How to Start a Construction Company in Minnesota | Essential Guide

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Minnesota Construction Company

Starting a construction company in Minnesota can be lucrative and rewarding for anyone with the right skills, resources, and determination. With a strong demand for quality construction services and a consistently growing population of 5,827,265 (2024 data), there is always room for new Limited Liability Companies to thrive in this industry. However, starting a construction company is a challenging task and requires careful planning, dedication, and hard work.

In this article, Webinarcare Editorial Team will discuss the necessary steps to Start a Construction Company in Minnesota and provide valuable tips for ensuring your success in this competitive industry.

How to Start a Construction Company in Minnesota

What is a Construction Company?

A construction company in Minnesota is a business that specializes in the planning, design, and execution of construction projects. These projects can range from residential homes to commercial buildings and infrastructure projects such as roads, bridges, and utility systems. Minnesota construction companies must adhere to local building codes, regulations, and licensing requirements to ensure their projects are safe, efficient, and compliant with state standards.

Minnesota construction companies often offer various services, including general contracting, design-build, and specialized construction services. They collaborate with various stakeholders, such as architects, engineers, developers, and property owners, to bring projects to life. By employing skilled tradespeople, project managers, and other professionals, construction companies in Minnesota work to deliver high-quality, durable structures that meet their client’s needs and contribute to their community’s development and growth.

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It is suggested that you speak with a legal professional before you begin setting up a construction company. They’ll understand what’s best for you and your future company. To safeguard your personal assets from business debts, you can always start an LLC in Minnesota.

– WEBINARCARE EDITORIAL TEAM

How to Start a Construction Company in Minnesota

To launch a construction business, you must follow the guidelines that include researching the construction industry, developing a business plan, registering your business, securing funding, purchasing equipment and material, hiring a skilled team, and marketing your construction company.

Step 1: Research the Construction Industry

Before diving into starting your construction company, it’s essential to understand the local construction industry in Minnesota. Research your area’s market trends, major players, and potential competition. This will help you identify gaps in the market that your company can fill and allow you to make informed decisions about the types of services you want to offer.

Some key areas to research include:

  • Types of construction projects in demand (residential, commercial, etc.)
  • The average cost of construction projects in your area
  • Local building codes and regulations
  • Key stakeholders in the industry (architects, developers, etc.)
  • Licensing and certification requirements for contractors in Minnesota

Step 2: Develop a Business Plan

A well-thought-out business plan is crucial for the success of any new business, including a construction company. Your business plan will act as a roadmap for your company’s growth and development, helping you make informed decisions and keep your business on track.

Some key elements to include in your construction company business plan are:

  • Company Overview: Describe your company’s mission, vision, and goals. Include the legal structure of your business (LLC, corporation, sole proprietorship, etc.) and your company’s name and location.
  • Market Analysis: Summarize your research on the local construction industry, including the target market, competition, and growth opportunities.
  • Services Offered: Clearly define the types of construction services your company will offer, such as general contracting, design-build, or specialized construction services.
  • Marketing and Sales Strategy: Outline how to attract and retain clients and your strategies for generating leads and closing sales.
  • Management and Organization: Detail the roles and responsibilities of your management team and any key personnel you plan to hire.
  • Financial Projections: Provide a realistic estimate of your company’s financial performance over the next few years, including projected income, expenses, and profits.

Step 3: Choose a Business Name

Selecting a name for your Minnesota construction company is essential to forming. Your business name should be unique, memorable, and reflective of your products or services. There is a complete guide on Minnesota Business Name Search for you to have a proper Minnesota construction business name. 

In Minnesota, if you do not wish to file your construction business company right away but want to hold the name that you have decided on, then you can reserve your Minnesota construction business name for 1 year. You must file a name reservation application with the Minnesota Secretary of State to keep the name. 

You can register your business under a different legal name if your preferred name isn’t available. Once you have chosen a name, you can submit an application for Minnesota DBA (doing business as). In this manner, you can choose any name you desire for your business. A DBA allows a company to operate under the name of the person or entity who owns it. If you have decided to file for a DBA, you can file it in three methods, online, by mail, and in person filing.

However, before filing a DBA, you should know that you need to renew your DBA every one year, which costs $50 for online filing and $30 for offline filing.

You can check the availability of your desired business name by searching the Minnesota Secretary of State Business Filings Online‘s website.

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Step 4: Register Your Construction Company

Register your business with the appropriate government agencies before officially starting your construction company in Minnesota and obtain any necessary licenses and permits. 

Hire a Registered Agent

A Registered Agent is a person or entity responsible for receiving legal documents and official notices for your construction business. The qualifications of a Registered Agent vary depending on the jurisdiction, but generally, they must meet the following criteria:

  • Age: The Registered Agent must be at least 18 years old.
  • Residency: The Registered Agent must reside where the company is registered or authorized to do business in that state. In some jurisdictions, a domestic corporation or limited liability company (LLC) can act as its Registered Agent if it has a physical address in Minnesota.
  • Physical Address: The Registered Agent must have a physical street address, not just a post office box, where the company is registered. This is where they will receive official correspondence and legal documents on behalf of the company.
  • Availability: The Registered Agent must be available during normal business hours (9 a.m. to 5 p.m., Monday through Friday) to receive and sign official correspondence and legal documents.
  • Good Standing: If the Registered Agent is a business entity, it must be in good standing with the state and not be in default, suspended, or revoked.
  • Compliance: The Registered Agent should know Minnesota requirements and deadlines for the company, such as Annual Reports and Minnesota franchise tax filings, and ensure that the company stays compliant. 

You can serve as your Registered Agent, appoint a friend or family member, or hire a Professional Minnesota Registered Agent Services.

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File For Articles of Organization or Articles of Incorporation

If you form an LLC for your construction company, you must file the Minnesota Articles of Organization, which costs $135. However, you must file the Articles of Incorporation if you form Minnesota Corporation for your construction company. The Articles of Incorporation filing fee costs $155 for filing online and in-person, and $135 for filing by mail. It is crucial to provide accurate and complete information on this document, as errors or omissions may result in delays or rejection of your filing.

  • Online Filing: Get the online form from Secretary of State, fill it up, and submit. Don’t refresh the page during the process. It will erase everything.  
  • Offline Filing: Send the form by mail or drop it off in person to Minnesota Secretary of State — Business Services, Retirement Systems of Minnesota Building, 60 Empire Drive, Suite 100, St Paul, MN 55103.

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Create an Operating Agreement

Operating Agreement is a document that contains all of your company’s organizational details. Drafting an operating agreement in Minnesota is optional. Yet, having one as an internal document is strongly advised. 

Recommended: Creating an Operating Agreement is like having a personal legal guide at hand; it’s efficient, thorough, and ensures the smooth and compliant operation of your business. With LegalZoom’s operating agreement, it will protect your rights as an owner, keeping misunderstandings at bay and your business on the path to success. That’s why we recommend using –

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Obtain an Employer Identification Number

You must first obtain Minnesota Employer identification number (EIN) from the IRS if you will open a bank account or hire an employee for your Minnesota construction company. 

The application of an EIN in Minnesota can be through the following:

  • Apply Online- The online EIN application is the preferred method for customers to apply for and obtain an EIN.
  • Apply by Fax- Taxpayers can fax the completed Form SS-4 application to the appropriate fax number), after ensuring that the Form SS-4 contains all of the required information.
  • Apply by Mail- The EIN application Form SS-4 can be filed via mail. The processing time frame to receive the mail is four weeks.
  • Apply by Telephone-International Applicants – International applicants may call 267-941-1099 (not a toll-free number) from 6 a.m. to 11 p.m. (Eastern Time) Monday through Friday to obtain their EIN.

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Step 5: Obtain the Necessary Licenses and Permits

Starting a construction company in Minnesota requires several licenses and permits. Some of the most common licenses and permits you’ll need include the following:

  • Business License: Your local city or county government may require Minnesota Business License. The business license fee in Minnesota ranges from $50 – $300.
  • Contractor’s License: A contractor’s license is required in most states for construction businesses that perform specific types of work, such as general contracting, electrical, plumbing, HVAC, or other specialized trades. Requirements for obtaining a contractor’s license may include passing an exam, providing proof of experience, and obtaining bonding and insurance.
  • Building Permits: Construction projects typically require permits issued by the Minnesota building department. Building permits ensure the construction project complies with local building codes and regulations.
  • Occupational Licenses: Some states may require occupational licenses for specific types of work, such as asbestos abatement, lead paint removal, or the installation of fire protection systems. Check with your state’s licensing board to determine if any special licenses are required for the work your construction company will perform.
  • Minnesota Sales Tax Permit: A sales tax permit from the Minnesota Department of Revenue allows you to collect sales tax. Currently, the Minnesota sales tax rate is 6.875%.
  • Environmental Permits: Depending on the nature of your construction projects, you may need to obtain environmental permits, such as stormwater discharge or air quality permits.

Step 6: Secure Funding

Starting a construction company requires significant capital to cover equipment, materials, and labor costs. To secure funding for your Minnesota business, you must explore various financing options and determine the best fit for your needs.

When seeking funding, be prepared to present your business plan and financial projections to potential lenders or investors. This will demonstrate your commitment to your company’s success and help build their confidence in your ability to repay the loan or generate a return on their investment.

However, consider applying for your construction company’s Minnesota Small Business Loans.

Step 7: Purchase Equipment and Materials

Once you have secured funding for your Minnesota construction company, you must purchase the necessary equipment and materials to begin operations. This may include items such as:

  • Construction vehicles (trucks, excavators, etc.)
  • Power tools and hand tools
  • Safety equipment (hard hats, safety goggles, etc.)
  • Building materials (lumber, concrete, etc.)
  • Office equipment and supplies (computers, printers, etc.)

Invest in high-quality equipment and materials, as this will help you deliver exceptional results to your clients and build a strong reputation in the industry. Consider purchasing insurance for your equipment, as this can help protect your investment in the case of theft, damage, or accidents.

Step 8: Hire a Skilled Team

Your Minnesota construction company’s success will largely depend on your team’s skills and expertise. Hire individuals with experience and knowledge in the construction industry to build a strong workforce. This may include:

  • Project managers
  • Construction laborers
  • Skilled tradespeople (electricians, plumbers, etc.)
  • Architects or engineers
  • Administrative staff (accountants, receptionists, etc.)

In addition to hiring qualified employees, invest in ongoing training and development programs to help your team stay current on industry trends, technologies, and best practices. This will improve the quality of your services and help you attract and retain top talent in the competitive construction industry.

Step 9: Market Your Construction Company

You must develop a comprehensive marketing strategy to attract clients and grow your Minnesota construction company. This may include building a professional website that showcases your services, portfolio, and testimonials from satisfied clients; creating and distributing print materials, such as brochures, business cards, and direct mail advertisements; networking with industry professionals, such as architects, developers, and real estate agents, to generate leads and referrals, and utilizing social media and digital marketing strategies to reach a wider audience and drive traffic to your website.

By consistently promoting your Minnesota construction company and showcasing your expertise and quality work, you can build a strong reputation in the Minnesota construction industry and attract a steady stream of new clients.

Benefits of Forming a Construction Company

Forming a Construction LLC is best for a start-up company since it offers the following advantages.

Limited Liability Protection

LLC provides limited liability protection to its owners, also known as members. This means that the personal assets of the LLC members are separate from the company’s debts and liabilities. In the construction industry, where accidents, property damage, and contractual disputes occur, limited liability protection is crucial to protect business owners’ assets.

Pass-through Taxation

An LLC typically offers pass-through taxation, meaning the company’s profits and losses are reported on the owner’s tax returns. This avoids the double taxation corporations may face, where the company and its shareholders are taxed separately. Pass-through taxation can lead to potential tax savings for the Minnesota construction company’s owners.

Flexibility in Management

LLCs have a more flexible management structure than corporations. They do not require a board of directors, and the owners can choose how to manage the company through member or manager management. This flexibility allows Minnesota construction companies to adapt their management structure as needed.

Simpler Record-Keeping and Compliance

LLCs still require formalities; they typically have fewer record-keeping and reporting requirements than corporations. This can save time and resources for Minnesota construction companies, allowing them to focus on their core business operations.

Credibility

Forming an LLC can provide the Minnesota construction company with increased credibility and professionalism in the eyes of clients, vendors, and financial institutions. This can be beneficial in securing contracts and building a positive reputation in the industry.

FAQs

What are the requirements to start a construction company in Minnesota?
To start a construction company in Minnesota, you are required to have a general contractor’s license, a tax identification number, and liability insurance.
How do I apply for a general contractor’s license in Minnesota?
The Department of Labor and Industry in Minnesota can provide all the information needed to apply for a general contractor’s license.
How long does it take to get a general contractor’s license in Minnesota?
You will have to complete the application process and pass a test to obtain a general contractor’s license in Minnesota. The process can take anywhere from 4 to 12 weeks.
Do I need to show proof of financial stability to become a licensed contractor in Minnesota?
Yes, you will be required to show proof of financial stability to become licensed in Minnesota. This may include credit checks, tax returns, and bondability requirements.
Is there a fee to renew my general contractor’s license in Minnesota?
Yes, there is a fee required to renew your general contractor’s license in Minnesota.
What are the construction regulations in Minnesota?
The Minnesota Department of Labor and Industry has provided information on regulations such as electrical systems, plumbing, and building codes.
What types of insurance should I consider for a construction company in Minnesota?
You should consider liability insurance and worker’s compensation insurance as they are both common necessities for construction companies.
Can I register my construction company online in Minnesota?
You can register your construction company online through the Minnesota Secretary of State’s website.
Does Minnesota require commercial property to have a building code inspection?
Yes, under Minnesota law, a building code will generally require an inspection in Minnesota.
Do I need a contractor’s license for roofing in Minnesota?
Yes, a roofing contractor readily requires a license in Minnesota.
When working on public constructed projects in Minnesota, what criteria have to be met?
For public construction projects in Minnesota, you may need to comply with tradespeople requirements, prevailing wage laws, and an environmental review process.
Is there a process for appealing bids not granted in Minnesota?
Yes, the Minnesota Court of Appeals is in place if desired, after the department who reviews bids.
Should I incorporate my construction company in Minnesota?
This can vary based on tax subject and other constitutional things related to which an incorporated and unincorporated entity will stand at the same point.
Do county or city agencies offer business assistance in establishing my construction company in Minnesota?
Yes, there is assistance offered at the city and county level for construction companies in Minnesota.
Do I need a Minnesota state license to perform work in the construction of buildings?
Yes, it is mandatory to possess a Minnesota state-specific contractor’s permit to perform building works.
What identifies a company’s legal status operating business as a general entity?
The legal status of a construction or other contracting company after initial registration establishes an entity as a model or corporation in Minnesota.
Who is liable in Minnesota should a properly inspected onsite construction administration exploit mishap?
In worker exploitation catastrophes, a labor charge and liability-based suits often followed up a fin3 over-the-air inspection in Minnesota.
What laws dictate lawbreakers reneging on construction or contractor worth commitment in Minnesota?
Late constructions, under record-keeping and safety protocols, corrupt contractors and scams can all allegedly have an indictment lodged with statutory agencies experienced in a judiciary proceeding under Minnesota laws.
Can any professional that doesn’t carry general contractor’s licensee information do any contracting work in Minnesota under contract building through corporations or registered entities?
The state of Minnesota authorizes a transparent contractor’s license number inclusion in contracts that offer their services related to construction tasks confidently.
Is reconstruction permitted on lakeshores and in beaches owned by Minnesota?
Regulatory standards should be a prime net inflow of erosion mitigation on lakeshores and boundaries adjoining Minnesota lakes.
What applies to almost all builders, crews and general contractors in Minnesota?
Contractor and project orientation safety training should be made available to any basic crews and vendors in Minnesota.
Do I need personal fitness and operating equipment checkout done to become a logger in Minnesota?
Minnesota legislative proceeding mandates laboratory and human factors analysis tests to address the waysward factors of accident and misadventure claims for sector stakeholders.
Is qualifying for my Minnesota building permit affected if a lot reaches acreage over which no building is allowed?
Land possession and Minnesota ordinance amendments viz regulatory comfort standards are considerable determining factors of these questions.
What Minnesota customs duty or fee categories qualify for farming or agricultural land construction?
Enrolling in altered arrangements or design estimation validation work expedience outweigh explicit state denomatic or geospatial hedgerow regulation requirements in Minnesota.
Which imported goods classifications/regoli are charged OTX fees in Minnesota rural conservation belts?
Preserving scenic byways and augmentative assessments are import-driven consumer excellence goods portals in relation to interstate-365 operational in-state product procurement functions on Minnesota highways.
How many basic types of engineer classes could dig Minnesota’s required bonding procedures?
Things worth being diligent over criteria make regulated engineering zones interested in shifting the burden from liability and risk-averse compensation returns approved on defense appeals in Minnesota brick-by-brick models.
Are contracts acceptable for property inspection cover requests among front and back yard formal regulations modifications in Minnesota countries?
Regulations enforced by county law require certified contracts to satisfy total regulatory standpoint declarations on county inspection requisition requisites based on property validation value reports that look over site submissions.
How much explicit zoning quantity difference should exist in meeting regional Minnesota participation in the workspace when structural regulations are voluntarily being transcended?
Counted, rooted measuring sticks paid and priced per assessment service language, tending toward precise and technical inspection protocols are specifically contoured along politically appropriated incentive treatments in regard to measurements specific to growth and sustainability criteria.
Are military contractors in Minneapolis required to be bond-heavy and mitigating?
Increase depend heavily correlates in many unexpected facilities to more plausible BQI based methodology for military industries of input regulation summaries to include partner prototypes in Minnesota industrial risk-conduct risk pattern forecasting.
What are the steps to start a construction business in Minnesota?
The first step is to register your business with the Secretary of State’s office in Minnesota and obtain any necessary licenses and permits.
What type of license do I need to start a construction business in Minnesota?
You need a contractor’s license from the Minnesota Department of Labor and Industry.
Do I need insurance to start a construction company in Minnesota?
Yes, you will need liability and workers’ compensation insurance to comply with Minnesota laws.
What are the requirements to obtain a contractor’s license in Minnesota?
You need to have four years of experience in residential or commercial construction, complete an application, and pass a technical exam.
What are some good resources for aspiring construction business owners in Minnesota?
Small Business Development Center of Minnesota, SCORE, and Minnesota State College, and universities offer business development and entrepreneurship programs.
Will I need a business plan to start a construction company in Minnesota?
Yes, a business plan is crucial particularly if you have to approach a bank for funding.
What are some permits required for construction businesses in Minnesota?
Permit fees and requirements vary based on jurisdictions. Some common permits include zoning permits, construction permits, electrical permits and building permits.
What are the best types of legal structures for a construction business in Minnesota?
LLCs and S-Corporations offer excellent legal liability protection for small businesses and low tax rates.
How much money will I need to start a construction business in Minnesota?
It varies but can be anywhere from $10,000 to $50,000 or more.
Are there any tax incentives that construction companies can apply for in Minnesota?
You can receive property and income tax credit for eligible businesses located in the state.
Where can I locate available construction opportunities?
Local newspapers, construction directories and online boards are great places to check.
What is prevailing wage?
Prevailing wage is the average wage paid for work of a similar nature in the immediate geographical area, classified by the U.S. Department of Labor and the State of Minnesota.
How do I set up payroll taxes for employees in a Minnesota construction company?
Register the business with the Minnesota Department of Revenue and Internal Revenue Service and file your payroll taxes on a monthly or quarterly timeline.
How do I increase, market and network my Minnesota construction business?
Building strong relationships with customers and suppliers, maintaining an online presence, showcasing projects and joining a regional Chamber of Commerce or Professional Organization are ways to expand your presence.
How long does it take to obtain a construction permit in Minnesota?
It varies depending on jurisdiction but usually range from 2-6 weeks.
What permits do I need to specifically operate my construction business in Hennepin County MN?
You will need to obtain licenses for Hennepin County, Shelter Bay County, Independent Contractor and join the Builders Association of Minnesota.
Can I operate a construction company from my home in Minnesota?
You cannot have a workshop, retail, or storage facility on your resident spot unless zoning permits.
How can I ensure I am providing work that aligns with Minnesota pollution laws?
Contractor compliance documentation which consists of Descriptions, contract clauses, checklists and workplans to help businesses operate according to both Minnesota state and federal pollution regulations can be helpful
Is there any financial assistance for small Minnesota construction businesses in good infrastructural development eligible for funding?
Yes, financing and grants are available through the Minnesota Department of Employment and Economic Development and Small Business Growth Loans Programs.
Can non- Minnesota residents apply for state contracts in Minnesota?
Yes, provided they first register their construction company with Minnesota’s Secretary of State and fulfill other requirements & regulations.
Can I have my specialty as part of my construction company Name?
Yes.
Are there strict regulations on land preservation for Minnesota contractors?
Yes, several laws like the Minnesota Land Use Planning Act and Civil Rights Act exist regarding Minnesota environmental and construction laws.
Can construction business owners in Minnesota apply for small business grants with the Minnesota Department of Commerce?
No. Small business financing and grants are available through the Small Business Established Growth program at the Minnesota Department of Employment and Economic Development.
Which cities and counties have additional permits for construction companies in Minnesota?
Minneapolis and St Paul have additional permits and licensed regulations. Additional research will be needed.
Are construction companies vastly regulated with good insurance policies in Minnesota?
Yes, because of the physical dangers generally faced on construction sites.
Is the focus gathered by contractors and construction companies in Minnesota on technology?
Yes, some companies utilize available software and computational tools to estimate job cost, create ideal project timelines and other general building obligations.
What is Express Board certification as concerning construction businesses in Minnesota?
Express certification allows members to qualify for smaller, less difficult projects, opening up a new area of work for construction businesses and vendors.

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Conclusion

Starting a construction company in Minnesota can be challenging yet rewarding for those prepared to invest the time, effort, and resources necessary for success. By following the steps outlined in this article and dedicating yourself to providing exceptional service and quality work, you can create a thriving construction business that stands out in the competitive Minnesota market.

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