Having a Minnesota LLC is a better and cheaper option than having other business structures. A limited liability company (LLC) reduces the owners’ personal liability and protects their personal assets. One can start an LLC in two ways, domestic LLCs or foreign LLCs (LLCs in more than one state). By following some basic steps, you can easily form an LLC in Minnesota.
On this page, you’ll learn about the following:
- How to Start an LLC in Minnesota
- After Starting your Minnesota LLC
- Minnesota Foreign LLC
- Why an LLC in Minnesota
- Best Businesses in Minnesota
- Minnesota LLC Formation Review
How to Start an LLC in Minnesota
An LLC or a Limited Liability Company is a hybrid business entity combining a corporation’s characteristics with a partnership or sole proprietorship. It separates your personal assets from your business assets, thus giving you personal asset protection. This section gives you a step-by-step guide on how to start an LLC in Minnesota.
Step 1: Decide a Name for Your LLC
Deciding on a business name is the first step to start an LLC. In Minnesota, before you name your LLC, it is important to note a few things. Firstly, make sure the name is available to use. If the name is available, then check if the name complies with all the Minnesota business naming requirements. Once you pass through them, you can successfully name your business.
Why do you need a proper business name?
If you want your LLC to have special identification, your company name is essential. However, many potential customers face lots of issues by avoiding focus on choosing a business name for their LLC business formation filings.
Because of this, here are some of the major benefits of choosing the best LLC corporate names.
- To help establish a company’s presence in the market, a proper business entity type will help you. This also creates a new identity that will resemble your LLC.
- After you’ve properly chosen the name for your LLC, you will have no problems finishing the registration service process.
- You can only get the EIN number when you have your name registration certificate with you.
Requirements when deciding a name for your LLC
LLC Name Search: A business name search is required to check if the desired name is available or not. If the name is available then the business owner has to fill up a name reservation form and send it to the Secretary of State, Minnesota. To do the name search, one has to visit the Business Entity Search page on the official Secretary of State website. Send the name reservation form to the below address by mail to reserve your LLC name in Minnesota. The cost of a name reservation is $55 (online) and $35 (mail).
Important Quick Links:
Minnesota Secretary of State – Business Services
Retirement Systems of Minnesota Building
60 Empire Drive, Suite 100
St Paul, MN 55103
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Step 2: Assign a Registered Agent in Minnesota
A registered agent, or business entity, is a person that will act or work on your behalf. This person or business will receive significant tax forms, legal documents, a notice of lawsuits, and other official government correspondence in Minnesota. Choosing a Minnesota registered agent services for your LLC is required.
Make sure your registered agents are residents of Minnesota. It could also be a business. Here are the recommended agents and employees for you:
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Note that availing of the services of professional registered agents would be your best option since you are guaranteed that whoever is handling your legal affairs knows their stuff well. You will enjoy peace of mind and focus only on running your business, as the ‘professionals’ take care of all legal matters.
These LLC formation services are recommended registered agent services as they are authorized to conduct business in Minnesota. Compare them to check the best yet cheapest option for you. Besides, they can guarantee you professional service because they have been in the business for years.
Step 3: File Articles of Organization in Minnesota
A Certificate of Name Reservation is needed to file Articles of Organization, as other states call it. You need to make reports of this certificate with the Minnesota Secretary of State. You may file them online or by mail.
This Minnesota Certificate of Formation is a legal document needed to form your business officially. It will indicate details about your LLC in Minnesota, like if it is a member-managed or managers-managed.
Before you start filings, you must already have your LLC name and registered agents or employees. You will attach a copy of your Name Reservation Form along with a list of the services that your Minnesota LLC will offer.
How to File Online
Go to the Secretary of State Online Service. Select “non-subscriber.” Fill out the online form. The website will alert you if your county does not support online filings after selecting your principal county. To know more about online filing, visit the Minnesota Certificate of Formation.
How to File by Mail
If you prefer filing real-life forms for your Minnesota LLC registration, then you can download the Minnesota Limited Company Certificate of Formation. Read the form thoroughly and fill it out. for filing by mail or annual renewals by mail, it will have to fill, among others, your name, physical street address, city, state, zip code, and signature. You may also file in person by visiting the office on business days.
Mail To: Minnesota Secretary of State — Business Services
Retirement Systems of Minnesota Building
60 Empire Drive, Suite 100
St Paul, MN 55103
Step 4: Create Your Minnesota LLC Operating Agreement
An operating agreement is a document that legally outlines the proprietorship and operating procedures of your LLC This internal document is vital as it ensures that all business owners are on the same page regarding how they operate, thus reducing future conflicts.
When it comes to an LLC operating agreement Minnesota does not require you to have a comprehensive operating agreement, but it is ideal to have one that contains all your details of business operation. This document would be useful if you decide to dissolve Minnesota LLC later.
Step 5: Filing a Minnesota LLC EIN
The Employer Identification Number or, simply, the E.I.N. is a nine-digit number given by the Internal Revenue Service (IRS) to make it easier to identify types of business for tax purposes and taxes in general. It is like a Social Security number dedicated to a business’ taxes. The EIN is necessary for any active business or any form of business for that matter.
To obtain EIN (aka FEIN) one has to fill up a form (Online or by mail) and submit it to the IRS. Before sending the form, ask for EIN Assistant. Enter details of your LLC, and finally complete the form and send it to the address given.
Mail to: Internal Revenue Service, Attn: EIN Operation, Cincinnati, OH 45999
Fax: (855) 641-6935 | Fee: Free
Note: You don’t need a Social Security number when getting an EIN. You can proceed to fill out I.R.S. Form SS-4 and leave section 7b blank. You must then call the IRS at (267) 941-1099 to complete your application. Agents or employees will help you with that.
And that’s all! Congratulation, you are now done with all the necessary steps to form your Minnesota LLC. If you still haven’t used a professional service from here, I strongly recommend having one to handle the remaining tasks.
After Starting your Minnesota LLC
After forming your LLC, there are still some things that you will need. Take note of the following:
- Get a company business bank account
- File Minnesota business permits & licenses
- Get liability for business and professional liability insurance with coverage for employees
- File a Minnesota LLC annual report or biennial report
- Already existing LLCs that wish to operate in Minnesota must register as Minnesota foreign LLC.
This page has provided you with steps to LLC formation and filing processes. You now have to remember upcoming filing deadlines and filing fees or filing costs, including fees for late filings to make sure your LLC is up-to-date.
Minnesota Foreign LLC
To register a Minnesota foreign LLC, one has to file the foreign LLC formation certificate with the Secretary of State, Minnesota. Forming a foreign LLC allows you to operate your business in more than one state in the USA as a single business entity. Check Minnesota Foreign LLC to know more about having a foreign LLC.
Why an LLC in Minnesota
If we consider the Minnesota state, it offers one of the brightest environments for the new LLC to establish. Some of the advantages offered can be a competitive environment for the business and stronger business policies for smooth functioning. Some of the benefits they are offering are common for the LLC throughout, but there are many unique advantages of the Minnesota LLC discussed in detail below.
Resource available for entrepreneurs is huge
The biggest benefit of Minnesota LLC is the abundance of resources. If some business is purely based on new research and innovative ideas, the Minnesota government will help that LLC with resources. However, different programs for these resources to entrepreneurs are mainly listed under the Minnesota Department of Employment and Economic Development.
From business to business, the fund amount differs. For instance, the Job creation fund for an LLC may vary up to $1 Million. For loans, this amount may vary from $20,000 to $50,000.
The Minnesota Opportunity zone
All the LLC in Minnesota that is looking forward to a long-term investment start-up in the state but have low investment resources and income are included under this opportunity zone. Such LLCs will be eligible for some tax deferment, like a temporary basis; no income tax will be charged on the capital they gain and permanent removal from the list of taxed businesses based on their taxable amount out of their income gains.
Research and Development Tax Credit
There is a research and development department in almost every new startup that will help them explore future endeavors for future personal growth and the growth of humanity. Such R&D’s are appreciated by the government, and the tax that is leveraged over these centers is offered back as a credit to companies to appreciate their good work and motivate them for the future.
The environment is positive for LLC
If a new business, which wants to start an LLC in Minnesota, looks at the survival rate of the new LLC, then it is huge. More than 57 percent of the new business is accomplished in the state. This is the strong engagement of a local person, which helps in easing the processing services of establishment and managing.
Best Businesses in Minnesota
Before you form an LLC in Minnesota, go through the below-mentioned top businesses in the state. Not only are they the Top Businesses in the state, but their contribution to annual GDP is also immense.
More than 74,500 farms in Minnesota state, providing raw material to more than 1000 agricultural firms. The primary sector of agriculture is contributing around $75 billion to the State. Moreover, the State also ranks 4th in milk production, which shows a significant contribution of dairy into the business.
The manufacturing business is rising day by day, resulting in around 8300 active manufacturing firms in the State. The employment provided by the manufacturing sector has risen by 11% from the year 2010 to 2019, with a total contribution of $55 billion. This amount is 1/6th of the total GDP of the State. Moreover, the competitive business environment in the State is giving better options of growth to new manufacturing businesses.
The State’s service industry is one of the greatest contributors to the economy and has employed 3/4th of the working population. The educational services and health care are the biggest ones that contribute to around $36.34 billion to the state GDP, followed by wholesale and retail trading.
There are small businesses also that are established very well in the State. They are mentioned below.
- Giving music lessons
- Opening a recruiter agency for the manufacturing and service sector
- Being a virtual assistant for companies
Minnesota LLC Formation Review
Time needed: 5 minutes.
Just to recap, here are the easy steps again when forming an LLC in Minnesota. Click on the steps in this list to read the full detail.
- Name your Minnesota LLC
The first thing you must do is to choose a company name, which should be unique, easy to find, and available in the state.
- Choose a registered agent
In Minnesota, it is not an option if you don’t want to select a registered agent for service for your LLC. You can check out our list of our 5 Best LLC Services in the United States.
- File a formation certificate
Filing a formation certificate is necessary when forming an LLC. Depending on the state, it could be called any of the following: Certificate of Formation, Articles of Organization, or Certificate of Organization.
- Create operating agreement
An operating agreement is not a strict requirement but something encouraged when you start an LLC.
- Get an EIN
The Employer Identification Number (EIN), also called Federal Tax Identification Number, serves to identify a business entity like a social security number but for a company.
If you are a resident of Minnesota, then you can file your LLC by yourself. However, it is always worth having a professional than doing it yourself to handle legal complexities, paperwork, and other documentation.
Apart from the formation fee of $155 (domestic LLC) and $205 (foreign LLC), LLC costs in Minnesota do not include fees for Annual Reports as it is free. LLCs are liable to pay sales tax of 6.875% every year.
It takes 7 to 14 business days to get a Minnesota LLC if you file it online or via mail.
Every year all the LLC have to submit an Annual Report for free to the Minnesota Secretary of State and renew the LLC. It is mandatory to renew your LLC every year.
Generally, for the LLCs, it is a default tax structure. Once you will obtain the EIN, you will get the various tax structure options to select. Sometimes LLCs choose S Corp to reduce federal tax burdens.
Having an LLC is easier than other forms of business. LLCs have a ‘pass-through taxation’ advantage for which they are excluded from certain taxes. On the other side, the formation of LLCs requires less paperwork and fewer legal complexities. If you have any questions, leave a comment below.