Think about your LLC a year from now: raking in profits and taking Minnesota by storm. You have big plans, but before your business can officially take off, you’ll need to make a bit of an investment.
And we’re not talking about renting office space or paying employees – before you sell a single product, there are startup costs associated with launching an LLC in Minnesota.
While you’re making plans and dreaming big, make sure that you consider all the possible costs associated with starting an LLC. To help you out, we’ve compiled the most common Minnesota startup fees here.
Quick Note: If you’d like to keep your costs of starting an LLC as simple and low as possible, consider hiring ZenBusiness – a reliable business formation service. To get a better idea of the value they offer and how it works, we compared them to the two most well known services:
Bare Minimum Cost to Start an LLC in Minnesota
Optional: LLC Name Reservation Fee
- $35 to submit by mail and $55 to submit online or in person
Required: Articles of Organization Fee
- $135 to submit by mail and $155 to submit online or by in person (expedited)
Overall Minnesota LLC Formation Costs
LLC Name Reservation Fee
First things first: this fee is completely optional. You’re not required to reserve a business name before starting your LLC. That said, if you have a great name in mind and want to protect it while you prepare to launch your business, a name reservation can help. The form is available online and as a hard copy. Submitting by mail costs $35 and submitting online or in person costs $55 (because they’re automatically expedited). To save time and money, if you’re ready to file your Articles of Organization you should just start there and it will register your name for you.
Articles of Organization Fee
This is the big one, the most important (and most expensive) form that you’ll file to start your Minnesota LLC. The Articles of Organization is what puts your business on the map, and what makes it official in the eyes of the state. You can file it either online or with a hard copy. Online and in-person filings will set you back $155, while mailed ones cost $135. But it officially establishes your business, so it’s money well spent. Plus, you only need to file the Articles of Organization and pay this fee once.
Business and Professional Licenses
Even if your Articles of Organization is accepted, there might be one more step before you can begin doing business in Minnesota. Certain types of business must apply for licensure with the appropriate agency. Plus, local governments sometimes require separate business licenses. Your LLC might need multiple licenses, or it might need none. Check with Minnesota’s eLicensing website and your local government to see which you’ll need to obtain.
LLC Formation Service
Starting an LLC can be a complicated and time-consuming process. If you want to spend less time on paperwork and more time planning your business, you might opt for an LLC formation service. These services take care of the registration process for you, so you don’t have to spend the time on research, paperwork, and filings.
Most of these services (like ZenBusiness and Northwest) offer basic LLC formation service like Articles of Organization filing, tax consultations, and phone/email support for a flat rate, with options to pay more for premium packages with premium services like Employer Identification Numbers, Operating Agreements, and expedited filing.
Registered Agent Service
Appointing a registered agent is an important part of your LLC formation process. Your registered agent is responsible for handling sensitive legal and tax documents and keeping your business compliant with Minnesota business law. In short, you need an agent you can trust.
While you can be the registered agent for your own LLC, this puts pressure on you to keep up with business filings and potential legal disputes. Sometimes it’s better to hand off that responsibility to a professional. A registered agent service ensures that your annual reports and other forms are filed efficiently and on-time, saving you from the penalties of delinquent filings and the stress of having to do it yourself.
Not all registered agent services are equal, so you’ll need to be careful in choosing one. Fortunately, we’ve done some research for you, and we recommend Northwest Registered Agent. In addition to registered agent services, Northwest also handles LLC formation — and they’ll include a registered agent free for one year when you form your business with them. We think they’re the most reliable choice, but if you’d like to evaluate all your options, check out our Best Registered Agent Services guide.
If you have questions or concerns about the LLC formation process or if it’s the best business structure for you, sometimes it’s best not to take chances and consult an attorney. They’re not cheap, but they can provide essential business advice, professional filing assistance, and peace of mind.
Some attorneys offer free consultations (usually 30-60 minutes) but will charge by the hour after that. On average, business attorneys charge between $150-350 per hour. Some will offer a flat rate for setting up an LLC, which can range from $500-2000.
Cost variations depend on the experience and location of the lawyer. But the sheer amount of lawyers out there might have you asking: how can I find the right one? If you use a site like Avvo, you’ll have access to a database of Minnesota business attorneys – sortable by rates, location, specialties, and more – so you can find the best fit for your LLC.
Foreign Qualification Fee
This only applies if your LLC was formed in another state and is now expanding into Minnesota. Does this describe your business? If so, instead of the Articles of Organization, you will file a “Certificate of Authority.”
All foreign business entities are required to foreign qualify in Minnesota, or they could incur some pretty severe penalties. The Certificate of Authority is a bit more expensive than the Articles of Organization, $185 for mailed forms and $205 for online or in-person submissions. But like the Articles of Organization, this is a one-time filing, so as long as it’s accepted, you won’t have to pay this fee again.
LLC Annual Fees
The Minnesota Secretary of State requires all LLCs to file an Annual Renewal every year by Dec. 31. However, as long as your business is in good standing with the state, there’s no fee involved. You can file the Annual Renewal online or with a paper form.
Your LLC will only need to pay taxes in Minnesota under specific circumstances. Because they are classified as a “pass-through” entity, LLCs don’t need to file corporate tax returns at the federal level. The state of Minnesota doesn’t charge LLCs with franchise or privilege taxes either.
If your LLC has employees, though, it will be subject to a withholding and unemployment tax, and if it sells merchandise, you will need to pay a sales tax. If either of these taxes apply to your business, you must register to pay them online, by mail, or by phone.
What If I Don’t Pay?
Looking at all these fees, you might be thinking: how can I pay less? While you might be tempted to look for loopholes or find a way around them, this could cause you bigger problems in the future.
For example, miss an Annual Renewal and you won’t be charged a late fee, but you might get something worse: loss of good standing and administrative dissolution. The same goes for other required filings. When you’re out of good standing with the state, you can’t foreign qualify in most other states, apply for business loans, or renew some professional licenses. If your LLC has been administratively dissolved, you can’t do business at all until you’ve reconciled outstanding forms/fees and filed for reinstatement.
Fail to pay your taxes on time and you’ll end up with a penalty – 5% of the tax owed per 30 days (up to 15%), plus interest. See the Minnesota Department of Revenue website for more information. In the end, it will save you a lot of money and stress to stay on top of your filings and taxes.
Planning Your Expenses
By now, your budget spreadsheet might be looking a little crowded, but have no fear! Most of these are one-time fees that you won’t have to worry about again. Plus, with all these on the books, there won’t be any surprise costs when you register an LLC in Minnesota.
Soon, you’ll have these fees behind you and you’ll be forging ahead, growing your business and earning profits. As you do, make sure to keep up with the few recurring fees – like Annual Renewals and certain taxes – so your business doesn’t fall out of good standing.