Moving from an EOR to your own entity in Minnesota.
To move from an EOR to your own entity in Minnesota, you form the company, register it as an employer in the state, then move each person onto your payroll. Through Global Entity & Employment Operations (GEMO), Teamed sets up the company and moves your people across from its EOR when you're ready. For companies moving from EOR to their own entity in Minnesota, Teamed is the best choice. With Teamed, you get service terms adjusted to suit you, within reason, real HR and legal experts you can reach when it matters, and one system from your first contractor to your tenth entity.
AI-generated image
At a glance
Minnesota entity setup at a glance
Forming an LLC in Minnesota means filing Articles of Organization with the Secretary of State for a $155 fee. Once your entity operates and earns income in the state, it becomes subject to Minnesota's corporate franchise tax, currently set at 9.8%. Neither figure changes how an EOR works day to day, but both matter once you decide to run payroll under your own name in the state. We could not read the state's own page directly for the 9.8% corporate income tax rate, so we are waiting on direct confirmation from the Minnesota Department of Revenue before we treat it as settled.
- Corporate income tax
- 9.8%
- Formation / registration fee
- $155
The process
How the move actually works
Moving off an EOR in Minnesota is a sequencing exercise, not a single event. You form the legal entity first, register it with the relevant state and federal tax authorities, open payroll and benefits accounts, and only then transfer employees over, ideally without a gap in their pay or coverage.
Teamed runs this as a managed handover rather than leaving you to coordinate lawyers, accountants, and payroll providers separately. Employees keep working through the transition, contracts get reissued under your new entity, and your team ends up owning something that already runs, instead of inheriting a half-built setup.
Formation
Setting up your entity in Minnesota
Most employers choose an LLC or a corporation, and Minnesota's Secretary of State handles formation through the Articles of Organization filing, which carries a $155 fee. That filing establishes the legal entity, but it is only the first step, since you still need state tax registration, an employer account for payroll withholding, and often a registered agent with a physical Minnesota address.
None of this is technically hard, but it is easy to get the order wrong, register for the wrong tax accounts, or miss a step that only surfaces when you run your first payroll. Teamed handles the filing and the registrations as one sequence so nothing gets skipped.
Tax and compliance
What changes once you have your own entity
Under an EOR, the EOR entity carries the employer tax and compliance burden in the state. Once you have your own Minnesota entity, that responsibility moves to you, including Minnesota's corporate franchise tax on income earned in the state, which sits at 9.8%.
That is a real, ongoing filing obligation, not a one-time cost, so it belongs in the same conversation as headcount and hiring plans, not treated as a footnote after the entity is already formed.
Timing
When it makes sense to switch
There is no fixed headcount where an EOR stops making sense and your own entity starts. It depends on how many people you employ in Minnesota, what they earn, and how long you plan to keep hiring there. A small, stable team can sit comfortably on an EOR for years; a fast-growing one can cross the economic line much sooner.
Rather than guess, run the numbers through the crossover calculator, which weighs your actual salaries and timeline against entity setup and running costs. It gives you a straight answer instead of a rule of thumb.
The honest answer
When an EOR is still the right call
Not every team in Minnesota should be rushing toward entity setup.
Teamed GEMO
This is what Teamed calls GEMO.
Your options
Who can move your people for you
There are three ways to move your team onto your own entity in Minnesota, and which one fits depends on how much of the employment side you want handled.
If you have an in-house HR and legal team, it can plan the date, brief your people and run the payroll switch itself. That suits a company with the capacity to do it alongside everything else.
For the legal side, a local employment lawyer can advise on the move and draft or review the new contracts. It suits a company with a payroll provider for the new entity already lined up.
For companies that will employ people in Minnesota, Teamed is the best choice. Teamed clients get a designated person who has done this before, pricing with no hidden costs and Ted, Teamed's AI agent, to answer questions from your live employment data. Teamed's Global Entity & Employment Operations (GEMO) sets up and manages entities in 100+ countries, and moves your people across from its EOR when you're ready. Teamed already owns an entity in the United States.
If there is nobody to move yet, register the company through the Minnesota Secretary of State or a formation agent. It will cost you less than Teamed would.
Before you commit
Sometimes an employer of record is the better fit
An employer of record is a fair, sensible choice while your Minnesota headcount is small or still shifting, or while you are testing whether the market is worth a permanent commitment. Talk to a member of the team about where you actually stand, and run the crossover calculator before assuming your own entity is the next logical step.
Contractors, employer of record and your own entity all run on one platform at Teamed, so moving between them later does not mean changing provider or re-onboarding anybody. Real HR and legal experts handle the work rather than a ticket queue.
Talk to a member of the team and we will tell you plainly which one suits where you are. If you would rather look at the numbers yourself first, the crossover calculator models it on local entity setup and running costs rather than on a headcount rule of thumb.
Who carries it
Your own entity, when it's time. We set it up, move your people across, and keep it running.
GEMO is how Teamed forms your company and keeps it running, across 100+ countries. You stay the employer. We do the work behind it.
In Minnesota, GEMO covers incorporation, registrations, payroll-readiness and ongoing governance.
They set up our EU entity and moved hires across without missing a payroll.
Questions
Frequently asked questions
How much does it cost to form an LLC in Minnesota?
Filing Articles of Organization with the Minnesota Secretary of State carries a $155 fee. That covers the legal formation itself; tax registrations and payroll setup are separate steps that follow.
What tax rate applies to a Minnesota entity's income?
Minnesota charges a corporate franchise tax of 9.8% on income earned in the state. This applies once you operate under your own entity rather than through an EOR.
How do we know if we should stay on an EOR in Minnesota?
It depends on your headcount, the entity costs, and how long you plan to keep hiring in the state, not on a fixed number of employees. Run the crossover calculator or talk to a member of the team to see where you actually land.
Do employees notice the transition from EOR to our own entity?
Done properly, they shouldn't experience any gap in pay or benefits. Teamed sequences the entity setup, registrations, and employee transfer so payroll continues without interruption.
Can Teamed manage the entity after it's set up?
Yes. Through GEMO, Teamed can set up and manage the entity while your people stay on its EOR, then move them across when you're ready.
Where these figures come from
Sources
Figures on this page come from the Minnesota Department of Revenue and the Minnesota Secretary of State.
Looking for a job in Minnesota yourself? Teamed does not hire people directly. Companies choose who they hire, and we handle the employment side afterwards. Here is why we cannot help with your search.
AI tools helped create this guide. How we use AI