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Minnesota LLC CostYou 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.

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.

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

Optional: LLC Formation Service

    • $39 for an LLC service like ZenBusiness and $79 for LegalZoom

Required: Articles of Organization Fee

    • $135 to submit by mail and $155 to submit online or 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.

To clarify, most states don’t require name reservations, and they’re rarely necessary. If you’re concerned about someone else registering the name you want, you could opt to simply form your LLC instead of reserving the name.

 

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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.

The information you’ll need to file your Articles of Organization includes the official business name of your LLC, the name and address of your registered agent, the names, addresses, and signatures of your LLC’s organizers, your business email address, and your daytime phone number.

If you would rather get some help for this step, you’re in luck! There are plenty of reputable LLC formation services that will prepare and file your Certificate of Organization on your behalf. You have plenty of options for this service, but we prefer ZenBusiness. They offer great low rates and well-rounded services, and with our exclusive discount code, you can get 20% off!

 

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 businesses 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.

What are some of the most commonly required business licenses for Minnesota LLCs? If your business operates in a regulated industry, you will probably need some sort of professional license to operate in compliance with state law. On the municipal level, things like alarm permits, building permits, and zoning permits are all very common.

 

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 IncFile or ZenBusiness) 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.

There are many different companies offering LLC formation services these days, and it can be tricky to tell which one is the right choice for your needs. We think ZenBusiness and IncFile are the two best LLC formation companies, and we wouldn’t hesitate to recommend either of them to our families and friends.

 

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, 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.

 

Attorney Fees

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 $500-2,000.

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.

If you don’t want to go digging for your own attorney, we compiled the following list of highly rated business lawyers in Minnesota. All of these attorneys are primarily focused on the business world, they all receive five-star ratings from clients, and they all have excellent Avvo ratings.

 

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.

The information required to file your Annual Renewal includes your filing number, your LLC’s home jurisdiction, your LLC’s official business name, the name and address of your registered agent, your LLC’s principal office address, the name and address of your LLC’s manager “or other person exercising the principal functions of the chief manager of the limited liability company,” your email address, name, and phone number, and an indication that your business does or does not own agricultural land.

For more info on Annual Renewals for Minnesota LLCs, check out our full article on this topic!

 

Taxes

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 applies 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.

Key Steps for Starting a Minnesota LLC

  1. The first step to forming a Minnesota LLC is to come up with a good name for your business. You’ll want to make sure the name you want is still available and hasn’t already been claimed by another business, so you’ll need to search the state’s business database to verify its availability.
  2. Next, you’ll need to choose your registered agent. While you can legally serve as your own registered agent in Minnesota, this role can actually be more of a hassle than you might expect. That’s why we always recommend hiring a reputable registered agent service that can handle the responsibility of this position on your behalf.
  3. The third step involves the preparation and filing of your Articles of Organization. You’ll need to fill out the paperwork and pay a $135 fee. Once the state processes this document, your LLC will be officially open for business!
  4. That’s not the end of the road for the startup process though, as you’ll also need to create an operating agreement for your LLC. There is no legal requirement for Minnesota LLCs to have written operating agreements, but it’s still an extremely important element of any LLC. The operating agreement is an internal document that outlines how your LLC will operate, and there are several aspects of this document that can prevent messy ownership disputes down the line.
  5. You will also need to acquire a federal tax ID number (also known as an EIN, or employer identification number). This is essentially a Social Security number for your business, as it is a nine-digit code used to file taxes, hire employees, open business banking accounts, and more.
  6. Next, you’ll need to register for any relevant taxes with the Minnesota Department of Revenue, and also obtain all licenses and permits that apply to your business type. Keep in mind that, depending on the nature of your business, you might require licenses from the federal, state, county, and municipal governments.

Once you’ve finished all of these steps, you’re ready to operate a compliant business entity with the state of Minnesota!

Key Steps for Maintaining a Minnesota LLC

After you’ve completed all of the items in the previous section, you’ll need to focus on maintaining your LLC. The first step in this process is to open a business bank account. This will help you keep your business and personal expenses entirely separate, and it will also help immensely with your accounting and taxation responsibilities.

You should also keep detailed records of every financial transaction that takes place with your LLC. This means maintaining a file of invoices for every purchase and sale you make, along with information regarding your employees or contractors and the work they perform for your business.

As we already mentioned, annual reports are a key component of LLC maintenance in this state, and there are harsh financial penalties for delinquent reports. Additionally, you might want to hold an annual meeting to discuss goals and priorities for your LLC, although this is an optional step.

The Top 3 Minnesota LLC Services

If you want to hire a reputable LLC formation service to handle the heavy lifting on your behalf, these are the three companies we trust and rely on the most.

  • ZenBusiness ($39) – ZenBusiness offers a well-rounded LLC formation package at a great low rate. Their standard LLC package includes a full year of registered agent service, an accounting assessment, and a customizable operating agreement. ZenBusiness also receives stellar customer feedback.
  • IncFile (FREE) – That’s not a typo! IncFile really does form LLCs for free. Even better, they include 12 months of registered agent service in their free package. IncFile has a ton of experience and more than 500,000 satisfied customers, so they’re always a reliable choice.
  • Northwest Registered Agent ($225) – Northwest offers a bit more of a premium service, but if you have the money, we think it’s worth it. Like ZenBusiness and IncFile, Northwest also includes a year of registered agent service with the purchase of any LLC formation package. They also offer the best customer support in this industry, with knowledgeable representatives who are familiar with the details of business formation processes in every state.

Frequently Asked Questions

Before we wrap things up, let’s take a look at some of the most common questions we hear from readers regarding the LLC formation process in Minnesota.

What are the state business tax rates in Minnesota?

If your LLC is taxed like a sole proprietorship or general partnership, you’ll need to pay taxes on your business income at the state’s personal income tax rates (between 5.35% and 9.85%, depending on your income level). If your LLC is taxed like a corporation, you’re required to pay Minnesota’s 9.8% corporate income tax on your business revenue.

How quickly does Minnesota process LLC formations?

The Secretary of State should be able to process your LLC’s formation within 3-5 business days. If you’re in a hurry, you can hand-deliver your documents and they will process them as you wait.

How many small businesses are there in Minnesota today?

The state of Minnesota is home to nearly 465,000 small businesses. Entrepreneurs of all backgrounds and business types find that Minnesota is a great place to own and operate a small business.

What are the top small business resources and websites in Minnesota?

The Minnesota chapter of the Small Business Development Center is a great place to start, as they offer a wide variety of tools and resources for Minnesota LLCs. The U.S. Small Business Administration’s Minnesota District Office is another valuable resource, and the state’s Small Business Assistance Office also has plenty of good info.

Should I form my LLC in Minnesota, or choose a state like Delaware or Wyoming?

Some people like to form their LLCs in states with favorable legal settings. For instance, Delaware is often seen as the most business-friendly state, as it has an entire court system that’s dedicated solely to business matters. As for Wyoming, this state has some of the most generous anonymity laws for LLC ownership.

However, for most people, your best option is to simply form your business in your home state. Forming in a different state can be a tremendous hassle, and it can add some unnecessary complexity to tax issues as well.