LetsMakeMoneyTips

LLC vs Sole Prop Calculator for Minnesota

What forming an LLC costs in Minnesota (MN), and how the state fee changes the sole proprietor vs LLC + S-Corp comparison.

Minnesota LLC costs

LLC filing fee (one-time)$155
Annual report / franchise fee$0
State fees in the first year$155
Top state income tax rate9.85%

What an LLC costs in Minnesota

Forming an LLC in Minnesota costs $155 in state filing fees. Our data shows no recurring annual state fee, so the ongoing state cost is low — though other costs such as bookkeeping or tax preparation still apply.

Fees change, and some states charge extra for expedited filing, publication or name reservation. Confirm the current amounts with Minnesota's business filing office (usually the Secretary of State) before you file.

Sole prop vs LLC + S-Corp in Minnesota: a worked example

Take the calculator's default numbers — $80,000 of revenue and $15,000 of expenses, so $65,000 of profit — and enter Minnesota's $0 annual fee in the state fee field. The estimated tax is $23,484 as a sole proprietor versus $20,073 as an LLC taxed as an S-Corp: about $3,412 a year in favor of the LLC.

Where the difference comes from: as a sole proprietor, all of your profit is subject to self-employment tax (15.3% on 92.35% of profit). With an S-Corp election the calculator assumes half of the profit is paid to you as a salary that carries payroll tax and the rest is taken as a distribution that doesn't. It then adds Minnesota's fee plus a flat $800 overhead allowance to the LLC side.

In the year you form the LLC, add the one-time $155 filing fee to the fee field too — the first-year saving shrinks by that amount.

These are simplified estimates: a flat 22% federal income tax rate, and a 50/50 salary split the IRS may not accept as a reasonable salary for your work. This is general education, not tax or legal advice — talk to a CPA before electing S-Corp status.

Minnesota income tax and your business

Minnesota's top income tax rate is 9.85%. Because LLC and S-Corp profits usually pass through to your personal return, state income tax generally applies to the profit under either structure — so the calculator leaves it out and the comparison comes down to self-employment tax versus fees.

Some states also charge entity-level taxes or minimum fees on LLCs or S-Corps, so check Minnesota's rules for the structure you choose.

Open the LLC vs Sole Prop Calculator to run your own numbers.

Other states for LLC vs Sole Prop Calculator