How to Start a Used Car Dealership in Minnesota: DVS Dealer License, Bond and Dealer Plates

If you want to sell used vehicles to the public in Minnesota, the approval you need comes from Driver and Vehicle Services (DVS). Minnesota does not issue a general business license, so the path to a minnesota used car dealer license is a DVS motor vehicle dealer license under Minn. Stat. 168.27, backed by a corporate surety bond, proof of insurance, a background check, a qualifying building and a plan for dealer plates. This guide walks through those pieces in the order most new dealers find easiest to handle.

This article is informational content, not legal or tax advice. DVS rules, fees and forms can change, so confirm every figure on the agency's current pages before you file or sign a lease. If you have partners, financing or a complicated ownership structure, talk with a Minnesota attorney and a CPA before you commit money.

What you need before you start

Gather these items before you open a single application. Most delays happen when a dealer starts a filing and then finds that one document is missing.

• A business entity, if you plan to use one. Most owners form an LLC or corporation with the Minnesota Secretary of State (SOS). That filing is not a license, but the entity's legal name needs to match what you put on your DVS paperwork.
• A federal Employer Identification Number (EIN) and a Minnesota Tax ID from the Department of Revenue.
• A corporate surety bond of $50,000 for most dealers.
• Proof of the insurance required under Minnesota Statutes chapter 65B.
• A fingerprint-based background check. Ask DVS who must submit prints and how to do it.
• Documents showing a commercial building you own or lease, with office space and posted business hours.
• Money for the DVS application fees: $100 initial and $150 annual.

Fees at a glance

The table below lists every fee in this guide that has a verified figure. Where a fee is not listed, confirm it on the agency page before you budget for it.

Item	Cost	Notes
LLC Articles of Organization	$155 online or in person; $135 by mail	Online and in-person filings are expedited; mail filings are not
Corporation Articles of Incorporation	$155	Filed with the Secretary of State
Certificate of Assumed Name (DBA)	$50 online or in person; $30 by mail	Must be published; renewed annually at no charge
Annual Renewal (LLC or corporation)	$0	Due December 31 every year
DVS initial dealer application fee	$100	Minn. Stat. 168.27
DVS annual dealer fee	$150	Minn. Stat. 168.27, subd. 11
Corporate surety bond	$50,000 coverage	The premium is set by the surety company, not the state
Dealer plates	$75 per registration year for each of the first four plates	Confirm the cost of any plates beyond four with DVS

Step 1: Form your entity and check the name

Most used car dealers form a limited liability company. The Articles of Organization are filed under Minnesota Statutes chapter 322C for $155 online or in person, or $135 by mail. The name must include the words 'limited liability company' or the abbreviation 'LLC'. It may not include 'corporation' or 'incorporated' or their abbreviations, and it must be distinguishable on the Secretary of State's records from every domestic LLC, LLP, corporation and limited partnership already on file, authorized, registered or reserved in Minnesota (Minn. Stat. 322C.0108). Search the Minnesota Business Search before you pick a name.

If you need time to settle on a name, a name reservation costs $55 and lasts 12 months, renewable for additional 12 month periods. The filing requires a registered office: a Minnesota street address, since a PO box by itself is not accepted. That address does not have to match your lot.

An LLC needs no newspaper publication. Its yearly filing, the Annual Renewal, costs $0 but is due December 31 every calendar year. If you miss it, the LLC is terminated or revoked without further notice under Minn. Stat. 322C.0705. On the current Secretary of State fee schedule, reinstatement costs $65 by mail or $85 online or in person, so confirm those amounts before you rely on them.

Tax treatment depends on how you file federally. An LLC taxed as a partnership or disregarded entity passes income to its owners, who pay Minnesota individual income tax at 5.35 to 9.85 percent. An LLC that files as a C corporation pays the 9.8 percent corporation franchise tax, plus the minimum fee under Minn. Stat. 290.0922. A CPA should help you choose.

Expected result: once the Secretary of State accepts the filing, you have a legal entity on record. That record is a filing, not a license, and on its own it does not let you sell vehicles.

Step 2: File a DBA if you will trade under another name

If the lot will operate under a name other than your entity's legal name, file a Certificate of Assumed Name with the Secretary of State under Minnesota Statutes chapter 333. It costs $50 online or in person, or $30 by mail. Filing is not enough by itself. The certificate must be published for two consecutive issues in the legal notices section of a qualified legal newspaper in the county of your principal place of business, and failure to publish may make the certificate invalid. The certificate must be renewed annually at no charge. Use the assumed name page on the SOS site for current forms.

Choose the name once and use it everywhere: the entity, the DBA, the bond, the insurance policy, the DVS application and your signage. Mismatched names are one of the most common reasons a complete-looking file gets sent back.

Step 3: Register with the Department of Revenue

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 with Revenue is a tax registration, not a license. Start the process through the Revenue new business registration page.

The state sales tax rate is 6.875 percent, and local taxes are added on top. How vehicle sales tax is collected and remitted when a car is titled and registered is a separate question. Confirm it with Revenue and DVS before your first sale, because the rules that apply to your sales depend on how the transaction is handled.

Step 4: Check local zoning and city rules

Minnesota has 87 counties, about 853 cities and about 1,780 townships. Because the state has no general business license, local rules matter. Cities and townships control zoning and license their businesses by category, and Minneapolis and St. Paul both license by category without issuing a general business license. Ask the city or township whether a used car lot is a permitted use at the address you are considering. Zoning is often the step that stops a project, so ask before you sign a lease, not after.

To see what licenses the state requires for other parts of your business, search the state's central lookup, License Minnesota. It sorts requirements by topic, agency and an A to Z index.

Step 5: Secure a qualifying building

A retail used car dealer needs a commercial building that is owned or leased for at least one year, with office space and posted business hours. Wholesalers, brokers and lessors may use qualifying office space instead. This is the requirement most would-be dealers misread. The building must be owned or leased for at least one year, so ask DVS directly whether a lease you sign this month meets it before you commit to the space.

Common mistake: signing a lease, buying a lot or setting up signage before DVS has confirmed that the building qualifies. That is the most expensive way to find out that a location does not work.

Step 6: Buy the surety bond

Most dealers must post a corporate surety bond of $50,000. Certain trailer, snowmobile and similar dealers post $5,000. The bond is conditioned on faithful performance, taxes and fees, so it protects the state and the public if the dealer does not meet those obligations. It is a bond, not insurance for your business, and you should not assume it covers your own losses.

The state sets the bond amount, but the surety company sets the price. Get quotes from several surety providers before you commit. Premiums are often influenced by your credit history and business experience, so ask how the underwriter will evaluate your file and what documents they need.

Step 7: Arrange the required insurance

DVS requires proof of insurance under Minnesota Statutes chapter 65B. Ask an insurance agent to write coverage that matches the dealer license you are applying for and to issue the proof DVS needs. Do not assume a general commercial policy satisfies the requirement, and confirm the exact certificate format with DVS before you submit the application.

Step 8: Submit the DVS dealer application

The Minn. Stat. 168.27 license covers several classes, including new, used, broker, wholesaler, auctioneer and lessor. For a used car lot, you apply in the used dealer class. Bring the full package at once: the entity documents, your EIN and Minnesota Tax ID, the bond, the insurance proof, the fingerprint background check, the building documents and the $100 initial application fee.

If the application is approved, DVS issues a 90 day temporary license, and then inspects your site. Plan the lot, office and posted hours so they are ready for that inspection during the 90 days. Expect the inspection, not the temporary license, to be the point where you are actually cleared to operate as a dealer. Ask the agency for current timing before you schedule a launch date.

The isolated sale exception: a seller who makes isolated sales of not more than five vehicles in 12 months does not need a dealer license. The sixth sale in that 12 month window is where the license requirement applies. If you are testing the market with a few cars, keep a written count and confirm with DVS how the exception applies to your situation.

Step 9: Plan for the annual fee and renewals

After the initial $100 application fee, the DVS annual dealer fee is $150. If both fees fall in your first year, which DVS should confirm, the state fees for the items in this guide add up to $705 with four dealer plates: $155 for the LLC, $100 for the DVS application, $150 for the annual fee and $300 for four plates at $75 each. That total excludes the bond premium, insurance, rent, city fees, the DBA, taxes and your vehicle inventory.

Keep the bond and insurance in force through the life of the license. A lapse in either one can put your license at risk, so set a calendar reminder for each renewal date. Set a separate reminder for the LLC Annual Renewal, due every December 31.

Step 10: Budget for dealer plates

Dealer plates cost $75 per registration year for each of the first four plates. Budget for that cost every year you hold the plates. The fee for plates beyond the first four is not covered here, so ask DVS before you order a fifth plate or assume the same price applies.

Common mistakes to avoid

• Treating the SOS filing as a license. Forming an LLC gives you a legal entity. It does not give you permission to sell vehicles.
• Assuming a statewide business license exists. Minnesota does not issue one. Check License Minnesota, your city and DVS for what applies to you.
• Signing a lease before confirming the building rule. Get DVS to confirm the one year requirement and the city to confirm zoning first.
• Using different names across filings. The entity, the DBA, the bond, the insurance and the DVS application should match.
• Skipping DBA publication. A DBA that is not published may be invalid.
• Missing the December 31 LLC renewal. A missed renewal can lead to termination or revocation without further notice.
• Making a sixth sale in 12 months without a license. The isolated sale exception stops at five vehicles.
• Shopping for the bond last. The state sets the amount, but the premium is set by the surety, so start early.
• Forgetting the annual fee and plate costs. Put the $150 annual fee and the per plate cost into your first year budget.

What to expect when it goes well

If the entity, bond, insurance, building, fingerprints and fees are all in order when you file, the most likely path is a 90 day temporary license followed by a site inspection. Once you pass that inspection and receive the full license, you are positioned to operate as a licensed used car dealer in Minnesota. Your sales volume, margins and time to profitability depend on your market, your inventory and your choices, and nothing in this guide promises any particular result.

Official resources

• Minnesota Secretary of State: entity filings, name checks and DBA forms
• Business Filings Online (MBLS): search and file with the Secretary of State
• Minnesota Department of Revenue: Tax ID, sales tax and corporate tax
• License Minnesota: the state's central license lookup
• Minnesota Small Business Development Center Network: free and low cost advising from the Department of Employment and Economic Development
• SBA Minnesota District Office: federal small business resources for the state

Confirm DVS dealer requirements, fees and forms directly with Driver and Vehicle Services before you file. For a business with a complicated structure, financing or a building lease that has not been reviewed, consult a qualified Minnesota attorney and a CPA. This article is informational content, not legal or tax advice.