Forming a Limited Liability Company (LLC) in Minnesota offers personal liability protection, potential tax benefits, and flexibility in management. Here’s a step-by-step guide to help you establish an LLC in Minnesota:
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STEP 1: Choose a Name for Your LLC
Naming Requirements: The name you choose for your LLC must include the words “Limited Liability Company” or the abbreviations “LLC” or “L.L.C.”
Uniqueness: Ensure that the name is distinguishable from existing businesses registered in Minnesota.
Check Name Availability: Use Minnesota Secretary of State’s online business name database to confirm your chosen name’s availability.
Optional Name Reservation: Minnesota allows you to reserve a name for 12 months by submitting a “Name Reservation” form and paying the associated fee.
Time it Takes to name an LLC
Researching and deciding on a name: 1-2 hours
If opting for a name reservation: The act of filing can take about 10-15 minutes.
If opting for a name reservation: Filing can take minutes, but approval might take a few days to a week.
STEP 2: Designate a Registered Office and Agent
Your LLC must have a registered office (a physical address) in Minnesota.
Designate a registered agent responsible for receiving official legal documents for your LLC. The agent can be an individual or business entity but must have a physical address in Minnesota.
Time it Takes to be a Registered Agent
Registered Agents MUST BE at the Business Address everyday during business hours. This is why Home Addresses Are Not Accepted.
If you already have someone in mind (like an attorney or a service), this can be quick. If you need to find and appoint a registered agent: 1-3 hours.
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Benefits of having Inc Authority serve as your Registered Agent include:
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· Legal Compliance: Avoid fines, penalties, and possible dissolution
· Convenience: Serves as your public & legal business address
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STEP 3: File Articles of Organization
Prepare and submit the Articles of Organization. This document officially creates your LLC with the Minnesota Secretary of State.
Provide details such as the LLC’s name, registered office and agent, management structure (member-managed vs. manager-managed), and organizer details.
You can file the articles online or by mail with the Minnesota Secretary of State.
There’s a filing fee associated with this form.
Time it takes to write the Articles of Organization
Preparing the document: 1-2 hours
Filing online: 30 minutes to 1 hour.
Waiting for confirmation/approval: This can range widely, but typically, online filings can be processed in a few days to a couple of weeks.
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STEP 4: Create an Operating Agreement
An Operating Agreement outlines the roles, responsibilities, and procedures for your LLC. It includes topics like member contributions, profit sharing, decision-making processes, etc.
While Minnesota law recognizes the authority of an Operating Agreement, having one is not mandatory. However, it’s highly recommended, especially for multi-member LLCs.
Time it takes to write an Operating Agreement
If using a template and making minimal changes: 1-3 hours
If drafting from scratch or having extensive negotiations among members: Several days to weeks.
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STEP 5: Obtain an Employer Identification Number (EIN)
Apply for an Employer Identification Number (EIN) from the Internal Revenue Service (IRS) for tax purposes.
You can apply for an EIN online at no cost through the IRS website: https://www.irs.gov/businesses/small-businesses-self-employed/apply-for-an-employer-identification-number-ein-online
The EIN will be used for tax filings, opening bank accounts, and hiring employees.
Time it takes to get an EIN / Tax ID
Filling out the online form and receiving the EIN: Approximately 0.5 to 1 hour (the online process is relatively quick if there are no complications).
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SO HOW MUCH TIME WILL IT TAKE TO FORM AN LLC MYSELF? DO IT MYSELF (DIY) an LLC?
Total Time Investment (Minimum): 5 hours (if you exclude the higher range estimates and name reservation)
Total Time Investment (Maximum): 11.5 hours (if you include the higher range estimates and name reservation)
This gives a ballpark range of 5 to 11.5 working hours for an individual, excluding all waiting times. It’s worth noting that these times can vary based on the person’s familiarity with the processes and any specific details or challenges related to the business being set up.
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