How to Start an Online Store in Minnesota: Sales Tax Nexus at 200 Sales or $100,000

Minnesota does not issue a general business license, so selling online here is one of the simpler ways to start a business. You still have to file a few things in the right order, and the one that catches most sellers is sales tax. This guide covers how to start an online store business in Minnesota, from choosing a legal structure to knowing when an out-of-state seller must start collecting Minnesota sales tax.

Informational only: This article explains Minnesota rules for general planning. It is not legal or tax advice. Entity choice, sales tax collection, and privacy obligations depend on your facts, so talk with a qualified attorney or CPA before you file or make your first sale.

What You Need Before You Start

Gather these items before you begin. Most of them take little time to get, but several filings depend on each other, so having them ready prevents restarts.

• A business name you have checked against Secretary of State records
• A decision on legal structure: sole proprietorship, LLC, or corporation
• A Minnesota business street address for your registered office, if you form an LLC or corporation (a PO box alone is not accepted)
• A federal Employer Identification Number from the IRS
• A Minnesota Tax ID and sales and use tax account from the Department of Revenue
• A business bank account in the entity's name, kept separate from personal funds
• A written list of products with cost, weight, and shipping dimensions
• An e-commerce platform account, with its built-in tax settings reviewed
• Order records that show the ship-to state for every sale, so you can measure sales into Minnesota

Step 1: Choose Your Legal Structure

Your structure decides what you file, what you renew each year, and how income is taxed. For a one-person online store, the choice usually comes down to liability protection and tax treatment, which is a question for a CPA or attorney.

Sole proprietorship

If you sell under your own legal name, you do not file anything with the Secretary of State to start. If you want to sell under a different name, you must file a Certificate of Assumed Name (see Step 2).

Limited liability company (LLC)

An LLC is formed by filing Articles of Organization under Minnesota Statutes Chapter 322C. The filing fee is $155 for online or in-person filings, which are processed as expedited service. Mail filings cost $135 and are not expedited. The Secretary of State does not publish a guaranteed turnaround in business days, so plan for lead time.

Your LLC name must include the words “limited liability company” or the abbreviation “LLC.” It may not contain “corporation,” “incorporated,” or their abbreviations, and it must be distinguishable from every domestic LLC, LLP, corporation, and limited partnership on file in Minnesota.

Every LLC must have a registered office at a Minnesota street address. It does not have to match your principal place of business. Naming a registered agent is optional for a Minnesota LLC. An LLC does not need to publish a notice when it forms.

Minnesota has no separate LLC franchise tax. An LLC taxed as a partnership or disregarded entity passes income through to its owners, who pay the individual income tax rates of 5.35 to 9.85 percent. An LLC that files federally as a C corporation pays the 9.8 percent corporation franchise tax instead.

Corporation

A corporation is formed by filing Articles of Incorporation under Minnesota Statutes Chapter 302A, with a $155 filing fee. Like an LLC, it does not publish a notice at formation. A C corporation pays the 9.8 percent corporation franchise tax. Minnesota also sets a minimum fee for C corporations, S corporations, and partnerships. Single-member LLCs that report only on the member’s individual return are exempt. Confirm the amount that applies to you with the Department of Revenue.

Step 2: Check Your Name and File What You Need

Start by searching the Minnesota Business and Lien System at mblsportal.sos.mn.gov to see whether your name is available. If you need time to finish your paperwork, you can reserve a name for 12 months for $55. Reservations renew for additional 12-month periods. The reservation form is at the Secretary of State’s name reservation PDF.

If you sell under a name that is not your legal name or your entity name, you need a Certificate of Assumed Name (commonly called a DBA) under Minnesota Statutes Chapter 333. Here is what it involves:

• Fee: $50 if you file online or in person, or $30 by mail.
• Where: The Secretary of State, Business Services. Details are at the assumed name page.
• Publication: After filing, the certificate must run for two consecutive issues in the legal notices section of a qualified legal newspaper in the county of your principal place of business. If you skip publication, the certificate may be invalid.
• Renewal: Renew each year. Renewal is free.

Filing with the Secretary of State is a filing, not a license. It creates your legal entity or registers your name, but it does not authorize you to sell any particular product.

Step 3: Register With the Department of Revenue Before Your First Sale

Before you make any taxable sale, register with the Minnesota Department of Revenue for a Minnesota Tax ID and a sales and use tax account. Registration is done online through the Revenue new business registration page. Registration with Revenue is not a license.

Check with Revenue for the account type that fits your store and for the steps to set up a resale certificate. You will need one if you buy inventory tax-free because you plan to resell it. Ask Revenue how your shipping and handling charges are treated, since the answer affects how you set up your checkout.

The Minnesota state sales tax rate is 6.875 percent. Local taxes are added on top, and they depend on where the buyer is located. Your platform may calculate local rates for you, but you still need to confirm the settings and keep records. The main Revenue site is at revenue.state.mn.us.

Step 4: Check Licenses by Product and Location

Minnesota has no general statewide business license. Whether you need a license depends on what you sell and how you make or handle it. Licenses and permits are issued by individual agencies by trade or activity. The state’s central lookup is License Minnesota at mn.gov/elicense, where you can browse by topic, by agency, or through an A to Z index.

The agencies you are most likely to encounter include:

• Department of Labor and Industry (DLI)
• Minnesota Department of Health (MDH)
• Minnesota Department of Agriculture (MDA)
• Alcohol and Gambling Enforcement Division
• Office of Cannabis Management
• Department of Children, Youth, and Families (DCYF)
• Minnesota Department of Transportation (MnDOT) and Driver and Vehicle Services (DVS)
• The professional licensing boards for regulated services

Selling alcohol, cannabis, or food products each has its own process, and the agency that applies depends on the specific product. Check with the agency or through License Minnesota before you list a regulated product.

Local rules add another layer. Minnesota has 87 counties, about 853 cities, and about 1,780 townships, and local requirements vary. Minneapolis and St. Paul license by category, and neither issues a general business license. If you store inventory or ship from home, check your local zoning rules before you start.

Step 5: Understand Sales Tax Nexus at 200 Sales or $100,000

This is the rule that matters most for an online store, and it has two parts depending on whether you have a place of business in Minnesota.

If you have a place of business in Minnesota

A home office, a warehouse, or inventory held in the state can create a Minnesota place of business. If your setup does, you generally collect Minnesota tax from your first taxable Minnesota sale rather than waiting for a threshold. Confirm this with Revenue before you rely on it.

If you have no place of business in Minnesota

A remote seller or marketplace provider with no Minnesota place of business must collect Minnesota tax once it makes or facilitates 200 or more retail sales into Minnesota, or more than $100,000 in retail sales, in the prior 12 months (Minn. Stat. 297A.66). You must register and begin collecting within 60 days of passing the threshold.

Sales made through a marketplace that collects tax on your behalf do not need to be collected again by you. They still count toward both thresholds. The table below shows how each type of sale is treated.

Type of sale	Counts toward the 200-sale or $100,000 test?	Do you collect Minnesota tax on it yourself?
Direct sales from your own website to Minnesota buyers	Yes	Yes, once you pass the threshold
Sales through a marketplace that collects tax for you	Yes	No, the marketplace collects the tax
Sales shipped to buyers outside Minnesota	No	Not for Minnesota tax

Here is a simple example. Suppose you make 150 direct sales to Minnesota buyers and 60 marketplace sales to Minnesota buyers in the prior 12 months. That is 210 sales into Minnesota, which passes the 200-sale test even though the marketplace collected the tax on its 60 sales. You would need to register and start collecting within 60 days of passing the threshold.

Because the test looks back over the prior 12 months, you need a running count, not a once-a-year check. Tag every order with its ship-to state, and review the count each month. Ask Revenue whether the 200-sale count is based on orders or on individual items, and how orders with multiple shipments are counted.

Step 6: Show Prices the Minnesota Way

Minnesota’s price transparency law (Minn. Stat. 325D.44, subd. 1a, in effect since January 1, 2025) requires advertised prices to include mandatory fees. It does not require government taxes to be included in the advertised price.

For example, if you sell a $40 product and charge a required $5 handling fee on every order, the advertised price should be $45. Sales tax can then be added at checkout. Optional add-ons, such as gift wrap that the buyer chooses, are not mandatory fees. Review your product pages and checkout flow together so the advertised price and the final price match.

Step 7: Plan for Customer Data Privacy

The Minnesota Consumer Data Privacy Act (Minn. Stat. 325M.10 to 325M.21) took effect July 31, 2025. It applies to controllers that handle the data of 100,000 or more consumers, or 25,000 or more consumers if more than 25 percent of revenue comes from selling personal data.

Small businesses, as the U.S. Small Business Administration defines them, are generally exempt. There is one important exception: a small business may not sell sensitive data without consent (325M.17). Whether your store qualifies as a small business under the SBA definition is a question to confirm with an attorney. Even if you are exempt, a clear privacy policy that explains what you collect and why is a practical step for any online store.

Step 8: Set Up Your Store and Records

• Test your tax settings. Place a test order with a Minnesota shipping address and confirm that the state and local tax lines look right. Repeat the test for a non-Minnesota address.
• Keep sales records by destination. Export order data monthly with ship-to state, tax collected, and marketplace status. You will need these records for the nexus count and for your sales tax filings.
• Keep business and personal money apart. Use the business bank account for all store income and expenses.
• Ask an insurance agent what coverage a product-selling business in your situation typically carries before you start shipping.

Step 9: Calendar Your Deadlines

• December 31 each year: Annual Renewal for an LLC or corporation. The fee is $0 if the entity is active and in good standing. If you miss the date, an LLC is terminated or revoked without further notice, and reinstatement costs $65 by mail or $85 online or in person. A corporation is dissolved without further notice if it misses the date, and you should confirm its reinstatement fee on the Secretary of State’s fee schedule.
• Each year for a DBA: Renew the Certificate of Assumed Name. Renewal is free.
• Within 60 days of passing the remote seller threshold: Register and begin collecting.
• Your sales tax filing schedule: Revenue assigns your filing frequency when you register. Put those dates on your calendar as soon as you receive them.

Tips for a Smoother Launch

• Register with Revenue and check your name before you buy inventory or a domain, so you do not pay for branding you cannot use.
• Choose a platform that shows ship-to state on each order. Many sellers struggle later because their order exports do not include it.
• Set a monthly calendar reminder to check your 12-month Minnesota sales count.
• Talk with a CPA before you pick an entity, especially if you expect profits in the first year.

Common Mistakes to Avoid

• Treating the Secretary of State filing as a license. An LLC or DBA does not authorize regulated sales.
• Skipping DBA publication. A DBA that is not published may be invalid.
• Using a PO box as the registered office. An LLC or corporation needs a Minnesota street address.
• Ignoring marketplace sales in the count. Marketplace sales that the marketplace taxes still count toward the 200-sale and $100,000 tests.
• Waiting until year end to count sales. The test uses the prior 12 months, and the 60-day registration clock starts when you pass it.
• Putting taxes in the advertised price. Minnesota requires mandatory fees in the advertised price, but government taxes are added at checkout.
• Assuming the platform handles everything. Your platform may calculate tax, but you are responsible for registration, filings, and records.

Expected Results

If you complete these steps in order, you may end up with a legal entity or registered name, a sales tax account, a documented list of licenses you checked, and a tracking process for the nexus test. These steps can make your launch easier to manage and reduce the chance of an unplanned tax bill or a lapsed filing. They do not guarantee sales, and results depend on your products, pricing, marketing, and the rules that apply to your specific business.

Official Resources

• Minnesota Secretary of State
• Business Filings Online (Minnesota Business and Lien System)
• Minnesota Department of Revenue
• Revenue new business registration
• License Minnesota
• Minnesota Small Business Development Center Network
• U.S. Small Business Administration, Minnesota district

For questions that depend on your products, entity, or sales volume, confirm the details with the agency or with a qualified attorney or CPA before you act.