Starting a service business in Minnesota comes down to four things: picking a structure, registering with the state, getting licensed for your trade, and setting up a way to bill customers. Filing an LLC in MN costs $155, ongoing reporting is $0 (annual renewal is free), sales tax is 6.875% + local, and personal income tax runs 5.35%–9.85%. Below is the full sequence, the fees you should budget for, the licenses most trades need, and the deadlines that catch new Minnesota owners off guard.
Most new registrations come out of Minneapolis, Saint Paul, Rochester and the rest of Minnesota — local business licenses are issued at the city or county level, so check yours after the state filing clears.
| Item | MN cost |
|---|---|
| LLC / entity filing (one-time) | $155 |
| Annual / periodic report | $0 (annual renewal is free) |
| Federal EIN (IRS) | Free |
| Sales tax registration | Typically free |
| Trade / professional license | Varies by trade |
| Local business license | Set by city / county |
Fees change — confirm current amounts with the MN Secretary of State and the Minnesota Department of Revenue.
Choose your structure and file with the MN Secretary of State ($155). Get your free EIN from the IRS the same day.
Register for Minnesota sales tax with the Minnesota Department of Revenue, then open a business bank account under the registered name.
Apply for your trade license and local business license. This is usually the longest step: Sales tax permit; Professional license.
Get general liability insurance (and workers' comp before your first hire), then set up estimates and invoicing so you can bill the day you're cleared to work.
LLC Filing Fee
$155
Annual Report
$0 (annual renewal is free)
Sales Tax
6.875% + local
Income Tax
5.35%–9.85%
Choose business structure
File with MN Secretary of State
Get EIN
Register for state taxes
Get local permits
Open business bank account
Annual renewals are FREE — one of the few states with no ongoing filing fees
Minnesota has one of the highest income tax rates
Yes — annual renewal filing is free, making it affordable to maintain your LLC.
Online LLC filings with the MN Secretary of State are typically processed in a few business days, and an EIN from the IRS is issued immediately online. Trade licensing and local permits usually take longest — plan on two to six weeks before you're fully cleared to work, depending on your trade.
No — you can operate as a sole proprietor in Minnesota and still invoice customers legally. An LLC ($155 to file, $0 (annual renewal is free)) separates your personal assets from business liability, which matters most once you're on customer property, hiring help, or signing contracts.
Minnesota sales tax is 6.875% + local. Materials and goods are commonly taxable, while labor treatment depends on the type of work, so bill parts and labor as separate lines and register with the Minnesota Department of Revenue before you start collecting.
Open a business bank account under the registered name, then invoice from a tool that applies MN tax per line item and accepts cards. Glo Invoice sends invoices by text with a one-tap pay link, and Tap to Pay lets you charge on site before you leave the job.