How to Start an LLC in Minnesota: Step by Step

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Minnesota llc

Estimated reading time: 11 minutes

Minnesota is a great state to start a small business. In fact, Forbes ranked Minnesota as the 15th best state to establish and operate a business. Some of the factors that provide the most favorable conditions for a start-up company include competitive tax rates, strong pro-business policies, streamlined regulatory processes, and a low operating expense. Apart from this, any business idea can benefit from Minnesota’s educated, skilled, and diverse workforce.

So, let’s dive into how to start an LLC in Minnesota step by step, so you can come up with a solid business plan of action!

Choose a Business Entity for Your Minnesota LLC 

To understand how to start a business in Minnesota, you need to understand entity formation.  Limited Liability Companies (LLCs) and Corporations are the most popular business types.

Business formation is important because it sets your company apart as a professional company and not just a hobby.

Corporation

A corporation is a legal entity that courts consider to be separate from those who own and operate it. A corporation’s debts and taxes are separate from its owners, thereby offering the greatest personal liability protection of all business structures. The two most common types of corporations are S and C corporations.

Limited Liability Company

LLCs are the most popular business structure, blending the aspects of corporations, partnerships, and sole proprietorships into a simple and flexible business entity. Like corporations, LLC formation protects the owner’s personal assets and also shields them from personal liability similar to a corporation. They also possess the “pass-through” tax benefits of a partnership.

There are two types of LLCs. LLC run by just own person (single-member LLC) and LLCs run by multiple people (multi-member LLCs)

Starting a LLC in MN can be difficult and confusing, especially as a first time business owner. But with a company like Inc Authority in your corner, you’ll not only have your LLC formed for you, but you’ll also get expert guidance beyond business formation, so you never have to wonder or worry about what to do next!

What About DBAs?

DBAs (which stands for “doing business as”) grant business owners the ability to conduct business under an assumed name. A DBA is also referred to as a fictitious business name and is an authorization by the state for your business to operate under an assumed name. 

For sole proprietors and owners of LLCs, DBAs offer an affordable way to gain legal recognition for the secondary name of your choice.

  • Sole proprietors: For sole proprietors starting a new business, DBAs are a budget-conscious way to gain legal status and work under a creative company name.
  • LLC owners: If the name on your LLC paperwork and your business name differ, DBAs offer the opportunity to operate as an LLC under a different legal name.

A DBA provides privileges like the ability to open a bank account, create enforceable contracts and establish federal employer tax status (getting an EIN). It’s possible to file multiple DBAs, allowing a single LLC to operate different businesses under the same legal umbrella. If you’re starting a business or expanding your LLC in MN, get the proper legal recognition early on to start off on the right legal footing. 

Our entity-setup service is 100% free.
We’ll waive our service charges, labor costs, and overhead. You only pay the state fees and postage, which are mandatory regardless of who incorporates for you. Start now for free!

Minnesota LLC Filing Fee

The Minnesota Secretary of State charges $135 to file the Articles of Organization (or Articles of Incorporation if you’re starting a corporation) by mail and $155 to file online or in-person. You can file an LLC name reservation for $50 if filed by mail and $55 if filed online or in-person. You are also required to file an Annual Renewal each year. It costs $25 to file this renewal by mail and $45 if filed online or in-person.

Create a Business Name

Under Minnesota law, an LLC name must contain the words “Limited Liability Company” or the abbreviation “LLC.”

Your LLC’s name must be distinguishable from the names of other business entities already on file with the Minnesota Secretary of State. Names may be checked for availability by searching the Minnesota business name database.

You may reserve a name for 12 months by filing a Name Reservation with the Office of the Minnesota Secretary of State Business & Lien system. The application may be filed online or by mail. The filing fee is $50 for filing by mail and $55 for online and in-person filings.

Using an Assumed Name

You don’t have to use your LLC’s official legal name registered in your Articles of Organization when you do business. Instead, you can use an assumed name, also called a fictitious business name, “DBA,” or trade name.

To do so in Minnesota, you must register your assumed name with the Minnesota Secretary of State. You can register by filing a Certificate of Assumed Name. You may register online or by postal mail. The filing fee is $50 for online filings and $30 for filing by mail. After filing, the Certificate of Assumed Name must be published for two consecutive issues in a legal newspaper for the county where the LLC’s principal place of business is located.

Minnesota LLC Registration  

Let’s take a look at business registration in MN, including payables such as the cost, government fees, and so on.

File Articles of Organization

You create a Minnesota LLC by filing Articles of Organization with the Minnesota Secretary of State. The articles must include:

  • the LLC’s name
  • the name and address of the LLC’s registered agent
  • the name, address, and signature of the LLC’s organizer, and
  • an email address and phone number.

Lastly, the articles may be filed online or filed by postal mail. The filing fee is $135 for filing by mail and $155 for online and in-person filings.

Minnesota LLC Operating Agreement

An LLC operating agreement is not required in MN, but it is highly advisable. This is an internal document that establishes how your LLC will be run. It sets out the rights and responsibilities of the members and managers, including how the LLC will be managed. It can also help preserve your limited liability by showing that your LLC is truly a separate business entity. In the absence of an operating agreement, state LLC law will govern how your LLC operates.

Issues that should be defined by your LLC Operating Agreement include:

  • Member powers
  • Rules for meetings
  • Members’ voting rights
  • How your LLC will be managed
  • Guidelines for losses and profits
  • Buyout provisions

Once the operating agreement has been adopted, it will provide protection for the members of your LLC. When the members of your LLC have agreed on the terms of your operating agreement and have signed the document, you should keep the agreement in a secure location.

Inc Authority can remind you to do or do for you if you choose to have us handle the paperwork.

Minnesota State Filing Fee:$155
Minnesota State Filing Time:4-7 business days

Mail to:

Minnesota Secretary of State — Business Services
Retirement Systems of Minnesota Building
60 Empire Drive, Suite 100
St Paul, MN 55103

Our entity-setup service is 100% free.
We’ll waive our service charges, labor costs, and overhead. You only pay the state fees and postage, which are mandatory regardless of who incorporates for you. Start now for free!

Get Your Employer Identification Number or EIN

The next step you’ll want to tackle is getting your EIN or Tax ID number (TIN). This number is like your business’s social security number, separating you from your business. This protects you from fraud and identity theft.

Additionally, an EIN is required by your bank to open a Business Checking Account, file tax returns, obtain payroll services and credit cards, and pay for any LLC cost that MN laws require.

To apply for your EIN, you’ll need to complete form SS-4, which can be found on the IRS website.

Assign a Registered Agent for your LLC in Minnesota

There are an estimated 38 million home-based businesses in the U.S., so if you’re thinking about starting a business in your home, you’re definitely not alone.

But did you know that by law, all businesses are required to have an address where they can accept service of legal documents (like a service of process) from the state or government agencies during normal business days and hours? Without an office, that would be your street address or P.O. box.

As you can imagine, that’s not always possible (or advisable) with a home-based or foreign-filed business. That’s where a registered agent comes in.

A registered agent is a responsible third-party in the same state as your business who receives official government notifications (usually tax forms and notice of lawsuits) on behalf of your LLC in MN.

Even if you aren’t planning on starting a home-based business or foreign LLC, having a registered agent is still advisable because it will:

  • Limit third party access to your personal information
  • Ensure that you never miss important documents
  • Protect the privacy of owners
  • Eliminate junk mail
  • Ensure you’re never served with legal papers in front of your clients
  • And more!

Ensure all your business needs are met by hiring a professional registered agent.

Setting up a Registered Agent Service

Every Minnesota LLC must have an agent for service of process in the state. This is an individual or business entity that agrees to accept legal papers on the LLC’s behalf if it is sued. The registered agent must be a Minnesota resident, a Minnesota business entity, or a foreign business entity authorized to do business in Minnesota. Your LLC may not act as its own agent. The registered agent must have a physical street address in Minnesota.

Lastly, in Minnesota, an annual report is a regular filing that your LLC must complete every year. The report is essentially updating your registered agent address. All LLC owners are required to file their annual report with the Minnesota Secretary of State. The purpose of this report is to keep your business records up to date with the state of Minnesota.

Learn more about our registered agent services here.

Open a Business Bank Account

To keep your personal and business expenses separate and to stay in good standing with the Internal Revenue Service (IRS), you need to open a business bank account for your LLC or corporation.

Setting up a separate bank account for your company makes it easier to for you do business, manage a cash balance, complete, and file your income tax returns with the MN Department of Revenue, deduct business expenses for taxes, conduct proper accounting, and execute employee payroll. Bank accounts also provide better protection in the event of legal action.

Additionally, business bank accounts create historical relevance through the relationship established with the bank, and can create unrestricted access to long-term funding options, business credit cards, and other financial solutions.

Tax and Regulatory Requirements

Additional tax (federal tax) and regulatory requirements may apply to your Minnesota LLC. These may include:

EIN: If your LLC has more than one member, it must obtain its own IRS Employer Identification Number (EIN). This is necessary even if it has no employees. If you form a one-member LLC, you must obtain an EIN only if you elect to have it taxed as a corporation – instead of a sole proprietorship (disregarded entity). Additionally, you may obtain an EIN by completing an online EIN application on the IRS website. There is no filing fee.

Business Licenses: Depending on its type of business and where it is located, your LLC may need to obtain other local and state business licenses. For local licenses, check with the clerk for the city where the LLC’s primary place of business is located (or county if it is in an unincorporated area). For state license information, check the State of Minnesota E-licensing portal.

Department of Revenue: In some cases, if you have employees or will be selling goods and collecting sales tax, you’ll need to register with the Minnesota Department of Revenue (DOR). You can register online using the DOR’s e-Services webpage.

Lastly, Minnesota LLCs are not subject to state tax

File Annual Renewals

All LLCs doing business in Minnesota must file an annual renewal once every calendar year with the Minnesota Secretary of State. You can file the renewal any time before December 31. Even better, you can file the renewal online or by mail. A paper renewal form is also available. The filing fee is $45 for online and in-person filings, and $25 for filings by mail.

Getting Started with Your Minnesota LLC

Forming a professional LLC or corporation in Minnesota is an exciting opportunity, but like starting any business it can be overwhelming. Why not let the business experts at Inc Authority do all the heavy lifting for you?

We’ll form your LLC or corporation, run a business name check, get your EIN, and make sure you have all the business resources you need, including the licenses and permits needed to run your business. We can also advise you on the things you need to pay, such as LLC cost, MN state fees, and other payables.

Not to mention we offer a ton of free management and report tools to help make running your business as simple as possible. You can contact us or visit our website today to get started!

Incorporating is the most powerful thing you can do to legitimize your business. And at IncAuthority.com, our setup LLC services are 100% free. Always. So, don’t wait. Form your free LLC today and enjoy the protection due to you and your business under the law.