Step-by-Step Guide to Forming an LLC in Minnesota

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Minnesota LLC Quick Facts

How much does it cost to form an LLC in Minnesota?

Initial LLC Filing Fee

  • By mail – $135
  • Online – $155

 

Recurring Fees – None

How long does it take to get an LLC in Minnesota?

  • By mail – 1 week
  • Online – 1-2 business days

 

Expedited processing is also available for an additional fee.

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Quick Reference

The Limited Liability Company (LLC) is a popular business structure for many businesses starting in Minnesota.  The LLC provides personal liability protection and has the potential to save money on taxes. With a little research, you can learn how to form an LLC in Minnesota without an attorney.

Unlike a sole proprietorship or partnership where the small business owner can be held personally liable for lawsuits against the business, the LLC is a separate legal structure, protecting the business owner’s personal assets.

Related: How Does an LLC Protect You?

Besides the liability protection, the Limited Liability Company provides several other benefits over the sole proprietorship, partnership, and corporation because of the multiple tax options, ease of administration, and management flexibility.

Costs to Form a Minnesota LLC

To form a Limited Liability Company in Minnesota, file the Articles of Organization with the Minnesota Secretary of State.  The LLC formation filing fee is $135 when submitting by mail and $155 when filing online.

Approval for the LLC typically takes between one week when filing by mail and immediately when filing online.

If you have questions, contact the Minnesota Secretary of State
Address: Minnesota Building 60 Empire Drive, Suite 100 St Paul, MN 55103
Phone: 651-296-2803 (between 9 am and 4 pm)
Email: business.services@state.mn.us

Steps to Form a Minnesota LLC

The steps for filing online or by mail are largely the same.  The screenshots below how to file online.

Professional services such as accountants, attorneys, architects, and many others are required to file as a Professional Limited Liability Company (sometimes referred to as a Professional LLC or PLLC) instead. The PLLC filing is very similar to the instructions below.

Forming an LLC can be both affordable and is something most people can do themselves. Entity formation companies like IncFile or IncAuthority help guide you through the process and make sure there are no mistakes.

Related: Should you use a Formation Service, Hire an Attorney or Do it Yourself?

How to form an LLC in Minnesota

  • Select Limited Liability Company (Domestic) under FIle a New Business or Nonprofit

Minnesota File a New Business Entity

  • Next, on the left side of the screen, select “For Profit.”  On the right side, you are asked whether the LLC will provide services that require licensing from the state.  To see more about the services that require licensing, check out the section on Minnesota licenses and permits.

Minnesota For-Profit LLC

Step 1: Name the LLC

Enter the name you want for the LLC.  The LLC’s name also has to differ from other entity names registered with the Secretary of State.  Check on available Minnesota LLC names before filing to be sure the one you want is available.

Additionally, the name of the LLC must include one of the following phrases or abbreviations at the end of the business name:

  • Limited Liability Company
  • Limited Company
  • L.L.C.
  • L. L. C.
  • LLC

A comma may be used after the business name and before the designator.  “Cowboy Cleaners LLC” and “Cowboy Cleaners, LLC” are both acceptable.

How to Register LLC Name in Minnesota

If the name is not currently being used, a message will state the name is available.  Otherwise, a message shows the name is not available.   If the name is available and is the one you want, click on the “File Limited Liability Company (Domestic) button to proceed.

Before finalizing a name, you may also want to see if a domain name is also available to have a matching website address.

If there is a name you want to use but aren’t ready to form the LLC, the Request for Reservation of Name can be filed to hold the name for up to 1 year. The state filing fee for a name reservation is $35, paid to the Secretary of State.

If you plan to use a different name from the one that you register (perhaps you want to run multiple businesses under the LLC), you can use an assumed name (sometimes referred to as a fictitious business name, trade name, DBA, or Doing Business As name).  To register an assumed name, file the Certificate of Assumed Name, along with the filing fee ($30 for filings by mail or $50 for online filings), paid will need to be sent to the Minnesota Secretary of State. Additionally, a legal notice is required to be placed in a newspaper in the county where the business is located for two consecutive issues.

Step 2: Organizers

The LLC Organizer is someone who is involved with filing the Articles of Organization.  The Organizer may or may not be a member, such as a mentor, attorney, or accountant, but the initial members could be an organizer.  An organizer is ofter an individual who is 18 years of age or older.

Add the name, address, and country for each organizer.  Save that individual’s or organization’s (usually a Registered Agent service, attorney, or accountant).

Minnesota LLC Organizer

Step 3: Registered Agent

To have an LLC in Minnesota, a Registered Agent must be identified for service of process.  The agent must have a physical street address in the state and available during normal business hours to act as a central point of contact to receive legal documents, tax notices, summons, subpoenas, etc. on behalf of the LLC. The Minnesota Registered Agent can either be a resident of Minnesota or a Registered Agent service with a registered office in the state.

A mailing address can be added if you prefer to receive mail at the Registered Agent’s address.  This would be common when hiring a service as they won’t allow normal correspondence to be sent to that address.  If the address is the same, simply leave this section blank and click on “Next” to proceed.

You are not required to pay for a registered agent. Any individual meeting the requirements can be the agent; however, the agent’s name and address become public record, and with that comes a loss of privacy. This is more important for some entrepreneurs, especially when doing business from home or still employed.  Hiring a company like Northwest Registered Agent to be the Registered Agent will reduce unwanted phone calls and mailings.

Minnesota LLC Registered Agent

Step 4: Add an Attachment

This is an optional section and not used by most LLCs.  Here you would include additional rules for the operation of the LLC.  If there are no additional attachments, leave this section blank and click on “Next” to proceed.

Step 5: Delivery Information

The contact information from the organizer is already populated.  If you prefer someone else to be the primary contact, should the Secretary of State have questions regarding the filing or if the Articles of Organization should be sent to someone else, enter the name, address, phone and email of this contact.

Step 6: Client Reference

Individual filers will leave this section blank, but if an attorney or filing service were completing the articles on your behalf, they can include a reference number to track the application.

Step 7: Email for Official Notices

Enter an email address for the Secretary of State to send official notices such as reminder notices of annual renewals.

Step 8: Minnesota Business Snapshot

This is a voluntary section to include information regarding the number of employees, women, minority or veteran ownership, business classification, and more.  Click “Next” to proceed.

Step 9: Review and Sign

Review that all of the information is correct.  If there are no corrections, click “Submit”  A box will pop up, asking for a signature confirming the information is correct.  Digitally sign and click “Submit.”

Step 10: Pay and File

Pay the state fees and file the Articles of Organization.

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Tasks After Forming Your LLC

Once the LLC has been formed, there are a few additional steps to take care of. Below is a list of the most common tasks.

Prepare a Minnesota LLC Operating Agreement

The operating agreement is a document that governs the framework of an LLC.  This document covers items like ownership rights, member responsibilities, how profits and losses are distributed, and more.

Most states do not require an LLC to have an operating agreement, but it is still worth considering. Without an operating agreement:

  • The LLC could be subject to generic state rules that may be detrimental in the event of a lawsuit.
  • Member’s personal liability protection may be diminished.
  • Members may not fully understand their roles and responsibilities, which could lead to costly disputes in the future.

Related: Minnesota operating agreement template

Obtain an EIN

The EIN or Employer Identification Number (also called a Federal Employer Identification Number, FEIN, or Federal Tax Identification Number) is a unique 9-digit tax identification number assigned to a business by the Internal Revenue Service (IRS). Similar to a social security number for an individual, the EIN identifies business entities for tax purposes. The EIN will be needed to hire employees, open a bank account, register for business licenses and permits, file federal and state taxes, and more.

There is no cost for the EIN when registering through the IRS. The number is available immediately when applying through the IRS website; however, you can also register by phone, fax, or mailing IRS Form SS-4.

Related: How to Apply for an EIN

Elect the LLC’s Form of Federal Income Taxation

One of the significant benefits of the Limited Liability Company is the tax flexibility it provides.  When applying for the Employer Identification Number, you will choose how the entity will be taxed for federal income tax purposes. While there are some limitations, an LLC may be classified for federal income tax purposes as a:

  • Sole proprietorship
  • Partnership
  • C-corporation
  • S-corporation

While this may sound confusing, this refers to how the LLC is taxed, not the legal structure.

Related: How can an LLC be taxed?

By default, the taxation of an LLC is called pass-through taxation, which means the profits or losses of the LLC flow through to the members.

Single-member LLCs will, by default, be taxed as a sole proprietorship. The members can also elect to change the taxation to a C-corporation or an S-corporation.

Multi-member LLCs will, by default, be taxed as a partnership. The members can also elect to change the taxation to a C-corporation or an S-corporation.

In general, the difference between being taxed as a corporation and being taxed as a sole proprietorship or partnership the profits and losses are passed to the member’s federal income tax returns based on their percentage of ownership.  As a result, the owner will pay self-employment taxes on all business profits.  As an alternative, electing to be taxed as a corporation allows the members to take a reasonable salary and then pay payroll taxes.  Any remaining profits are distributed and aren’t subject to payroll taxes, resulting in potential tax savings.

Before electing how your LLC will be taxed, consider talking with an accountant to assess which one will be best for you. Some tax elections, such as the C corporation, may be detrimental for some people due to double taxation.

Open an LLC Bank Account

Opening a bank account for your LLC is important for liability protection as the account separates the business’s funds from the member’s personal funds.

Several documents will be needed to open a business bank account, such as:

  • A banking resolution is a document that authorizes the members to open a business bank account on behalf of the LLC.
  • Copies of the original formation paperwork from the state showing the creation of the LLC.
  • Driver’s licenses of the members.
  • In some circumstances, a Minnesota Certificate of Good Standing may be needed to prove the LLC is active and in good standing with the state.

Related: How to Open a Business Bank Account for your LLC 

Apply for Business Licenses and Permits

Depending on what your business does and where it is located, there will likely be various business licenses and permits needed before starting your business. Some common registrations include:

  • Business License – Some cities require businesses to obtain licensing before they can start.
  • Professional License – Certain services such as barbershops, accountants, salons, and others must be licensed.
  • Sales Tax Permit – To sell products and certain services, registration with the Minnesota Department of Revenue will be necessary.

Related: What Business Licenses are Needed in Minnesota?

Get Business Insurance

Even with the liability protection of the LLC, business insurance is important to protect the business. The most common types of insurance include:

General Liability Insurance – covers damages owed and medical expenses for accidents that happen at your place of business.
Business Property Insurance – replaces damaged, stolen, or lost business property. This includes your physical business location, equipment, supplies, and anything else you used to run your business.
Business Vehicle Insurance – covers company vehicles and may also include coverage for personal vehicles used for business-related activities. Many personal policies won’t cover your vehicle if there is an accident while being used for business purposes.
Workers Compensation Insurance – mandatory in most states if you have employees, this insurance covers medical expenses that occur because of an accident or injury that happens to one of your employees while they’re at work.

Related: 7 Types of Insurance Your Business May Need

File the LLC Annual Renewal

LLCs are required to file an annual report every December 31st with the Minnesota Secretary of State.  Unlike most states, there is no annual filing fee.

Related: How to File a Minnesota LLC Annual Report

 

Common Questions When Starting An LLC

You can act as your own registered agent, provide you are a resident of the state and are generally available during normal business hours. 

It’s sometimes thought that the LLC and business license are the same, which they aren’t.  Business license requirements vary by location and the type of business being operated. 

An out-of-state LLC wanting to do business in another state will have to register as a foreign LLC with the new state’s Secretary of State.

Businesses that require state licensing and offer professional services such as accountants, attorneys, podiatrists, physical therapists, acupuncturists, etc. often must file as a Professional Limited Liability Company (sometimes referred to as a Professional LLC or PLLC) instead of an LLC. Filing for a PLLC is very similar to that of the LLC.

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