Sole Proprietorship in Minnesota: How to Start (2026)

Fact-checked by the LegalGlass editorial team against primary sources · Published Aug 20, 2026 · Last updated Aug 20, 2026

A Minnesota sole proprietorship exists as soon as you start doing business for yourself - there is no formation filing and no Secretary of State charter. Two obligations do apply: if you trade under any name other than your full legal name, you must file a Certificate of Assumed Name with the Minnesota Secretary of State and publish it for two consecutive issues in a qualified legal newspaper, and you must register for any Minnesota tax accounts your activity requires.

What a Minnesota Sole Proprietorship Is

A sole proprietorship is one person doing business without forming a separate legal entity. In Minnesota, as everywhere in the United States, it is the default status: the moment you sell a service or a product on your own account, you are operating as a sole proprietor whether or not you have filed anything. There is no charter, no operating agreement, and no Secretary of State approval to wait for.

That simplicity comes at a price. Because the business is not a separate legal person, the owner and the business are legally identical. Business debts are personal debts. A judgment against the business reaches the owner's personal bank account, car, and other assets. Liability insurance can absorb some risk, but it does not change the legal structure.

The contrast with an LLC is exactly this point of separation. A Minnesota LLC is a distinct legal entity whose members are generally not personally liable for the entity's obligations, which is why owners with employees, inventory, premises, or contracts often convert. See what an LLC is and how to form an LLC in Minnesota to weigh the two, and the national sole proprietorship guide for the general rules.

The Certificate of Assumed Name

If you do business under your own full legal name, Minnesota requires no name filing. The moment you use anything else - a trade name, a shortened version of your name, or a name with a descriptor attached - you are using an assumed name, and Minnesota Statutes chapter 333 requires you to file a Certificate of Assumed Name with the Minnesota Secretary of State.

The certificate identifies the assumed name, the address of the principal place of business, and the name and address of every person conducting business under it. The Secretary of State publishes the filing fee on its assumed name pages; confirm the current amount there before filing, since fees are adjusted by statute from time to time and differ between online and mailed submissions.

Filing an assumed name is not a trademark and does not by itself stop another business from using a similar name. It is a public-notice filing so that customers and creditors can identify who stands behind the trade name. If the name matters commercially, consider a separate trademark search and registration - see trademark registration and trademarking a business name in Minnesota. For how assumed names work generally, read what a DBA is.

Minnesota's Publication Requirement

Minnesota is one of the few states that couples an assumed-name filing with a newspaper publication step. After the Certificate of Assumed Name is filed, it must be published for two consecutive issues in the legal notices section of a qualified legal newspaper in the county where the principal place of business is located.

The Secretary of State maintains a list of qualified legal newspapers by county, and a newspaper must register with the office to qualify. After the notice runs, the newspaper returns an affidavit of publication together with a copy of the advertisement. Keep the affidavit with your Certificate of Assumed Name - it is your proof that the requirement was satisfied.

Do not skip this step. The Secretary of State warns that failure to publish may render the Certificate of Assumed Name invalid, which can matter if you later need to prove the trade name was properly claimed, enforce a contract signed in the trade name, or open a bank account in that name. Budget for the publication cost, which the newspaper sets, in addition to the state filing fee. The same publication duty applies when you file an amendment to the certificate.

Minnesota and Federal Taxes

A sole proprietor is not a separate taxpayer. Federally, business income and deductible expenses are reported on Schedule C with the owner's Form 1040, and net earnings from self-employment are subject to self-employment tax reported on Schedule SE. Because no employer withholds from a proprietor's profit, most owners make quarterly estimated tax payments to the IRS.

In Minnesota, the same profit is reported on the owner's Minnesota individual income tax return, filed with the Minnesota Department of Revenue. Minnesota has a state individual income tax, so a profitable proprietorship generally produces both a federal and a state liability, and Minnesota estimated payments may be required as well.

Separate accounts apply to activity beyond income. If you sell taxable goods or taxable services in Minnesota, you must register for sales and use tax and collect and remit it. If you hire anyone, you must register for Minnesota withholding and handle federal employment taxes too. Register only for what you actually need - see self-employment tax in Minnesota and business tax filing.

Do You Need an EIN?

Many Minnesota sole proprietors can operate on the owner's Social Security number. An EIN becomes necessary once you have employees, file certain excise returns, or maintain a qualified retirement plan. Even when it is optional, an EIN is worth getting: it keeps your Social Security number off vendor forms and W-9s, and most banks want one before opening a business account under an assumed name.

The IRS issues EINs free, through its online application or on Form SS-4, and limits each responsible party to one EIN per day. There is never a reason to pay a service for one. The responsible party is the individual who actually controls the business - for a sole proprietorship, that is the owner.

Note that if you later convert the sole proprietorship to an LLC or a corporation, the new entity generally needs its own EIN; the proprietorship's number does not carry over automatically. Read how to get an EIN and getting an EIN in Minnesota before you apply.

Licenses, Permits, and Local Registration

Minnesota does not issue a single general state business license that every business must hold. Instead, licensing is activity-based and layered: the state licenses specific occupations and regulated activities, counties and cities add their own requirements, and some trades require a professional license before you may advertise at all.

Work through the layers in order. Ask whether your trade is state-regulated - food service, childcare, contracting, cosmetology, alcohol, and health-related services usually are. Then check your city and county for a local business license, zoning approval, or a home-occupation permit if you work from home. Finally, confirm whether a sales tax permit is required for what you sell.

Operating without a required license exposes the owner personally, since a sole proprietorship provides no liability shield to absorb a penalty. See Minnesota business license requirements and the national business license overview for the general framework.

When to Convert to an LLC

The practical trigger for converting is risk, not revenue. A proprietorship is reasonable while the work is low-risk, insured, and small. Once you sign a lease, hire an employee, take on inventory, borrow money, or do work where a mistake could cause real financial harm, the unlimited personal liability of a sole proprietorship becomes the dominant consideration.

A second trigger is how counterparties treat you. Some clients, landlords, and lenders prefer to contract with a registered entity, and a few will not contract with an individual at all. A third is tax planning: an LLC can elect S corporation treatment once profits are large enough for that election to make sense, an option not available to a bare proprietorship.

Converting means forming a Minnesota LLC, moving contracts, licenses, and bank accounts to the new entity, and obtaining a new EIN. Nothing is lost by starting as a proprietor and converting later, but the shield only protects conduct after the LLC exists. Start with forming a Minnesota LLC, then the operating agreement and registered agent requirements.

Minnesota Sole Proprietor Checklist

The steps below cover a typical Minnesota sole proprietorship from first sale to first tax return. Confirm each fee and requirement with the linked agency, since the state adjusts them.

Keep the affidavit of publication, the EIN letter, and copies of every registration in one place. If you later form an entity, you will need all of them, and if a dispute arises over the trade name, the affidavit is the document that settles it.

Frequently Asked Questions

Do I have to register a sole proprietorship in Minnesota?

No formation filing is required - the business exists once you begin operating. But if you do business under any name other than your full legal name, Minnesota Statutes chapter 333 requires you to file a Certificate of Assumed Name with the Minnesota Secretary of State and publish it in a qualified legal newspaper.

What is the publication requirement for a Minnesota assumed name?

After filing the Certificate of Assumed Name, you must publish it for two consecutive issues in the legal notices section of a qualified legal newspaper in the county of your principal place of business. The newspaper returns an affidavit of publication. The Secretary of State warns that failure to publish may render the certificate invalid.

How much does a Certificate of Assumed Name cost in Minnesota?

The Minnesota Secretary of State publishes the filing fee on its assumed name pages, and the amount differs between online and mailed filings. Confirm the current fee there before filing. Publication in a qualified legal newspaper is a separate cost set by the newspaper, not by the state.

Does a Minnesota sole proprietor need an EIN?

Only if the proprietorship has employees, files certain excise returns, or maintains a qualified retirement plan. Otherwise the owner may use a Social Security number. Many owners still get an EIN because banks ask for one and it keeps the Social Security number off vendor forms. The IRS issues EINs free.

Is a sole proprietor personally liable for business debts in Minnesota?

Yes. A sole proprietorship is not a separate legal entity, so the owner and the business are legally the same person. Business debts and judgments reach the owner's personal assets. Forming a Minnesota LLC is the standard way to create that separation for conduct after the entity exists.

How is a Minnesota sole proprietorship taxed?

Federally, profit is reported on Schedule C with Form 1040 and net self-employment earnings on Schedule SE. The same profit flows onto the owner's Minnesota individual income tax return filed with the Minnesota Department of Revenue. Because nothing is withheld, most owners make quarterly estimated payments.

Related

• Sole proprietorship (cluster hub)
• How to form an LLC in Minnesota
• Minnesota DBA filing
• Minnesota business license
• Self-employment tax in Minnesota
• How to get an EIN
• What is a DBA?

Sources

1. Minnesota Secretary of State - Assumed Name / DBA (Certificate of Assumed Name; publication).
2. Minnesota Secretary of State - Legal Newspaper List (qualified legal newspapers by county).
3. Minnesota Secretary of State - Legal Newspapers (two consecutive issues; affidavit of publication).
4. Minnesota Statutes - Minn. Stat. 333.01 (certificate of assumed name).
5. Minnesota Statutes - Minn. Stat. 333.02 (effect of failure to file).
6. Minnesota Secretary of State - Types of Minnesota Businesses.
7. IRS - Sole Proprietorships.
8. IRS - About Schedule C (Form 1040).
9. IRS - About Schedule SE (Form 1040).
10. IRS - Estimated Taxes.
11. IRS - Get an Employer Identification Number (free; one per responsible party per day).
12. IRS - Employment Taxes.
13. Legal Information Institute - Sole proprietorship.
14. Legal Information Institute - Limited liability company (LLC).

LegalGlass provides general information for educational purposes and is not a law firm or a substitute for advice from a licensed attorney or tax professional. Laws, fees, and thresholds change; verify current requirements with the Minnesota Secretary of State and the Minnesota Department of Revenue before acting.