; to authorize a business to collect sales taxes and specialty taxes like cigarette or motor fuel taxes and remit those taxes to the state.
A comprehensive list of state required licenses and permits together with their requirements, schedules, and fees is available online at Minnesota ELicensing.
Some local governments also impose licensing requirements on businesses. Larger cities like Minneapolis and St. Paul have actual licensing departments. Small units of local government at city or county level more often utilize the city clerk or county clerk to direct licensing application and issuance.
The State of Minnesota does not approve, endorse, or market any franchise offerings. The Minnesota Franchise Act does require that a proposed franchise must be registered with the Minnesota Department of Commerce before any offers or sales are made. In addition, the Minnesota Franchise Act sets the requirements for public offering statements, defines unfair and prohibited practices, establishes enforcement standards and provides for civil money penalties for violations.
Minnesota accepts for registration franchise applications that comply with the Uniform Franchise Offering Circular put out by the North American Securities Administrators Association. That circular describes the disclosures that franchisors must make and requires that franchisors provide prospective franchisees with audited financial statements and copies of all proposed contracts and agreements pertaining to the proposed franchise relationship. Refer to this information from the MN Department of Commerce, Franchises.
Yes. Treasury regulations treat the owner as a sole proprietor in this situation and allow the owner to deduct trade or business expenses, including the LLC's share of employment taxes and the cost of health insurance for the owner, the owner's spouse, and the owner's dependents. These deductions are made on the appropriate schedule of IRS Form 1040.