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Forming an LLC in Minnesota

If you're ready to form an LLC (limited liability company), you're well on your way to establishing your company's legal foundation and protecting your personal assets. The process of LLC formation is not difficult, but it does require several steps. It's also vital that you comply with state laws to form your Minnesota limited liability company. Whether you plan to use a professional service or start your LLC on your own, it's best to understand the process before you get started.

We make business formation EASY. Learn about our DIY business formation services here.

LLC and Other Business Organization Types

"LLC" is an abbreviation of "limited liability company." This means that LLC owners aren't personally liable for the LLC's judgments and debts. For example, if someone decides to sue the company, you have protection for your personal assets (such as your house or car). Without liability protection, you could lose personal assets in a lawsuit arising from a business debt or obligation.

Forming an LLC requires fewer formalities than for a corporation but does require more effort to create when compared to the process for a partnership. It's a good idea to plan for the costs and the time it takes to form a Minnesota LLC.

Forming an LLC in Minnesota

Forming an LLC is a similar process in every state. However, some laws and procedures differ. Ensuring that you meet the legal requirements for starting and maintaining an LLC in Minnesota can help you avoid legal problems down the road.

Step 1: Name Your Minnesota LLC

Naming your Minnesota business is essential because it has both marketing and legal implications. From a marketing perspective, the name you choose is one of the first things potential customers will learn about your business. You want the name you choose to attract those customers to your products and services. From a legal perspective, you need to have an LLC name that satisfies the naming requirements in Minnesota.

The Minnesota laws on LLC names can be found in Section 322C.0108 of Minnesota Statutes. Note that your LLC name must:

  • Be distinguishable from all other business names on record with the Minnesota Secretary of State
  • Include the term "limited liability company" or the abbreviation "LLC"

Also, avoid using restricted terms or phrases unless you have the required licenses or approvals. Don't use any words or phrases in your business name that suggest that your business is a governmental agency. Don't use words or phrases that indicate that your business is organized for an unlawful purpose.

Make a list of a few potential names, and then head to the Minnesota Name Database to check for name availability. If a name on your list is already in use or reserved, you need to choose a different name for your business. You have the option of securing a name with the Minnesota Secretary of State if you settle on an available name but are not ready to register it yet.

Step 2: Pick a Registered Agent

You'll need to choose a registered agent to handle service of process for your company. If someone decides to sue the company, there must be someone appointed to accept the legal papers on behalf of the company. You must choose a person or company to serve as your Minnesota registered agent, as long as the person or company meets the requirements. If you choose a person, that person must be a resident of Minnesota. If you choose a business entity, that entity must be registered in Minnesota.

Also, your registered agent must have a physical street address in Minnesota. The registered agent must be available during regular business hours additionally. Consider using a registered agent service if you can't think of a suitable registered agent.

Step 3: File Your Articles of Organization

You'll need to file Articles of Organization with the Minnesota Secretary of State to create an LLC in the state. You can file your LLC Articles of Organization by mail, in person, or online.

The filing (which includes fees) must consist of the following information:

  • The LLC's name and address
  • The LLC's purpose
  • The registered agent's name and address
  • The name and address of at least one LLC organizer

Filing fees for Minnesota Articles of Organization are $135 for filings by mail and $155 for online filings. Don't forget to include this filing fee with your filing.

Step 4: Get an EIN

Getting an EIN (Employer Identification Number) or Tax ID number is necessary for most business owners. An EIN is like a social security number for your business. You'll need this number to open up a business bank account and hire employees.

Getting an EIN is simple and free. You can apply for an EIN on the IRS website.

Step 5: Draft an Operating Agreement

An LLC operating agreement is an internal document covering the rules and procedures governing your organization. Without it, you might have to rely on state LLC laws when or if a conflict arises.

Minnesota operating agreements tend to address: rights and responsibilities of the members, liabilities, procedures for admitting new members, procedures for voting, and the distribution of profits and losses. Even though you don't have to file your operating agreement with the state, it's essential to have one.

Step 6: Get a Business Bank Account for Funds

To keep your personal liability protection as an LLC owner, you'll need to make sure that you keep your personal and business funds separate. The best way to do that is to have a different account dedicated solely to your business. It also makes tax preparation and accounting easier.

Be prepared to provide your EIN and formation documents when you open your business bank account. Get a business credit card or debit card, as well, for business expenses.

Frequently Asked Questions (FAQs) on Minnesota LLC Formation

1. How long does it take to form an LLC in Minnesota?

Once you file your Articles of Organization, it could take up to two weeks for a filing by mail and 1-2 business days for an online filing to be processed in the office.

2. Do I need a DBA for my Minnesota LLC?

A DBA, also called a trade name or fictitious business name, is a name other than the legal business name used for conducting business. If you're only using your legal business name for business activities, you don't need to worry about registering a DBA.

3. Does Minnesota require annual reports or annual renewals?

LLC owners must file annual reports (annual renewals) with the Minnesota Secretary of State. It's free if your company is active and in good standing. However, if your company has been dissolved, there's a filing fee for the reinstatement.

4. Do I need to get a business license or permit for my Minnesota LLC?

You may need to get a business license or business permit for your Minnesota limited liability company. Requirements vary based on the location and the type of business you're running. For this reason, it's best to contact your local and state agencies to find out the requirements for your specific type of business.

5. How do I handle business taxes for my LLC?

LLC owners choose how the federal government taxes their business. State taxes are handled by the Minnesota Department of Revenue (DOR). You may need to register your business entity with the DOR.

Note: State laws are always subject to change through new legislation, rulings in the higher courts (including federal decisions), ballot initiatives, and other means. While we strive to provide the most current information available, please consult an attorney or conduct your own legal research to verify the state law(s) you are researching.

Ready to Begin Forming an LLC in Minnesota?

Fortunately, forming an LLC in Minnesota can be a straightforward process with FindLaw's Business Formation Service. However, if you have unique formation challenges or complex legal issues, help is available. Don't delay contacting a skilled Minnesota business organizations attorney near you.

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