On December 31, 2014, the Minnesota Supreme Court ruled that a hospital’s medical staff had the capacity to sue and be sued, and that medical staff bylaws can be considered a contract as between the medical personnel and the hospital. This ruling came from the case Medical Staff of Avera Marshall Regional Medical Center, et
Starting a Corporation in Minnesota
A corporation may be a good fit for the business you are trying to form. If you are worried about your future financials being affected by problems with the new business, a Corporation would protect you from being held responsible for all future debts of the business. If your business acquires significant debt, it will not affect the owner’s personal assets. Therefore, a Corporation best protect your personal assets. In addition, if an owner develops significant personal debt, it will not affect the business.
Typically, corporations are a better option for larger businesses while LLCs are better for smaller ones. Other advantages to a corporation are: there are more possibilities for tax-free benefits on things like life insurance from the company also, when going public investors are more used to buying stock rather than how an LLC would go about making securities available to the public.
Forming a Minnesota Business Corporation
A corporation is a separate legal entity that is owned by one or more shareholders. The shareholders elect a board of directors which is responsible for the management and control of the corporation. As a separate legal entity, the corporation is responsible for the debts and obligations of the business. In most cases the shareholders are insulated from personal liability for claims against the corporation.
A corporation is formed according to the laws of the state in which it is organized. In Minnesota the business corporation statute is Minnesota Statutes Chapter 302A. The following material describes the process for incorporating a business in Minnesota and some of the post-incorporation issues faced by new corporations. The formation of a state bank or trust company with the Minnesota Department of Commerce is beyond the scope of this publication. Other issues are described in posts of this blog on choosing the form of business organization, business taxes, and issues for employers.
Corporate Formation Services
The articles of organization are created for a limited liability company or corporation by the owner and filed with the state in order to form a business. The business does not legally exist until the articles are filed.
Bylaws are developed during the creation of a business in order to set up rules that direct how the business will function. They are created by the founder(s) of the business and should account for several topics pertaining to the business.
Anyone can form a Corporation for any lawful purpose. The Corporation does not exist until the Minnesota Secretary of State reviews and approves the articles of incorporation. The fees are the same as an LLC above.
Corporations file as a separate entity from the owners. The form used is an 1120 and the corporation pays for the taxes on the business itself.
View the following posts to learn more about starting a corporation in Minnesota:
- articles of incorporation
- other provisions
- amending the articles of incorporation / change of registered office or registered agent
- general post-incorporation issues
For information on forming other business types, see forming a business in Minnesota.
Common Shares v. Preferred Stock
Capitalization for Corporations: Shares & Preferred Stock Essentially, Minnesota corporations have two options to raise capital. The corporation can issue shares of the corporation stock or it can borrow money to provide startup capital. Pursuant to Minnesota Statute § 302A.011, subd. 28 a share is “one of the units, however designated, into which the shareholders’
What Form of Business Organization Should I Choose?
So you’ve made the decision that you want to start your own business. One of the very first decisions you will have to make is to choose what form of organization that you’d like for your business. There are a number of choices with various tax consequences. A Sole Proprietorship is owned and controlled by
Minnesota Public Benefit Corporations FAQ
In Minnesota, you now have the option of creating a Public Benefit Corporation (a.k.a. B-Corp) for your social enterprise. Minnesota state law allows a business engaged in social enterprise to avoid becoming an LLC or corporation by electing to form the company under the Minnesota Public Benefit Corporation Act (MPBCA). The MPBCA allows entrepreneurs to
Minnesota Offers Interest-Free Loans to Business Startups
The State of Minnesota's Angel Loan Fund offers interest-free loans to startup businesses in Minnesota. If you start a new business in Minnesota, you can apply for an interest-free loan through a new Minnesota program. The Angel Loan Fund is a government project offering small businesses a loan for seven years at a 0% interest
A corporation is a form of business organization formed under state law with the following three, mandatory characteristics: (1) an entity considered to be distinct from its owners; (2) an entity whose property is distinct from the property of its owners; and (3) the property of its owners cannot be seized and sold to satisfy
Duties and Requirements of Officers and Directors of MN Corporations
Corporations are run, in large part, by Officers and the Board of Directors. Individual Directors make up the Board of Directors. A vast amount of decision making related to the everyday affairs of a corporation is done by Officers and Directors. Corporations are businesses. Businesses can have many owners. A corporation is a non-living, non-breathing
Post-Incorporation Issues After Forming a Business in Minnesota
When a corporation is formed, it becomes a legal entity that is separate from the owners or shareholders. The corporation can only act, however, through the individuals who are the incorporators, officers, directors, or shareholders. As part of the process of organizing the corporation, those individuals address a number of organizational matters, such as planning
Corporate Taxes in Minnesota
Different forms of business entities are subject to different tax regulations. If you choose to set up your business as a C corporation, your business will have to pay corporate taxes. With other business entities, such as an LLC, partnership, or even S Corporation, the business is not taxed on a corporate level, but rather
LLC VS S Corporation: Which One Should I Get?
Minnesota small businesses often wonder whether to form a Minnesota S-corporation or LLC. The answer isn't simple. Here are some questions to consider: An S Corp may only have 100 owners. An LLC does not have this restriction. An S Corp may only be owned by individuals, estates, certain trusts, and certain tax exempt organizations.
Special Requirement for Professional Firms Forming a Business in Minnesota
If you are starting an LLC or corporation in Minnesota that will be providing professional services, there are special requirements to consider. Certain professional services firms require specific provisions in their Articles of Organization (for an LLC) or Articles of Incorporation (for a corporation). These professional firms include Accountancy Architecture Certified Interior Design Chiropractic Dentistry
Subsidiaries and Foreign Corporations Doing Business in Minnesota
When a corporation extends into a new product line or a new geographic area, it frequently establishes a “subsidiary” corporation. A subsidiary corporation is a separate legal entity which happens to be controlled by another corporation (its “parent”) that owns enough shares of the subsidiary’s stock to dictate policy. Some subsidiaries are wholly-owned, some are
Forming a Corporation in Minnesota – Amending the Articles of Incorporation
A corporation may amend its articles of incorporation to include or modify any provision that is required or permitted to appear in the articles or to omit any provision not required to be included in the articles. Amendments are required when any changes are made in the articles of incorporation. Common reasons for amending the
Forming a Corporation in Minnesota – Other Provisions
There is no publication (i.e., no “legal advertisement”) requirement for corporations incorporated under Minnesota Statutes Chapter 302A. There is also no statutory minimum capital requirement for these corporations. There are a number of provisions of Minnesota Statutes Chapter 302A that may be altered or adopted in the articles of incorporation, but that need not appear
Forming a Corporation in Minnesota – Articles of Incorporation
A corporation is formed by one or more incorporators filing articles of incorporation with the Secretary of State and paying the filing fee. Articles of incorporation are the equivalent to articles of organization in an LLC. Minimum requirements are satisfied by an articles of incorporation form that is available from the Secretary of State’s website