Starting a business in Minnesota is exciting, but it also means having the right paperwork in place.
And one of the first things new entrepreneurs should look at is licensing.
Unlike some states, Minnesota doesn’t have a one-size-fits-all license. Instead, the licenses and permits you need depend on your city, county, and industry.
Then you have to consider Minnesota business license costs, which are also not the same across the board.
For most small businesses, you can start with a local license from your city or county office.
Beyond that, many industries, like contractors and food services, need other state-level permits that come with their own fees.
Even home-based or online businesses often need some form of license to make sure they’re tax compliant.
A universal Minnesota business license is not required by the state, but nearly every business owner will need a license of some kind.
Let’s take a look at how that all works:
Do you need a business license in Minnesota?
The answer depends on what kind of business you’re starting and where you’re located.
Most businesses will need at least one license through the city or county where they operate.
But what makes Minnesota unique is the sheer variety of licensing offices.
While some states centralize licensing, in Minnesota, you’ll often need to work with multiple agencies depending on your business activities.
This system can feel overwhelming at first, but once you know which offices handle your type of business, the process is pretty straightforward.
How much does a business license cost in Minnesota
Licensing costs always vary, and figuring out how much a business license costs in Minnesota depends on your location and industry.
Nearly every city or county has its own fees, and state-level permits can add to the total.
In many smaller areas, a local license may only cost you between $25 and $50 a year.
In larger cities, like Minneapolis or Saint Paul, fees are often higher and may reach $200 or more, depending on the type of business.
And certain professions are regulated by the state board, meaning that they have to pay additional licensing fees that can range from $50 to several hundred dollars.
Here are some things that can affect the final cost:
- City vs. county: Fees differ across jurisdictions, with urban areas generally charging more.
- Business structure: A solo operator may pay less than a corporation with multiple employees.
- Industry type: Heavily regulated professions almost always carry higher fees.
- Business size: Some cities tie fees to the number of employees or your annual revenue.
Pro Tip
Before you apply for a license, call your city clerk’s office and ask them what supporting documents they need (like proof of insurance or zoning approval). Catching these details early saves time!
Types of businesses licenses in Minnesota and their cost
Because Minnesota doesn’t have a single license that fits every business, it’s important to know which applies to you before you get started.
You may need approvals at the city, county, state, or even federal level, depending on what you do and where you operate.
City business license
Most Minnesota cities require a local business license, often called a general business or operating license.
This is handled by the city clerk or licensing division and covers things like sales, services, and tax registration.
County business license
Counties may also require a license, especially if you’re operating in an unincorporated area or running a business that affects the county directly (like food service or health-related services).
State-level permits
Many industries are regulated by the Minnesota state boards or agencies.
Contractors, barbers, medical professionals, child care providers, and food-related businesses often need additional state-level permits.
Federal licenses
Federal permits only apply to businesses in industries that are regulated nationally, like broadcasting, firearms, aviation, or transportation.
Most small businesses won’t need one.
Cost breakdown
| License Type | Issued By | Purpose | Typical Cost Range |
| City business license | City clerk or licensing division | Required for most businesses within city limits | $25-$200 annually |
| County business license | County offices | Required in most counties | $25-$150 annually |
| State-level permits | MN state boards or agencies | Industry-specific | $50-$500 depending on the field |
| Federal licenses | Federal agencies | Regulated industries | Often several hundred+ |
Examples of different industries and the licenses they require in Minnesota
If you’re looking to start a business in Minnesota, the licenses you’ll need depend on what you’re offering.
For example, a retail shop or online store usually needs a city license and a sales tax permit to handle customer transactions.
A sales tax permit is the registration that allows your business to collect and send sales tax to the state on taxable goods or services.
Personal service providers, like barbers or nail techs, have to be licensed through the state board to ensure public safety and professional standards.
Contractors have to have a license from the Minnesota Department of Labor and Industry before bidding on projects.
Even small, home-based businesses may require a local license to track activity for tax purposes.
Business license requirements in Minnesota are layered and industry-specific, so make sure you check with city and state offices before you reply.
Renewing your business license in Minnesota
Once you’ve gotten your business license, it’s important to keep it current. These licenses have to be renewed every year (even though some industries may have different timelines).
Renewal fees are usually around the same as the original cost, but they can go up if new requirements are introduced.
And if you miss a deadline, you may end up with a late penalty or a suspended license until the renewal is complete.
That’s why it’s important to pay attention to this due date so you can avoid the hassle of penalties or business interruptions!
Conclusion
Minnesota business license costs depend on your location, industry, and business model.
But nearly every small business owner and entrepreneur will need at least one license before opening their doors.
Planning ahead for these expenses will keep your business legal and avoid any costly fines.
If you’re not sure which licenses apply to your business, you don’t have to figure it out alone, we at Tailor Brands are always here to help you along the way!
FAQ
Yes. E-commerce and home-based businesses often need a local license, and if you sell taxable goods, you must also register for a Minnesota Sales and Use Tax Permit.
Most will, yes. Even very small or home-based businesses usually need a local small business license in Minnesota, though the exact requirements vary by city, county, and industry.
You can apply through your city or county office for a local license. If your industry is regulated, you’ll also need to file with the appropriate state board or agency.
Local licenses can take a few days to a couple of weeks. State-level licenses may take longer if exams, inspections, or background checks are required.
Yes. Forming a Minnesota LLC does not replace the need for local or industry-specific licenses.
No. An LLC is a business structure, while a license gives you legal permission to operate.
You could face fines, penalties, or be ordered to stop operating. Regulated industries risk additional consequences, such as losing the ability to apply for permits in the future.