Minnesota LLC – How to Form an LLC In Minnesota? (7-Step Guide)
Starting a new business can be a very exciting time, but there are some processes you need to put in place before getting started. One of the most important decisions is which business structure you are going to use. One of the most popular is an LLC. An LLC stands for Limited Liability company, and essentially combines the limited liability of a corporation with the lack of formality and the flexibility of a sole proprietorship or partnership. When you look at it this way, you can see why it is so popular, as you are getting the best of both worlds. It is also relatively easy and inexpensive to set up, which helps to add to its appeal.
Before you start running your LLC, you will have to file it within the state that you are conducting business. Each state comes with its own fees, rules and requirements when it comes to filing an LLC. Today we are going to take a look at the 7 steps you are going to need to take if you are planning on setting up an LLC in the state of Minnesota.
- Form Your LLC in MN Hassle-free
- 7 Steps on Starting an LLC in Minnesota
- Step 1: Choose a Name for Your Minnesota LLC
- Step 2: Get a Registered Agent in Minnesota
- Step 3: Filing the Articles of Organization for Your Minnesota LLC
- Step 4: Create Your Minnesota’s LLC Operating Agreement
- Step 5: Get an EIN for Your Business in MN
- Step 6: Comply with Minnesota TAX and Regulatory Requirements
- Step 7: File Your LLC Annual Renewals
- Use Professional Service to Form Your Minnesota LLC
- FAQs About Minnesota LLCs
7 Steps on Starting an LLC in Minnesota
Step 1: Choose a Name for Your Minnesota LLC
Before you do anything, you’ll need to decide on a name for your LLC, however, that may not be as easy as it sounds. To start with, under the law of the state, an LLC name in Minnesota must contain the words ‘Limited Liability Company’, or the abbreviation of this.
It must also be distinguishable from all of the other business entities in the state that have filed with the Minnesota Secretary of State. Once you have come up with a name that you like, and ensuring it contains the term ‘Limited Liability Company’, you can check that the name, or a similar sounding name, is not already in use by searching the Minnesota business name database. If your name is available but you are not quite ready to file it yet, you can reserve the name for up to 12 months. This can be achieved by filing a name registration with the Office of the Minnesota Secretary of State Business and Lien System. You can either chose to do this online, which comes with a $55 filing fee, in person, which also has a $55 filing fee, or by mail, which costs $50.
There are a few other guidelines you should be aware of, such as your name cannot include any words that would confuse your name with a government agency. These could include words such as Treasury, State, Departments and FBI to name a few. Some restricted words like Bank, Attorney and University may mean that you have to do some additional paperwork, plus a licensed individual needs to be a part of your LLC.
Remember, although you are coming up with the official name for the business, you are also able to register assumed or fictitious business names, which are known as a DBA name (doing business as). This can be very helpful if you want to start up another branch of the business or make your name more memorable. I encourage you to also read on how to file for DBA here. You will still need to register this name with the Minnesota Secretary of State, but it gives you another option in the future to use a different name to the one on your Articles of Organization. You can register for this name both online, which costs an additional $50, or $30 if you wish to go through the filing process online. You must then publish this name for two consecutive issues in a legal newspaper in the county where the principal place of business is.
While you are going through the naming process, it is also advisable that you check online to see if your proposed business name is available as a web domain. If the domain is available, it is advisable that you buy the domain when you register your business name so that someone else doesn’t purchase it, even if you don’t plan on making a business website right away.
Step 2: Get a Registered Agent in Minnesota
The next vital step is to appoint yourself with a registered agent. A registered agent is an individual, or business entity, who will accept all legal papers on behalf of the LLC. These legal papers could include important tax forms, legal documents, official government correspondence and notice of lawsuits. Basically, they are your point of contact with the state. Who can be the registered agent of the company is quite flexible, but it must be a resident of Minnesota, a Minnesota business entity or alternatively, it can be a foreign business entity that is authorized to do business in Minnesota. They must also have a physical street address in the state. You could even be your own registered agent, or you could choose to elect someone else who is in your company.
Step 3: Filing the Articles of Organization for Your Minnesota LLC
This is arguably the most important step when it comes to filing an LLC. You must file your Articles of Organization with the Minnesota Secretary of State. What is on your Articles of Organization depends on your business, but contains all the vital information about your business and registered agent.
You can either file your Articles of Organization by mail or you can file it online. Filing by mail costs a little bit less at $135 and online and in person filings are charged at $155.
Step 4: Create Your Minnesota’s LLC Operating Agreement
Not all states require you to have an operating agreement in order to successfully file an LLC, and Minnesota is one of these. Despite the fact that is it not completely necessary, it is good practice to have one, and is very much advised. The operating agreement is the legal document that outlines the operating procedures and the ownership of the LLC.
It can be a very helpful document, especially in the long run, as it ensures that all owners of the business are completely on the same page about how the business is run. This will reduce the risk of future complications as if there is a disagreement in the future, then the members are able to just look back at the operating agreement which was agreed together.
Step 5: Get an EIN for Your Business in MN
An EIN stands for Employer Identification Number, although it is also sometimes referred to as a Federal Employer Identification Number or a Federal Tax Identification Number. The EINs are made up of nine digits and are assigned by the Internal Revenue Service.
Your EIN will be used to help identify businesses for tax purposes, much like how a Social Security Number works. An EIN is very important for an LLC as you’ll have to use it to open a business bank account, to hire any employees, and to file and manage Federal and State Taxes, so you should get it as soon as possible to make things easier for yourself in the future.
The EIN is free to get from the IRS, and the whole process can be done quickly and easily either online or by mail.
Step 6: Comply with Minnesota TAX and Regulatory Requirements
Depending on where your business is located and the type of business it is, there may be some other business requirements that you’ll have to consider. For example, the LLC may need to obtain local and state business licenses. To check if you need a business license, you can check with the clerk for city where the company’s primary place of business is. If you want to find more about state licenses, the place to look is the State of Minnesota Elicensing portal, as this will tell you all you need to know about business licenses in the state.
Again, depending on the type of business that you have, you may need to register with the Minnesota Department of Revenue. This may be if you have employees or will be selling goods or collecting sales tax.
Step 7: File Your LLC Annual Renewals
Once your business is all set up and running, the hard work is far from done. You will have to remember to meet the annual requirements that come with running a business in Minnesota. An annual renewal must be filed once every calendar year with the Secretary of State, as long as it is before December 31.
It is your choice if you want to file your renewal online or by mail. The cheapest option is by mail at $25, although this might take a little longer. Online or in-person filings are charged at $45.
Use Professional Service to Form Your Minnesota LLC
You don’t have to go through the process of forming your LLC yourself, there is always the good option of getting a knowledgeable third party to do all the hard work for you, usually for a small fee. They will handle the whole process for you, from start to finish, leaving you time to do more important things, such as actually running your business. Although there are many different options available for LLC formation services, two of the best are Zenbusiness and IncAuthority.
#1: Start an LLC in MN With ZenBusiness
Zenbusiness is a strong running in the LLC formation service game. Since its beginnings in 2015, it has formed literally thousands of businesses across the states, and has racked up an impressive number of positive reviews. LLC formation is just one of the many services that the company offers. They are one of the most affordable LLC services available, with their most basic package starting at just $39, and still comes with everything you’ll need to form a business successfully. The entire process is smooth and simple, and although there are add ons and up-sells available, they are not pushy, and only offer these additional services in a tasteful way.
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#2: Start an LLC in MN With IncAuthority
IncAuthority is another popular LLC formation service, likely for one main reason. The company offers their LLC formation service for free, meaning you’ll just have to pay the state filing fee. Not only that, but it also has some very positive reviews online, which shows it does a great job, as well as offering a great price. This free service even comes with a registered agent service for free for a whole year. If you want other services, there are a number of paid packages you could choose from which include services such as tax consultation, a company seal, complete operating agreement, ownership certificates and more.
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Form an LLC today with IncAuthority starting at $0+state fees. They’re one of best-known services with lots of great customer experience.
FAQs About Minnesota LLCs
How much will it cost to form my LLC in Minnesota?
There are several cost factors to take into consideration when forming an LLC in Minnesota. To start with, filing your Articles of Organization is likely to be the biggest expense, which is charged between $135 and $155. If you want to reserve your business name, then this is an extra $50-55 depending if you reserve the name by mail, online or in person. Every year you will also have to file an annual renewal, which is either $25 if you file it by mail, and $45 if filled out online or in person.
These are the costs for the initial set up, but then you will have to consider the cost of hiring a registered agent every year, and hiring a third party to form your LLC for you if this is the route you are going down. Hiring a lawyer will be the most expensive option, as this could cost you hundreds, if not thousands of dollars.
We recommend reading our full Minnesota LLC costs guide to see the full picture.
When it is time to dissolve my LLC in Minnesota, how do I go about doing this?
When you want to end your business, it is very important that you go about it the right way to help avoid unnecessary fees and payments. In Minnesota, you will have to file the correct dissolution paperwork with the state. There are two forms you’ll have to fill out, one is the Statement of Dissolution form, and the other is a Statement of Termination Form. Once you have filled these both out completely and correctly, you can submit it to your state.
Are there any licenses which are required for forming an LLC in Minnesota?
If you need a business license depends on where it is in the state that you are going to be conducting business. You will have to check on a local, state or federal level to ensure that you are doing business legally by having all the right licenses. You can check on a state level at the licensing web portal, which can be found at Minnesota ELicensing. Here, you are actually able to search for a license via the topic of your business.
Are there any insurances I am going to have to worry about?
All LLCs in Minnesota must carry workers’ compensation insurance in order to do business if they have any employees, even if it is just one person. After this necessary insurance, depending on the type of business, it also might be beneficial for you to get further coverage in the form of liability insurance. If you want further clarification, you can talk to an insurance professional and learn all about your options.
What is an LLC?
The abbreviation LLC stands for Limited Liability Company. It is one of the most popular business structures in the country, as it offers a lot of flexibility, especially when comparing it to a traditional corporation, while still offering many of the same benefits, and more.
Should I use a registered agent service?
Although it is possible to be your own registered agent or use someone you know to save yourself a little money, many businesses opt to use a registered agent service. There are many services out there that are extremely affordable, and will take the stress and hassle about that part of the business. There are many advantages of using this kind of service, many of which will outweigh the annual costs.
How long will it take to form my LLC?
There is no set formation time for filing an LLC in Minnesota, but in general it takes you between one or two weeks. This time frame, however, can greatly differ from business to business, so don’t worry if it takes a little longer.
Even though Minnesota does not require an operating agreement, do I still have to file it with the state?
No, it is not necessary to file your operating agreement with the state. Once written, you should keep it as an internal document, safely on file for future reference.
What tax structure should I be using?
You’ll be informed about all the different tax classification options that are available when you get your EIN. There are a few different options to pick from, however, most businesses go for the default tax status. Another popular option is the S corporation status, as this can help to reduce the business’ federal tax obligation.
Is there a difference between a domestic LLC and a foreign LLC?
Yes, there is a difference. If you want to do business in Minnesota but are not based in Minnesota, all LLCs organized outside of the state must still register with the Minnesota Secretary of State to create what is known as a foreign LLC. This is in addition to filing as an LLC in the home state. A foreign LLC must still also appoint a registered agent for service of process physically located in Minnesota. In order to go through this process, the LLC must file a Certificate of Authority to Transact Business in MN, which can either be filed online for a fee of $205, or in person for a fee of $185. Here’s more on domestic and foreign LLCs.
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