Corporate income tax is computed and filed using Form M-18. Minnesota corporations expecting to reach or exceed $500 in income tax liability need to make estimated tax payments. Minnesota corporations that have a tax liability exceeding $20,000 must make estimated tax payments through electronic funds transfer (EFT).
Your corporation will be required to make quarterly federal payments based on its estimated tax using Form 1120-W, Federal Estimated Tax Payment. Corporate taxes are typically due on April 15, June 15, September 15, and December 15, unless your corporation operates on a different fiscal year. In this case, your taxes will be due on the 15th day of the 4th month following the end of the fiscal year.
Any Minnesota corporation that is late paying its income taxes will have to file a M-4R, Business Activities Report. Questions regarding the activities should be directed to the Minnesota Department of Revenue.
In Minnesota all corporations, S corporations, partnerships, and LLCs have to pay a minimum tax fee. The fee is assessed based on the company' s total payroll, property, and sales or gross receipts (see Table 1).
Table 1 - Minimum Tax Fee for All Business Entities
| The company' s total payroll, property, and sales or gross receipts |
Minimum assessed fee |
| Less than $599,999 |
$ 0 |
| $500,000 to $999,999 |
$100 |
| $1,000,000 to $4,999,999 |
$300 |
| $5,000,000 to $9,999,999 |
$1,000 |
| $10,000,000 to $19,999,999 |
$2,000 |
| $20,000,000 or more |
$5,000 |
Sales and Use Tax
Minnesota imposes a sales tax on merchandise sold within the state. The general sales tax rate in Minnesota is 6.5%. Some retail items, however, are imposed a special rate. Sales of liquor items, for example, are taxed at the rate of 9.0%. The sale of farm or logging equipment is taxed at a rate of 2.5%. A complete listing of state sales tax rates is available from the Minnesota Department of Revenue. If you operate a retail business or provide certain services you will be required to collect and pay this sales tax to the Minnesota Department of Revenue. You may need to pay local sales and use taxes too. You will be required to file Form ABR, Application for Business Registration which registers your business for a Minnesota tax identification number. Or you may call or visit a regional department of revenue to obtain a registration for authorization to collect sales and use taxes.
In most cases you will not be required to pay sales taxes to wholesalers and distributors so long as you provide them with resale certificates on the goods you purchase. In like manner, as a wholesaler, distributor, or manufacturer, you will not be required to collect sales tax on the goods you sell provided the buyer is a retailer purchasing those goods for resale and provides you with resale certificates at the time of sale. For example, if you sell exclusively to other resellers or if your primary business is mail order, you may only be required to collect the tax for items sold and delivered within the state. However, this area of the law is being challenged, so you will find it wise to stay informed about how these changes affect you.
You will be assessed additional taxes on certain types of goods provided for resale. The federal government and most states assess pass-through taxes on certain goods such as gasoline, tobacco, and alcohol. As a retailer, you will pay taxes on these goods at the time of purchase and pass the tax through to the consumer. In the case of these taxes, you do not have to pay them separately to the state. The manufacturer, wholesaler, or distributor does this for you. However, you will still be required to maintain thorough records on all sales.
You are required to keep detailed records of the your gross receipts regardless of whether those receipts are taxable or not. These receipts will justify the taxes you pay and the deductions you take on gross sales throughout the year. You will be required to file ST-1 Sales and Use Tax Return to the Minnesota Department of Revenue. Returns are due annually for businesses with a tax liability averaging less than $100 a month. For businesses with a tax liability between $100 and $500, returns are due quarterly. Businesses with more than $500 of tax liability each month are required to file returns on a monthly basis. For those businesses with an annual tax liability of $120,000 or more, payments must be made via electronic funds transfer (EFT).
