Most business owners go into business with their eyes wide open. They know at least some of the risks and benefits. You know you need a business structure and that, at some point, your business will owe taxes. It’s the little-known things that can trip up a business. Read on to learn three facts every Minnesota business owner should know.
#1 You can be personally liable for your company’s mistakes.
Yes, in some circumstances your personal assets may be vulnerable. If your company is a corporation or limited liability company, you can expect some protection from personal liability.
However, you may be held liable for unpaid Minnesota sales tax. In 2017, the Minnesota Supreme Court affirmed such personal liability of an officer or owner of a corporation.
As owner, you may also be held liable for signing personal contracts related to your business. Tortious behavior on your part can also lead to personal liability.
#2 Don’t commingle business and personal accounts.
Besides giving your CPA nightmares, commingling business and personal funds can cause other problems. For example, you may lose any personal liability protection afforded by the type of business you own. Additionally, some business assets are considered “dangerous” because there’s a high risk of injury and resulting liability. Buying backhoes for your construction company using your personal funds will not only anger your wife, but also could increase personal liability. The same holds trust for companies that offer professional services.
#3 Your company have annual reporting requirements.
Of course, federal tax returns are filed every year. However, a Minnesota business owner has a few other annual housekeeping tasks:
- Stay in good standing with the Minnesota Secretary of State by filing your annual business renewal.
- State tax returns need to be filed.
- Talk to your business attorney to see if you need to file any additional annual renewals or reports.
Get Your Business Started on the Right Path, Then Keep it There
Consulting with a Minnesota business lawyer to get your business up and running is only the first step. Talk to the attorney at Virtus Law about your company’s legal concerns. To set up an appointment, call us at 612.888.1000. Our main office is located in Minneapolis, with other offices located in Maplewood, Cambridge, Edina, Mendota Heights, and Red Wing.