Forming a Corporation
The way you form a corporation in Minnesota is dictated by state law and the process is pretty straightforward.
Start by filing articles of incorporation with the Secretary of State and paying the filing fee. You can file online or download and submit a ready-made articles of incorporation form, or you may draft and submit your own articles of incorporation (drafted with the advice of an attorney). The articles of incorporation contain these elements.
By state law, the name of a corporation must:
- Be in English
- Contain the words “corporation”, “incorporated”, “limited”, “company”, “professional association” or “chartered” (or abbreviations thereof)
- Not contain a word or phrase indicating that the corporation conducts a business that is not a legal business purpose
- Be distinguishable from the other company names, reserved names, assumed names, trademarks or servicemarks on file with the Secretary of State
Search the Secretary of State’s business database to determine whether your chosen name is available at How To Check Business Name Availability, go to http://www.sos.state.mn.us/business-liens/start-a-business/how-to-check-business-name-availability/. Download the name availability guidelines.
A corporation must maintain a registered office located in the state of Minnesota. The address may not be a post-office box. It may be a street address, a rural route and rural route box or fire number, or directions from a landmark. If directions are given, a mailing address in the same town or in an adjacent area must also be given. All addresses must have a zip code.
The corporation is not required to name a registered agent in the articles of incorporation, but if it does name an agent, the articles must list the name of the agent and the agent must be located at the registered office.
Number of Authorized Shares of Stock
A corporation may authorize any number of shares of stock. The articles of incorporation require only the total number of shares authorized. Neither a par value nor a stated value is required, although the articles may include them. Corporations that plan to do business in another state should consider including a provision specifically stating that shares have a par value of one cent per share for franchise fee purposes. This is a restatement of Minnesota state law and may enable the corporation to avoid paying excess franchise fees in other states.
While the number of authorized shares is fixed in the articles, the decision to issue shares is up to the directors, who may reserve shares for later issuance. The board must approve each issuance and ensure that the corporation receives fair value for its shares.
Names, Addresses and Signatures of Incorporators
The articles must list the names and complete mailing addresses, including zip codes, of each of the incorporators. There must be at least one incorporator. Each incorporator must be at least 18 years of age and must sign the articles.
There are a number of provisions set out in state law that may be altered or adopted in the articles of incorporation, but that need not appear in the articles in order to properly form a corporation.
Once the corporation is formed, there are the practical steps for startup and operation. It’s a good idea to get legal and tax advice at this point, but in general start-up and maintenance tasks include:
- Obtaining federal and state tax identification numbers and an unemployment insurance employer account number for the corporation.
- Issuing shares of stock in conformity with the articles of incorporation. Federal and state securities laws apply to the issuance of corporate shares. These laws are complicated. Consult an attorney.
- Setting up and maintaining corporate books and records, including books of account, shareholder records, and corporate minute books
- Calling and conducting the initial meeting of the board of directors or shareholders in conformity with the articles of incorporation and applicable laws.
- Assuring that all actions taken and decisions made by the corporation through its directors, officers and shareholders conform with the articles of incorporation, bylaws, and applicable law. All actions and decisions should be recorded in the corporation’s minute book.
Minnesota corporations must file an annual corporate registration with the Secretary of State which will provide corporations with a reminder-to-file notice. Failure to file an annual registration for any calendar year will trigger an administrative dissolution of the corporation.
Business Activities Report
Every corporation that does business in Minnesota must file an annual business activities report with the Department of Revenue. Corporations are exempt from this requirement if they:
- File a Minnesota corporate income tax return on time
- Are a foreign corporation possessing a certificate of authority to do business in Minnesota
- Are a tax-exempt corporation
- Are engaged solely in secondary market activity in Minnesota
- Are financial institutions that annually conduct business with fewer than 20 persons, and have total assets and deposits of less than $5 million
Corporations that are required to file a business activities report and fail to do so can be barred from using Minnesota courts during the violation period.
Consultants at our Small Business Assistance Office can help you understand more about corporations. And our network of Small Business Development Centers has experts located in nine main regional offices and several satellite centers statewide.
Our Guide to Starting a Business in Minnesota provides a detailed look at this and other important issues.