Questions

Yes. Effective Jan. 1, 2024, Minnesota’s earned sick and safe time law requires employers to provide paid leave to employees who work in the state. Minnesota’s current sick and safe leave law remains in effect until Dec. 31, 2023 and will be replaced by the new earned sick and safe time law on Jan. 1, 2024.

Sick and safe time is paid leave employers must provide to employees in Minnesota that can be used for certain reasons, including when an employee is sick, to care for a sick family member or to seek assistance if an employee or their family member has experienced domestic abuse.

An employee is eligible for sick and safe time if they:

• work at least 80 hours in a year for an employer in Minnesota; and
• are not an independent contractor.

Temporary and part-time employees are eligible for sick and safe time. Sick and safe time requirements will not apply to building and construction industry employees who are represented by a building and construction trades labor organization if a valid waiver of these requirements is provided in a collective bargaining agreement.

Review the Minnesota Dept. of Labor & Industry (DLI) Earned Sick and Safe Time (ESST) information.

Watch a video on this topic from the Minnesota Small Business Call from December 2023 - Earned Sick and Safe Time.

The Office of Cannabis Management (OCM) process for general licenses will be announced soon. In the meantime, OCM recommends preparing a proposed business plan, security plan, and business capitalization table, as well as standard operating procedures for: quality assurance; inventory control, storage, and diversion prevention; and accounting and tax compliance. See General Licenses.

The new law in Minnesota requires any business that sells hemp-derived cannabinoid products directly to consumers register with the Office of Cannabis Management (OCM) before selling any hemp-derived cannabinoid products. This includes establishments that sell THC beverages as well as out-of-state businesses that sell online to Minnesota customers. Refer to the OCM information Hemp-Derived Cannabinoid Products for the online registration form. There is no charge to register.

A separate licensing process will be available in the future and will be announced when it is available.

Beneficial ownership information refers to identifying information about the individuals who directly or indirectly own or control a company.

In 2021, Congress passed the Corporate Transparency Act on a bipartisan basis. This law creates a new beneficial ownership information reporting requirement as part of the U.S. government’s efforts to make it harder for bad actors to hide or benefit from their ill-gotten gains through shell companies or other opaque ownership structures. The new law went in to effect January 1, 2024.

Updated information - Alert

FinCEN Removes Beneficial Ownership Reporting Requirements for U.S. Companies and U.S. Persons, Sets New Deadlines for Foreign Companies

Financial Crimes Enforcement Network (FinCEN) announced that, consistent with the Department of the Treasury’s March 2, 2025, announcement, it is issuing an interim final rule that removes the requirement for U.S. companies and U.S. persons to report beneficial ownership information (BOI) to FinCEN under the Corporate Transparency Act.

In that interim final rule, FinCEN revises the regulatory definition of “reporting company” to mean only those entities that are formed under the law of a foreign country and that have registered to do business in any U.S. State or Tribal jurisdiction by the filing of a document with a secretary of state or similar office (formerly known as “foreign reporting companies”). FinCEN also exempts entities previously known as “domestic reporting companies” from BOI reporting requirements. Thus, through this interim final rule, all entities created in the United States — including those previously known as “domestic reporting companies” — and their beneficial owners will be exempt from the requirement to report BOI to FinCEN.

However, foreign entities that meet the new definition of a “reporting company” and do not qualify for an exemption from the reporting requirements must report their BOI to FinCEN under new deadlines. These foreign entities will not be required to report any U.S. persons as beneficial owners, and U.S. persons will not be required to report BOI with respect to any such entity for which they are a beneficial owner.

Upon the publication of the interim final rule, the following deadlines apply for foreign entities that are reporting companies:

• Reporting companies registered to do business in the United States before the date of publication of the interim final rule must file BOI reports no later than 30 days from that date.

• Reporting companies registered to do business in the United States on or after the date of publication of the interim final rule have 30 calendar days to file an initial BOI report after receiving notice that their registration is effective.

In accord with its prior notices and the Department of the Treasury’s March 2, 2025, announcement, FinCEN is applying all exemptions and deadline extensions in the interim final rule as of today, in advance of formal publication in the Federal Register, and will further not enforce any beneficial ownership reporting penalties or fines against U.S. citizens or domestic reporting companies or their beneficial owners.

Effective January 1, 2025, Minnesota's minimum-wage rates will increase to $11.13 an hour for large employers and $8.85 an hour for other state minimum wages.

Some local cities like Minneapolis and St. Paul have rates different from the state minimum wage rate.

Federal law requires that every employer* who recruits, refers for a fee, or hires an individual for employment in the U.S. must complete Form I-9, Employment Eligibility Verification. Form I-9 will help you verify an employee's identity and employment authorization. Review the I-9 Central site.

Temporary Protected Status (TPS) for Ukraine Extended for 18 Months; Certain EADs Automatically Extended Through April 19, 2026

January 17, 2025
The Department of Homeland Security extended Temporary Protected Status (TPS) for Ukraine from April 20, 2025, through Oct. 19, 2026. Given the time frames for processing TPS re-registration and Employment Authorization Document (EAD) renewal applications, USCIS has automatically extended through April 19, 2026, the validity of certain EADs with a Card Expires date of April 19, 2025, or Oct. 19, 2023, issued under the TPS designation for Ukraine.

More specific information may be found at  Completing a Form I-9. Resources are found at Form I-9 Resources.

ESG refers to the Environmental, Social, and Governance results of business actions. The Securities and Exchange Commission has proposed regulations requiring large publicly traded companies to disclose and explain their affirmative ESG efforts and anticipated outcomes in the regular reports that the companies file with the SEC. There has been passing reference among small businesses that they might seek to build ESG into loan applications, securities offerings, and marketing materials to make the public aware of these efforts; but there is no requirement. There has also grown up some opposition to requiring publicly traded companies to build out ESG activities and report on them on the basis that such long term and uncertain efforts can be violations of mangers’ and directors’ fiduciary duties to the company by diverting resources into ESG rather than directing them to immediate shareholder value. There are also private organizations that give ESG ratings to companies that investors seeking to invest in ESG companies can use in making investment decisions.

Yes. The fair market value of the crypto constitutes taxable wages and is reported by the employer on Form W-2. The fair market value of crypto listed on an exchange with the value determined by supply and demand is arrived at by converting the crypto to U.S. dollars at the exchange rate on the date of payment.

The Employee Retention Credit (ERC) is a refundable payroll tax credit. Eligible businesses can receive up to $26,000 per employee. Born out of the same CARES Act as PPP, its aim is to provide economic relief for small and medium businesses who retained employees during the COVID-19 pandemic. Initially, eligible employers could only take either PPP, or ERC. In 2021, as part of the Consolidated Appropriations Act, Congress amended this provision, allowing businesses to apply for both.

Eligible businesses have up to three years to amend their past returns after 2020 to claim the credit.

Because this is a refundable credit, the taxpayer will receive an actual check for the amount of refund.

Refer to IRS information, Employee Retention Credit

UPDATE February 2024

Educational sessions for tax professionals

Starting in February 2024, IRS Criminal Investigation special agents are hosting a series of educational sessions for tax professionals who may have claimed the ERC for their clients on previous years’ tax returns.  The sessions are part of a nationwide initiative to ensure that tax professionals have the latest information about ERC claims and understand ERC eligibility criteria.

On this page

• Beware of ERC scams
• Eligibility highlights
• How to claim the ERC
• Penalty relief
• Reporting tax-related illegal activities
• News about how the IRS is protecting taxpayers and increasing compliance efforts
• Guidance by period when the qualified wages were paid

The IRS has developed a new FAQ on the credit available online at Frequently asked questions about the Employee Retention Credit

Yes. The California Privacy Rights Act (CPRA) and other new state data privacy laws were set to take effect in 2023. Take a look at our publication A Legal Guide to Privacy and Data Security 2024, authored by the law firm of Lathrop GPM.

No. The federal corporate income tax remains at 21%. The Inflation Reduction Act created a new 15% corporate alternative minimum tax on corporations with revenues of $1 billion or more. Congress chose to do this rather than eliminate or reduce various credits and tax strategies in the Internal Revenue Code.

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.

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. (See Minn. Stat. 270C.57)

Detailed information is available on the Revenue website at Successor Liability.

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 Form 1065, U.S. Partnership Income. As a result, the partnership must prepare a Schedule K-1 (Form 1041) to report each partner’s share of these tax items.

• K-1s are provided to the IRS with the partnership’s tax return and also to each partner so that they can add the information to their own tax returns.

Schedule K-1 for S corporations

Similar to a partnership, S corporations must file an annual tax return on IRS Form 1120-S, U.S. Income Tax Return for an S Corporation. 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.

New employees, and existing employees who wish to change their income tax withholding, must use the 2024 version of IRS Form W-4. Review the IRS information, About Form W-4, Employee's Withholding Certificate.

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 information Guide to Business Expense Resources and Publication 535 Business Expenses.

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.

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.

If you filed a Certificate of Assumed Name, Minnesota Business Corporation, Foreign Business, or Non-Profit Corporation, or a Cooperative, Limited Liability Company, Limited Liability Partnership or Limited Partnership, you must file an annual renewal once every calendar year, beginning in the calendar year following your original filing with the Office of the Minnesota Secretary of State. Most registration renewals have no fee, but some do. Refer to the Office of the Minnesota Secretary of State Business Filing & Certification Fee Schedule.

Your entity will be “statutorily dissolved” (no longer be recognized as existing in Minnesota) if you fail to file your annual renewal. If your entity has been statutorily dissolved, you may have it retroactively reinstated (as long as the name is still available) by filing a renewal for the current year and paying a fee.

Renewal may be made online.at the Secretary of State Office, How to File Your Annual Renewal or Amendment Online.

*See this information from the Minnesota Attorney General Office, Business Compliance Solicitation Scams

Form 1099-K, Payment Card and Third-Party Network Transactions - A payment settlement entity (PSE) must file Form 1099-K for payments made in settlement of reportable payment transactions for each calendar year. A PSE makes a payment in settlement of a reportable payment transaction, that is, any payment card or third party network transaction, if the PSE submits the instruction to transfer funds to the account of the participating payee to settle the reportable payment transaction.

Form 1099-K is a report of payments you got for goods or services during the year from:

• Credit, debit or stored value cards such as gift cards (payment cards)
• Payment apps or online marketplaces, also called third party settlement organizations or TPSOs

These organizations are required to fill out Form 1099K and send copies to the IRS and to you.

Payments you got from family and friends should not be reported on Form 1099-K.

Use Form 1099-K with other records to help you figure and report your taxable income when you file your tax return.

We recommend reviewing your recordkeeping requirements with your business advisor.

While you do not need a business plan to open a business, we think it is a good idea for the following reasons:

• To prove that you are serious about your business. A business plan shows everyone – employees, investors, partners and yourself – that you are committed to your business.
• It helps to understand your competition. By analyzing your competition, you can better understand your company’s competitive advantages, or figure out what you need to do to gain them. It also forces you to research and really know your market.
• It helps you understand your customer in order to create better products and services for them and understand how to reach them most effectively.
• It forces you to test and analyze the validity of your assumptions and will serve as a feasibility study for your business.
• It helps you determine your financial needs and understand how your business will actually make money.
• A business plan serves as the basis for financial proposals.
• It will help you understand your staffing needs.
• A business plan helps you understand the success of your business by allowing you to compare actual operational results against the plan itself, and clearly see if you have achieved your strategic, financing and operational goals.

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.