Understanding Small Business Definitions
According to the Small Business Administration, a small business employs fewer than 500 employees. However, over 94 percent of businesses in Minnesota are much smaller, employing less than 50 employees. In addition, the U.S. Census Bureau reports that Minnesota is also home to over 397,000 non-employer businesses or those residents who are self-employed. Together, there are over 500,000 businesses in Minnesota with 0-499 employees, the vast majority. In 2016 small businesses were responsible for 52 percent of private jobs overall and nearly 60 percent of those in Greater Minnesota.
Most manufacturing companies with 500 employees or fewer, and most non-manufacturing businesses with average annual receipts under $7.5 million, will qualify as a small business. For statistical purposes, the Australian Bureau of Statistics (ABS) defines an entity employing less than 20 employees as an SME, and a medium-sized business as a business employing between 20 and 199 employees. While the SME meaning defined by the EU is also business with fewer than 250 employees, and a turnover of less than €50 million, or a balance sheet total of less than €43 million.
According to the definition given above, micro businesses are entities that are commercializing some skill or product idea and making money out of it, but are overall smaller than small businesses.
- Microenterprise: 1 to 9 employees.
- Small business: 10 to 49 employees.
The purpose of this paper is to define a small business in measurable terms.
Small Business Ecosystem in Minnesota
Minnesota may not have the largest economy or most notable corporate entities out of all 50 states, but what it does have is a strong and solid business ecosystem for businesses both large and small. There are many incredibly useful resources at the state’s disposal, with the sole focus on supporting small businesses and those just starting out. Small Businesses thrive in Minnesota because of its manageable state tax burden, an ever-growing and stable economy, readily available office space and other commercial space, a highly skilled workforce, and multiple cooperative laws suitable for businesses in most industries.
You can obtain a business license in Minnesota by applying with the relevant licensing or regulatory agency. The agency you apply with will depend on where your business is located and what business activities it engages in.
In Minnesota, businesses need certain licenses and permits to legally operate as a business. The regulatory hurdles required vary depending on the type of business, its location, and the products and services offered. Business licenses and permits are issued to certify that a business and its products and services are safe for the public.
Starting an LLC in Minnesota
If you are still wondering where to open an account for your small business in Minnesota, you should check the Best Bank for Small Business in Minnesota. Certain steps are necessary to establish a legal business presence:
- Get a business license in Minnesota before establishing your LLC.
- Conduct a name search on the Secretary of State’s website to ensure your business name is unique.
- The business name cannot contain words that suggest a governmental agency or certain restricted terms (bank, lawyer, attorney, credit union, etc.) without additional documentation and licensure paperwork.
- Draft a Minnesota LLC operating agreement during the business planning phase.
- Obtain an EIN for your LLC in Minnesota.
- Submit a Minnesota annual renewal report for your business; remember that there’s no fee for your Minnesota LLC’s annual renewal, but you’ll have to pay taxes on the income from your LLC.
Job growth occurred across Minnesota in 2016, indicating quality business opportunities due to the state’s business-friendly climate. There are current legislative opportunities to improve the climate further by updating regulations and taxes.