Learn About Minnesota Business Law

Minnesota business law covers a wide range of topics including business formation, contracts, advertising, bankruptcy and employment law.  These are all topics that the business owner will eventually encounter when starting or running a business.  A Minnesota business owner will also encounter a myriad of regulatory issues when running a business such as required licenses from municipalities, the state of Minnesota, and in some instances, the U.S. Government.


In Minnesota, the requirements vary depending upon the industry.  For instance, a heath care provider must obtain required licenses from the Minnesota Department of Health before they can start and run a health care related business.  Similar restrictions on starting a business can be found for most industries.  It is important to find a Minnesota business lawyer who is familiar with these requirements to allow the business owner the time to focus on running the business, not dealing with government regulations.  Frequently, it is far cheaper and easier to prevent a problem from happening than it is to fix the problem after it has occurred.

Minnesota Business Formation

When forming a Minnesota business, there are several different business entities to choose from including: 


The choice of business entity will determine the amount of personal liability, the allocation of profits and losses for the entity, the transferability of ownership interests, the duration of the entity and tax considerations for the business.  It is always a good idea to review the options with a Minnesota business law lawyer. 

Minnesota Contract Law

The typical transaction between business entities involves contracts.  Contracts are usually done in writing, but can also be done orally.  In most business situations, it is important to have a properly drafted contract to protect your rights and set out your obligations under an agreement with another party.  A well-drafted contract will create clear obligations for both parties involved in negotiating the deal.  A Minnesota business lawyer can assist with such agreements

Most of the time, business transactions go smoothly between parties even without an elaborate contract.  However, the times when you appreciate a well-drafted contract are those instances where business transactions do not go smoothly.  Although it is also true that most contracts contain a great deal of “boilerplate” contract language, the important part of any contract is the non-boilerplate portion of the contract, which may only comprise 10% of any given agreement.  It is important to find a Minnesota business lawyer to draft or review that 10% of the contract that could make or break your company should a dispute arise regarding the contract.

Minnesota Business Taxation

Minnesota business taxation is typically governed by the U.S. Government and IRS regulations.  A business owner has a number of choices regarding how their business is taxed and how they organize the entity.  The entity can be set up as a sole proprietorship, partnership, C or S Corporation or limited liability company (LLC).  One of the most important factors when incorporating a Minnesota business is how the entity will be taxed.  Business taxation is a very complex area of law, and a Minnesota business lawyer should be consulted to provide guidance on how to organize the business.

Minnesota Corporate Dissolution

A Minnesota Corporate Dissolution can be voluntary dissolution by the directors, court supervised dissolution, and involuntary court-ordered dissolution.  It is a relatively simple process for a corporation to dissolve in Minnesota if the corporation has not issued any shares and does not have any unpaid debt.
If the corporation has issued shares it needs shareholder approval, a notice of meeting, must file a notice of intent to dissolve, and start winding down the corporation.  The wind-down process is much smoother if the corporation can pay all claims as they come in after notice is provided to creditors.  A Minnesota corporation can be dissolved by giving notice to creditors and claimants or without giving notice.  The main difference in the two approaches is the amount of time provided to creditors to file claims against the dissolving corporation.  Minnesota laws governing dissolution in some cases are complex and a Minnesota business lawyer should be consulted before beginning the dissolution process.

Minnesota Employment Law

It is important when running a business to know about Minnesota employment law and how that will affect your decision to hire or fire employees.  Some of the basic requirements when deciding to hire employees are the obligation to pay payroll taxes, provide employee benefits, comply with state and federal wage laws, and keep your workplace discrimination-free.  (A number of companies provide payroll services to employers.)  The advantage of having an employee is that the business owner has more control over the hours worked, training, and how the work is performed for the business.

The alternative to hiring employees is finding independent contractors to work for your organization.  This arrangement may save the employer from some of the payroll taxes associated with hiring employees.  The downside is that you need to hire someone who is interested in independent contract work and does not want regular full time employment.  Otherwise, the independent contractor may leave your organization after you’ve invest time training them for the job. The other important issue for employers is making sure they are not treating independent contractors like employees.  A number of different tests exist to determine how to classify the relationship you have with your employee/independent contractor.  This is an important distinction for taxes, worker’s compensation, unemployment benefits and employer taxes.  These tests are complicated and an employment law lawyer should be consulted if you have any questions regarding how to characterize your employees.  If you need assistance, a Minnesota business lawyer can refer you to an expert.

Minnesota Business Law Collections

With any Minnesota business it is important to stay on top of your accounts receivables, which are the uncollected payments due to your company.  If a customer is not paying their invoices in a timely manner, it could indicate a problem with their finances and they should be contacted immediately regarding the unpaid balance.  The longer an account is unpaid the less chance the business owner has of receiving any money.
 
A business owner should set up a relationship with a Minnesota business law firm to collect on past due bills and have a procedure in place once a bill becomes over 30 days past due.  If a business owner takes prompt action in regards to their overdue accounts, it gives them a better chance of collecting the money.  In some cases a simple phone call and letter will settle an overdue account with a customer.  If the letter does not elicit a response it is sometimes necessary to file a lawsuit to collect the overdue bill.  Once a judgment is obtained against the debtor, the business owner is in a much better position to collect the debt.  The judgment allows the lawyer for the business owner to garnish bank accounts and wages, and lien real property belonging to the debtor.  In some instances this may be the only way to collect the money owed.

Minnesota Mergers and Acquisitions

A Minnesota business planning a merger or acquisition needs to be aware of the complexities involved in the process.  The merger has to provide fair valuation for shareholders.  The old rule was the “business purpose” rule.  This rule has been abolished by the Minnesota Legislature.  In Minnesota, the remedy for a dissenting minority shareholder in a merger is a getting a statutory appraisal conducted to determine if the valuation of the business is fair.

Recent shareholder lawsuits have prompted boards of directors to be more cautious when corporations are planning on merging.  The directors of a Minnesota corporation have to avoid conflicts of interests and the requirements are promulgated in Minnesota Statute Sec. 302A.255.  One of the ways in which directors run into trouble with the conflict of interest requirement is when they have a “material financial interest” in the outcome of a merger.  This financial interest is extended not only to the director, but also to the director’s spouse, parents, children, spouses of children and siblings.  A Minnesota business lawyer should be contacted before your company decides to merge or acquire another company.  This is a complex area of the law and care must be taken to avoid conflicts of interest and ensure that fair valuation is received for all shareholders.