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How to Form a Minnesota LLC: Minnesota and its Many Business Benefits

There are many requirements that go into getting your Minnesota LLC up and running, some of which can be overwhelming for new business owners.

However, with the right support, you’ll be able to successfully form your Minnesota LLC so you can start doing business in the state of Minnesota. Below you will find an overview of each step for the state of Minnesota:

steps to form an LLC

What are the Benefits of Forming an LLC?

There are numerous benefits that come with forming a Minnesota limited liability company (LLC). An LLC limits your personal liability because it keeps the LLC legally separate from its owners. In a sole proprietorship or a partnership, your business debts are also your personal debts. However, when you form an LLC, your personal assets, such as bank accounts, vehicles, and real estate properties are kept safe from debts or lawsuits.

Creating a Minnesota LLC may appear to be an overwhelming task, but that’s what our professional team is here for! The team at LLC Formations is happy to assist you every step of the way. Our detailed instructions can support you in learning about the process until you’re ready to allow us to efficiently guide you.

Forming an LLC is worthwhile to go into business for yourself and to pursue your passion. If you utilize our step by step guide, you will have your Minnesota LLC up and running in no time.

Minnesota LLC

The Steps to Forming Your Minnesota LLC

A new entrepreneur is responsible for not only filling out all of the required paperwork, but also satisfying state requirements as well. Factor in the additional steps needed to protect your new business from future liability and the process becomes a little bit more difficult. The professionals at LLC Formations can walk you through each step to simplify the process and protect yourself and your business.

The Minnesota LLC formation process has eight easy steps:

1. Complete an LLC Name Search

2. Select a Registered Agent

3. Obtain a Certificate of Formation

4. Create an LLC Operating Agreement

5. Get an EIN Number

6. Open a Business Bank Account

7. Complete an Annual Report

8. Obtain Business Licenses and Permits

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1. Choose a Name for Your Minnesota LLC

Step 1 of creating your Minnesota LLC is to name it. When you form an LLC, your LLC name must be unique and creative, and it’s best if it references what your business offers its customers or clients. In addition to being clever, the business name should also be memorable. Clients need to be able to easily search for the name of your LLC without added difficulties of pronunciation or spelling.

Things your LLC name can and cannot have:
  • Your name must include the phrase “limited liability company” or an abbreviation (LLC)
  • It cannot include restricted words or that will confuse your LLC with a government agency
  • If your LLC must include restricted words, it may require extra paperwork in addition to a licensed individual (law firms require a licensed lawyer, tax firms require a licensed tax professional, etc.)

Conduct an LLC Name Search through the Secretary of State

You can check to see if your company name is available by conducting a Minnesota LLC search. A basic name search on the Secretary of State website will let you know if your LLC name is already taken by another Minnesota LLC.

If you’re not quite ready to take the leap, you may reserve your LLC name for up to 12 months. By reserving your LLC name, it ensures that nobody else will be able to take the name while you organize your limited liability company.

To reserve a company name, you must first file an application with the Office of the Minnesota Secretary of State Business and Lien System. This reservation must be filed online or by mail with the Minnesota Secretary of State business and Lien System. There is a non-refundable filing fee of $35 for requests sent by mail and $55 when paying online or in person.

Check to See if the Domain is Available

Before you form an LLC with your name, check to see if your website URL is available. Even if you’re not 100% ready to set up your website, we advise our clients to check that name is available as a domain name before committing to it. Buying the URL before someone else does is a smart step to avoid issues in the future. It secures your business name for a website when you’re ready to create one.

It’s important for any business structure to have an online presence with the company information. This way, potential clients or customers can see what your business is all about. A smart business owner would use the same domain name so the website can be used as a marketing tool to help you grow your business.

Set up Your Business Email Address

Once your name has been officially registered with the Secretary of State, setting up professional email accounts is the logical next step. When you have a professional email address, your clients will have a way to contact you on a secure server. A company email address is safe for your customers’ sensitive information, and it will also make your business look more professional.

2. Choose a Registered Agent in Minnesota

The next step in starting an LLC in Minnesota is choosing a registered agent. Every LLC must file their LLC formation documents with the information of their chosen agent. Hiring a registered agent is a required step in the state of Minnesota as the registered agent will need to be named on your documents.

Getting a DBA or Trade Name - is it necessary?

DBA stands for “doing business as”. Most LLC’s don’t require the use of a DBA however if you need to conduct business utilizing an alternate name, a DBA is a necessary step. Contact us for more details on how we can help you file!

What is the Role of a Registered Agent?

A registered agent is responsible for receiving legal documents on behalf of your LLC and acts as your LLC’s point of contact with the Minnesota Secretary of State. Your registered agent must be a resident of the state of Minnesota or a corporation that has been authorized to conduct business within the state. A registered agent must be chosen carefully, however, you may elect any individual (including yourself).

Who Can Be a Registered Agent?

In addition to those guidelines, your registered agent must be 18 years or older, have an office address or mailing address in Minnesota, and must be available during the hours in which someone might receive service of process in person.

An alternative option to choosing an individual as a registered agent is to hire professional registered agent services. While this option is a bit more expensive, it can help you to avoid any fees or legal issues pertaining to important documents or notices.

Should I Use a Registered Agent Service for My Minnesota LLC?

Your registered agent is a person/business who is nominated to officially send and receive papers on the LLC’s behalf. Utilizing a service ensures several things:
  1. Paperwork will always be filed on time for your limited liability company. In Minnesota, an LLC is automatically dissolved if the annual report has not been filed on time. The registered agent notifies you when reports are due, collects appropriate fees, and takes care of the filing documents for your LLC in Minnesota.
  2. Registered agent services allow you to keep your private business private. You can avoid listing your street address or personal information on your filings by using a service for your limited liability company.
  3. If someone decides to file a lawsuit against you, the LLC will be served at the address listed. If the address listed is at a separate place of business and/or not at your home address, it saves you the embarrassment of having legal papers served in front of employees or family members.
  4. Additionally, the registered agent’s phone number will be in the public domain. Business owners who prefer to keep their phone number private choose to hire a service that can provide their number on the forms.
  5. Using a service gives you the freedom to work when needed – a registered agent must be consistently available during normal business hours. This affords you the freedom to come and go as needed without worrying about paperwork being received by the right person.

3. File the Minnesota Articles of Organization

Once you have designated a registered agent, in order to continue the Minnesota LLC formation process, you will need to file your Articles of Organization with the Minnesota Secretary of State. You must determine whether your LLC will be manager-managed or member-managed. Once you have made this decision, you can then file online or in person.

The Articles of Organization is an important document that gives legal standing to your LLC in the state of Minnesota. Once you file the Articles of Organization and get them approves by the state, your business is nearly finalized.

You will need to list specific information when you do the filing of the Articles of Organization. You will need to include the company name, the information for your registered agent, your LLC start date, and all LLC members, which will document whether it is a multi member LLC or a single member LLC.

When you go to complete the filing, you will need to include the state filing fee along with the the required forms. If you need help with filing the Articles of Organization for your LLC in Minnesota, contact the professionals at LLC Formations so we can help you get your business approved.

4. Prepare an LLC Operating Agreement

Although this step is not required, we highly advise preparing an Operating Agreement when you form an LLC. For further assistance with creating an Operating Agreement, contact the professionals at LLC Formations so we can help you organize this important document for your Minnesota LLC.

What is an Operating Agreement?

An Operating Agreement is further protection for your LLC. Although an Operating Agreement isn’t legally required, we recommend that you create one as soon as you form an LLC. The Operating Agreement is important for single member LLCs and multi member LLCs.

An Operating Agreement includes important information about your Minnesota LLC, such as ownership percentages, the duties and responsibilities of each member, and how different information is handled within the company.

Every type of business structure needs some sort of Operating Agreement. Operating Agreements keep the business organized and running efficiently. There are a few blank templates of Operating Agreements online, but since each business is so different, we recommend working closely with a professional so you can craft an Operating Agreement for your specific business.

Contact LLC Formations so we can help you with this important document for your business.

Initial Costs & State Filing Fees

The state filing fee for your Minnesota LLC is $155 with expedited service for online and in person submissions. The fee is higher when you file online, but you will be able to start an LLC much sooner since the response is very fast.

You can pay a lesser filing fee of $135 if you choose to submit your filing by mail. These forms are subject to change, so it’s best to check before mailing in your application.

5. Get an EIN Number for Your Minnesota LLC

Obtaining your Employer Identification Number, also called an EIN or tax ID, is an important step for your LLC in Minnesota. Although there are some situations where you don’t have to get one, it is very important that you obtain an EIN when you start an LLC in Minnesota.

An EIN is like a social security number for your company. Additionally, LLCs with an EIN are offered many business services that can really help with growing the business as well as tax purposes. In order to obtain your EIN, you must complete an online EIN application through the website of the Internal Revenue Service (IRS).

Obtaining an EIN is free of charge, and it also offers many business benefits. When you have an EIN, you will be able to hire employees on payroll. Additionally, you will be able to open a business bank account for your Minnesota business.

If you’re working hard to start an LLC in Minnesota, contact the professionals at LLC formations so we can take care of the paperwork for you.

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6. Open a Business Bank Account

Once you have an EIN for your LLC in Minnesota, you will be able to open up a business bank account. LLCs with a business bank account are following one of the most important rules of operating an LLC — keep your business finances separate from your personal finances.

As long as your LLC is in good standing, you’re benefiting from the limited liability protection offered by the LLC business structure. Be sure to keep your personal finances separate from your business finances by opening up a business bank account for your LLC.

Additionally, LLCs with a bank account can open business credit cards and grow a line of credit for future loans. This is important so you can invest money back into the growth of your LLC in the future. When you are able to grow a relationship with a bank, you are opening up future opportunities for the growth of your business.

7. File an Annual Report for Your Minnesota LLC

In order to remain in good standing with the Minnesota Secretary of State, you will need to stay on top of your filing requirements. Each year you will have to pay a filing fee and submit an annual report for your LLC in Minnesota. Also called an annual renewal, this document needs to be submitted before the deadline or according to the state law, your LLC could be dissolved by the Minnesota Secretary of State.

All LLCs in Minnesota and foreign LLCs are required to file this report as well. All reports are due by December 31st of the year after you start your LLC. These reports can also be filed online at the Minnesota Secretary of State website or via mail.

Your registered agent or registered agent service should be helping you to remember these important dates and deadlines. If you need help with updating your annual renewal, or annual report, contact the professionals at LLC Formations so we can help you file this important document with the Minnesota Secretary of State.

8. Obtain Proper Business Licenses and Permits

Depending upon your type of business and its location, your LLC may need to obtain local and state business licenses in order to do business in Minnesota.

For new entrepreneurs, having representation is especially important when it comes to Minnesota licensing. Your Minnesota LLC must comply with regulations at all levels (federal, state, and local) including health permits, building permits, and signage permits. In addition to extra paperwork and fees, short classes may be required as well in order to have your state or local license approved.

If you need help to determine which licenses and permits apply to your specific business, LLC Formations offers this service. Instead of guessing and risking your LLC, let the professionals do the research and handle the paperwork.

Department of Revenue

If your LLC will be selling goods or collecting sales tax, you will need to register with the Department of Revenue. This registration can be done online or via mail with an application for registration.

Types of Business Insurance

General Liability

Most common for small businesses, this insurance policy protects LLCs from lawsuits that can arise after forming an LLC. There are different coverage options available depending upon your business.

Professional Liability

In order to protect yourself from claims of malpractice or other business errors, this type of insurance is common for accountants, consultants, doctors, etc., and you will need to register your professional license with the state of Minnesota.

Workers’ Compensation

Workers’ compensation insurance provides coverage for employees in the event of job-related illness, injury, or death. Minnesota requires businesses with five or more employees (including LLC business officers, corporate officers, members, etc.) to have workers’ compensation insurance.

If someone gets hurt on the job, workers’ compensation covers your employee and your LLC from potential issues that could arise.

Financing Your LLC

An LLC is typically created with financing from members and contributors, but it may also invest its own funds, borrow money, or trade-in the securities of other organizations and the government. LLC’s have a greater deal of flexibility and can even increase their own investments before accepting contributions from the outside of the LLC.

Transferring Ownership

Depending upon how the LLC was created and what is written within the Articles of Organization, an LLC can be dissolved once a member’s interest is terminated, or if the last member terminates and no new members are admitted for 180 days. Be sure to keep all of your important business formation documents in a safe place to make future matters easier.

Why is Minnesota a Good State to do Business in?

Minnesota has a great tax rate for small businesses. Your LLC may have additional regulatory and tax requirements depending on what your Minnesota business offers and where your Minnesota business is located within the state. Taxes will also depend on how many members are in the Minnesota LLC.

Whether you have one member or multi members, it is your responsibility to obtain your own IRS Employer Identification Number or EIN – even if you have no employees for your LLC in Minnesota. If your LLC is a one-member LLC your EIN must be obtained only if you have or will have employees or if you choose to have your LLC taxed as a corporation instead of as a sole proprietorship.

There are also tax advantages for LLCs. LLCs get several perks, such as adopting the tax status of sole proprietorships, partnerships, an S corporation, or a C corporation. Additionally, LLCs can take advantage of “pass-through” taxation which means that the LLC is not required to pay LLC taxes or corporate taxes once the filing is approved. It is easy to file your tax return as an LLC with the right help.

How Can LLC Formations Help You?

While the entire process seems to be a big undertaking, don’t let that stop you from following your entrepreneurial dreams. If the outlined steps still seem overwhelming, the professional team at LLC Formations can help you get your Minnesota business up and running.

While winging it is doable, it’s just not advisable. Our experts are able to provide up-to-date, state-specific instructions so you can successfully start your business in the state of Minnesota. Check out our Mississippi guide where we show you how to start your next business in Mississippi.

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