How to Start an LLC in Minnesota (May 2024 Update)

A limited liability company (LLC) is a business structure that combines aspects of partnerships, sole proprietorships, and corporations. LLCs provide business owners with personal liability protection like a corporation, while allowing the tax and operational flexibility of a partnership or sole proprietorship.

Forming an LLC in Minnesota can benefit business owners in several ways. Most importantly, it shields the owner’s personal assets from liability for debts and lawsuits associated with the business. Minnesota LLCs also provide flexibility in management structure, taxation options, and have relatively low start-up costs compared to incorporation.

This article will explain the step-by-step process for starting an LLC in Minnesota, including:

• Naming and registering your LLC
• Appointing a registered agent
• Filing articles of organization
• Creating an operating agreement
• Obtaining licensing and tax IDs
• Submitting annual renewals
• Special considerations

Follow these guidelines to ensure your Minnesota LLC is properly established and maintained.

Steps to Form an LLC in Minnesota

1. Choose and Register a Business Name

Choosing a name is an exciting first step to forming your LLC! Minnesota does impose some rules around LLC names, so be sure to follow these guidelines:

Naming Requirements:

• Must contain the words “Limited Liability Company” or the abbreviation “LLC”
• Should be distinguishable from other business names in Minnesota
• Cannot contain words that imply the LLC is an incorporated entity

Additionally, you’ll want to check that your desired URL and social media handles are available before finalizing the name.

Name Availability Search: The easiest way to search LLC name availability in Minnesota is through the Secretary of State’s online business search database. If your name is too similar to an existing one, you may still be able use it by obtaining consent.

Name Reservation: You can temporarily reserve an LLC name for a $55 fee while you complete additional incorporation tasks. Reservations expire after 12 months but can be renewed. Reserving is optional but prevents others from taking your name in the meantime.

Once you land on an available business name, you can move forward to the second step.

2. Appoint a Registered Agent

Minnesota requires all LLCs to designate a registered agent within the state. This agent is authorized to receive legal documents and service of process notices on behalf of the LLC.

While individuals or existing businesses can serve as registered agents, most LLCs choose to use specialized registered agent services. These companies receive and digitize documents sent to your business address so that you don’t have to deal with paperwork or risk missing time-sensitive filings.

3. File Articles of Organization

Drafting and filing articles of organization officially registers your LLC with Minnesota. This paperwork requires the following information:

• Proposed LLC name
• Registered office address
• Organizer’s name and address
• Email address for official notices
• Effective date of organization

You’ll also need to draft and include a Minnesota Business Snapshot covering details like the number of employees, ownership demographics, NAICS industry code, and gross annual revenue.

The full articles can be submitted to the Secretary of State by mail for a $135 fee or through an expedited online/in-person filing for $155.

4. Create an Operating Agreement

While not technically required, having an LLC operating agreement is highly recommended for Minnesota businesses to codify internal processes and financial arrangements. These custom documents cover topics like:

• Ownership percentages
• Member responsibilities
• Rules for distributions
• Voting procedures
• Financial accounting procedures
• Steps for dissolving the LLC

LLCs with multiple members especially benefit from crafting an thorough operating agreement. But even single-member LLCs can realize advantages through thoughtfully outlining their intentions for management and long-term planning.

Pre-made operating agreement templates are available through online formation services or dedicated LLC creation tools. Expect pricing starting around $40.

5. Obtain Licensing and Tax IDs

Depending on your industry, location, size and other factors, your new Minnesota LLC may need to obtain a variety of federal, state, and local licenses, permits, and tax registrations. Common requirements include:

• Federal Employer ID Number (EIN): Used to open business bank accounts, apply for financing, and manage payroll taxes for employees. Managed through the IRS.
• State Tax ID: Administered by the Minnesota Department of Revenue to track tax liabilities. Necessary if you plan to sell products, purchase materials for resale, hire employees, or apply for state permits/licenses.
• Sales Tax Permits: If selling taxable goods or services to Minnesota residents. Requires additional sales tax filings and remittance procedures.
• Professional Licenses: For LLCs practicing law, medicine, accounting, architecture and 20+ other regulated professional services in MN.

Check with your county and city clerk about possible local licensing needs related to food service, transportation, alcohol sales, rental properties and more.

While this may seem daunting, many licenses and tax processes can be handled online through dedicated portals. Formation service companies also provide assistance on managing licensing/permit logistics.

6. Submit Annual Renewals

All LLCs in Minnesota must complete annual renewals to remain active and legally compliant.

You’ll need to file renewal paperwork before December 31 each year with the Secretary of State covering any changes to:

• Business name
• Registered office address
• Management roles
• Contact information

This renewal is submitted along with a statement that your business remains in good standing. Annual renewal fees are either $25 (mail) or $45 (online/in-person).

Penalties apply for those missing the renewal deadline, including dissolution of the LLC if filings remain incomplete for over 12 months.

Special Considerations

Out-of-State LLCs

LLCs formed in other states must register as a “foreign LLC” before conducting business in Minnesota by filing a certificate of authority. You’ll also need to demonstrate name availability or register an alternate name to use locally. Annual renewal rules apply the same for foreign LLCs.

Single vs. Multi-Member LLCs

The process for starting a single-member LLC is the same as that outlined above. The main legal difference relates to default tax treatment - single-member LLCs receive pass-through personal taxation like a sole proprietorship, while multi-member LLCs are treated like partnerships unless election is made otherwise.

Professional/Licensed Services LLCs

Those running licensed professional services like law, medicine, accounting, architecture, engineering and more in Minnesota under an LLC must formally organize as a Professional Limited Liability Company (PLLC). Additional paperwork demonstrates that every member and owner is licensed in their profession. Special regulations apply.

Conclusion

Congratulations on taking the first steps to start your Minnesota LLC!

Remember that properly structuring and maintaining your Minnesota LLC limits personal liability protection and opens doors to valuable tax deductions only available to LLC businesses. It does involve administrative upkeep, but becoming compliant from day one sets your new venture up for long-term success.