Corporation All corporations must: • Comply with laws and regulations applicable to their industry • Follow specific statutory procedures for dissolution • Navigate generally more complex tax laws than proprietorships or partnerships
Additional Requirements for Corporations Issuing Securities If your corporation issues registered securities, you must: • Make periodic filings with state and federal regulators • Comply with ongoing reporting requirements • Follow complex securities regulations
TAX CONSIDERATIONS IN CHOOSING THE FORM OF ORGANIZATION
This section of the guide explains the major tax considerations for different business structures in Minnesota. Tax laws are complex—consult a qualified tax advisor for advice specific to your situation. How to Use This Guide This section helps you understand how federal and Minnesota taxes work for different business structures. Quick takeaway • Minnesota generally follows federal rules for how your business entity is taxed, including how LLCs choose their tax classification. • Most small businesses are “pass-throughs” (sole proprietors, partnerships, S corps, or LLCs taxed as those), meaning profits flow to the owners’ personal tax returns. How Minnesota treats each entity Sole Proprietorship The owner is the taxpayer, and business income is reported on the owner’s individual return. This is the case for both federal and Minnesota tax purposes. Partnerships The partnership itself is not a taxable entity. The partnership serves as a conduit through which income, deductions and credits are passed through to the individual partners. Each partner is taxed on his or her share as defined in the partnership agreement. All income of the partnership
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