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When starting a new company, choosing a business entity is the most important decision that the founders must make. For most businesses with more than one founding member, forming as an LLC is often the best option for a number of reasons.
An LLC is an uncomplicated business structure that affords business owners legal protection by separating personal assets from business debts. Moreover, LLCs often enjoy a lower tax rate than corporations. Nevertheless, creating an LLC can get complicated depending on where you are based, with the formation process, filing fees, and continuing legal obligations differing from state to state.
Forming an LLC in Minnesota is a relatively simple process without any deviations from the standard procedure used in most U.S. states. To avoid a misstep in the filing process, follow these steps to start an LLC in Minnesota, and refer to the checklist at the bottom of the post to familiarize yourself with the legal and financial requirements for LLCs in the state.
Starting an LLC in Minnesota step-by-step
1. Select a name for your Minnesota LLC
Follow naming requirements
There are 2 major guidelines to follow when naming your LLC in the state of Minnesota:
- An LLC’s name must be distinguishable from the names of existing businesses on file with the Minnesota Secretary of State.
- An LLC’s name must either contain the phrase “Limited Liability Company” or the abbreviation “LLC.”
Check name availability
After choosing a name, make sure it’s available to use in the state by performing a search with the Minnesota Secretary of State Search Business Filings application.
Reserve your LLC name with the Secretary of State
It’s a good idea to reserve your LLC name with the Minnesota Secretary of State so that another business entity doesn’t use it before you are able to file your Articles of Organization.
A name can be reserved for up to 12 months with the filing of a Request for Reservation of Name. You can file online (requires account creation) or through the mail. The name reservation fee is $55 for online filings and $50 for mail filings.
2. Designate a registered agent
As in every U.S. state, forming an LLC in Minnesota requires the appointment of a registered agent service to handle state and federal legal documents and service of process on the business’s behalf.
The registered agent must either be a state resident or business entity with a street address in Minnesota OR if the individual or business is based out-of-state, they must have a business office in Minnesota.
3. File Articles of Organization
An LLC is formed in Minnesota with the filing of Articles of Organization with the Minnesota Secretary of State. You can file the articles online or by mail. The online filing fee is $155 and the mail filing fee is $135.
Your Minnesota LLC’s Articles of Organization must include the following details:
- LLC name, address, phone number, and email address
- Registered agent’s name, address, and signature
- LLC organizer’s name, address, and signature
Foreign LLCs doing business in Minnesota
An LLC formed outside of Minnesota that wishes to do business in the state must register with the Minnesota Secretary of State.
Follow these steps to do business in Minnesota as a foreign LLC:
- Comply with Minnesota LLC naming guidelines and run a search using the Search Business Filings app to confirm the name’s availability.
- Appoint a Minnesota registered agent.
- File a Certificate of Authority to Transact Business in MN with the Minnesota Secretary of State. You may file the certificate online or by mail. The filing fee is $205 for in-person and online filings and $185 for mail filings.
4. Draft an operating agreement
Although not a legally mandated step for forming an LLC in Minnesota, drafting a comprehensive LLC operating agreement is strongly recommended for all nascent limited liability companies.
The operating agreement should do the following:
- Describe the LLC’s business structure
- Establish the individual responsibilities and obligations of LLC members
- Detail how the LLC will be run
Without an operating agreement clarifying the specific duties of its members, an LLC may face significant legal and operational difficulties.
5. Obtain an IRS Employer Identification Number (EIN)
All newly formed LLCs in the United States must acquire an Employer Identification Number (EIN) from the Internal Revenue Service (with the exception of single-member LLCs).
The nine-digit EIN is like a social security number for a business and is necessary to pay income tax, file tax returns, open business bank accounts, and perform many other important functions.
You can apply for an EIN online on the IRS website without paying a filing fee.
6. Fulfill your Minnesota LLC’s additional legal obligations
Once an LLC is registered, its members must devote attention to fulfilling legal requirements that apply for the duration of the company’s existence.
All LLCs active in Minnesota are required to file an annual renewal with the Secretary of State each year. The annual renewal is due by the last day of the calendar year (December 31) and can be filed online or through the mail.
The filing fee is $45 for online and in-person filings and $25 for mail filings.
Business licenses and permits
A Minnesota LLC may be required to obtain one or more state or local business licenses or permits depending on the nature of its business and its location.
You can find Minnesota state business license information at the Minnesota Elicensing portal. For information on local licensing regulations, you should get in touch with a clerk or local government representative in the city or county where your LLC is based.
Register with the Minnesota Department of Revenue
Certain Minnesota LLCs are required to register with the state’s Department of Revenue. Examples include LLCs that collect sales tax on retail goods and LLCs with employees.
You can register with the Minnesota DOR online using its e-Services application.
Minnesota LLC checklist
A Minnesota LLC’s name must obey the following guidelines:
- Must be distinguishable from the names of existing businesses on file with the Minnesota Secretary of State.
- Must contain the phrase “Limited Liability Company” or the abbreviation “LLC.”
Formational documents and filing fees:
- Request for Reservation of Name – $55 online and in-person filing fee, $50 mail filing fee
- Articles of Organization – $155 online and in-person filing fee, $135 mail filing fee
- Certificate of Authority to Transact Business in MN – $205 online and in-person filing fee, $185 mail filing fee (foreign LLCs only)
- An LLC is formed in Minnesota through the filing of Articles of Organization with the Minnesota Secretary of State.
Additional legal obligations:
- Filing Annual Renewals – Required of all LLCs doing business in Minnesota
- State and local business licenses & permits – Required for certain LLCs
- Minnesota DOR registration – Required for certain types of LLCs