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Start an LLC in MinnesottaStarting a business in Minnesota can be an exciting time. Before selling your product or service though, the nuts and bolts of licenses, registrations, and taxes must be completed.

The guide below will show you the DIY process of forming an LLC in Minnesota. However, you can also use an online LLC service handle the paperwork for you. We reviewed and ranked the 7 best available.

 

The Top 2 Worth Considering:

  • Northwest Registered Agent is a great option if you are looking for premium customer support.
  • IncFile is ideal if you are looking for the best pricing with excellent features.

 

Step 1: Name Your LLC

Selecting a name for your Minnesota LLC is a first step, yet a very important one. A name that is unique and easy to remember is helpful in finding potential clients or retaining customers.

The name should indicate the product or service. It should also follow guidelines set forth by the state of Minnesota.

The name of an LLC will likely appear on business cards and stationary, marketing materials, a website, legal contracts, business bank accounts, invoices and/or a building directory.

Minnesota law requires that the business name includes the words “Limited Liability Company” or the abbreviation “LLC.” It must be different than other names already registered. In general, the name must be different by at least one letter or numeral.  More specifically, distinguishing features include the following:

  • Variations or obvious misspellings of words are used.
  • If the key words are numbers, they are communicated differently: as numerals, Roman numerals, or written words.
  • Key words are differentiated by singular, plural, or abbreviations.
  • The elimination or addition of prepositions, conjunctions or contractions are used.
  • Entity designations are different.

For Example

Let’s imagine that someone is considering opening a flower shop in St. Paul, Minnesota. The name she is considering, Flowers by Fanny, LLC is already in use. Instead, she decides to legally name her business Fanny’s Florals, LLC.

Determine the Name is Available

Following the selection of a name but before filing the Articles of Organization, check to ensure that your name is unique on the Business Name Database on the Minnesota Secretary of State website. Searching in other places, such as online, is also a good idea.

After you have determined that your chosen name is “distinguishable,” the name can be reserved in order that you have exclusive rights for 12 months.

Optional: Name Reservation

Sometimes a situation may arise where an individual wants a particular name but needs time to organize his/her company before filing paperwork to create an LLC. In this case, a name can be reserved for 12 months in the state of Minnesota. An option for a 12-month renewal is available.

The downside is that it does cost $35 for a mailed reservation. Standard processing is approximately three weeks. Expedited (same day) processing, either in person or online, costs $55.

For a hard copy Request for Reservation of Name application, click here. To file online, click here.

If filing in person or mailing, use the following address:

Minnesota Secretary of State – Business Services

Retirement Systems of Minnesota Building

60 Empire Drive, Suite 100

St Paul, MN 55103

 

Step 2: Choose a Registered Agent

Every LLC in Minnesota is required to have a registered agent. This agent can be an individual or a company.

The role of the registered agent is that of a contact person between the LLC and the state. Simply put, the process agent receives communications or documents from the state involving such things as taxes or lawsuits and communicates them to the LLC.

Some may wonder why a Minnesota registered agent is necessary. The importance of the agent is to ensure that someone is always available to receive important documents even if the business owner leaves the office, goes on vacation, or is otherwise away. Also, having a registered agent is especially important if a physical office does not exist in Minnesota.

The organizer of the LLC can designate a registered agent on the Articles of Organization application.

Individual as Registered Agent

Most importantly, the individual must be a resident of the state of Minnesota. Using a third party ensures that nothing falls through the cracks. The third party can be an accountant, an attorney, or even a friend. The agent must have a physical and mailing address in Minnesota.

Registered Agent Service

If using a service, the registered agent must be a business or professional. We recommend either using an LLC formation service (like Incfile or Northwest Registered Agent) which gives you a free registered agent or ordering a registered agent service by yourself if you choose to DIY your Alaska LLC formation.

 

Step 3: File the Formation Documents with State

Let’s assume that fictional Fanny has selected both the name for her LLC and the registered agent. She is ready to complete the paperwork (called the Articles of Organization) that actually creates Fanny’s Florals, LLC in Minnesota.

This step can be completed by mailing a hard copy for a fee of $135. If filing online or delivering in person, the expedited fee is $155. When you are ready, it is important to note a few details about each method to ensure that your application is fully completed in the time frame in which you need it.

Online Filing

In order to complete an online application, you will first need to set up an account with the Office of the Secretary of State. Online filing includes same-day processing.

Hard Copy Filing

Applications and payments can be sent or delivered in person to the following address:

Minnesota Secretary of State – Business Services

Retirement Systems of Minnesota Building

60 Empire Drive, Suite 100

St Paul, MN 55103

As noted above, if delivering in person, the processing is expedited; it will be done while you wait. The standard processing time for mailed applications is approximately three weeks.

 

Step 4: Create an Operating Agreement

An operating agreement in the state of Minnesota is recommended though not required. The agreement is a contract that defines the operations of the LLC, includes terms and conditions, states the responsibilities of its members, and ensures legal protections of its members.

All owners of the LLC must be in agreement of the terms in the agreement and sign before a notary public.

The operating agreement is useful for both multi-member and single-owner LLCs. In both cases, the agreement provides protections.

For example, in the case of the multi-owner LLC, the terms can stipulate what should happen if a death or divorce occurs among one of its members. In the case of the single-owner LLC, the agreement could be used in court as evidence that the LLC is separate from the individual owner.

The operating agreement can be created in two ways. Some individuals may choose to write the agreement on their own, using an online template. In this case, forms are available that are specific to state. Be sure to use the correct multi-member or single-member form.

The alternative is hiring an attorney to create the document. The benefits of using an attorney are ensuring the document doesn’t exclude any important information, adheres to state law, and invalidates default provisions that may not be what you wish.

 

Step 5: Get an EIN

An EIN is an Employer Identification Number. Anyone who runs their business as a corporation or partnership must file for this 9-digit number in order to identify the tax accounts of a business. The number can be applied for in one of the following three ways:

Online

Applying online is the quickest method. The process can be completed between 7 a.m. and 10 p.m. EST, Monday through Friday. When the form is completed, the information will be immediately validated and a number issued while you are still online. In order to apply online, a valid individual taxpayer number, such as a Social Security number, is required.

Fax

Form SS-4 can be downloaded, completed and faxed to 855-641-6935, twenty-four hours, seven days per week. The EIN will be provided within four business days.

Mail

If either of the above methods are unavailable, Form SS-4 can be mailed, though processing will take approximately four weeks. The form can be mailed to the following address:

Internal Revenue Service Operation

Attn: EIN Operation

Cincinnati, OH 45999

Think you’re ready to open up shop now? Guess again!

 

Step 6: Taxes, Licensing & Income Reporting

Businesses like Fanny’s Florals, LLC may be official after completing the above steps, but it is important not to overlook a few critical details.

Taxes

On the federal level, most LLCs do not pay taxes directly to the government. Instead, they report income and losses on the owner’s personal 1040 tax returns. Schedule C is often used for reporting. Unless the LLC chooses to be taxed as a corporation, a single-member LLC is taxed as a Sole Proprietorship and a multi-member LLC is taxed as a Partnership.

Similarly, most LLCs will pay state tax on pass-through income via their personal income tax returns. The exception is if an election is made to tax the LLC as a corporation.

Unlike some states, Minnesota does not require LLCs to pay a franchise or privilege tax.

If your LLC has employees, you will need to pay a withholding and unemployment tax. Businesses that sell merchandise will need to pay a sales and/or use tax. You will need to register for any of the above taxes with the Minnesota Department of Revenue online, through the mail or by phone.

Finally, an LLC may need to file and pay a local tax to a city, municipality, or county.

Licensing

Some LLCs are required to register for various state licenses and permits before a business can begin operations. This may include a professional license. Requirements and fees vary according to the license or permit. In order to determine what is required of your LLC in Minnesota, check out Minnesota Elicensing, the state’s licensing web portal.  It can be browsed by topic, by agency, or by using the A-Z index of licensing.

Local municipalities and counties may have their own requirements for licensing and permits. Check the websites in the locale in which your LLC is based.

Reporting

After an LLC is formed, an annual renewal must be filed by December 31 each year. A fee is not charged for the renewal if the LLC is in good standing. If an annual renewal is not filed, the LLC risks losing its good standing status which can lead to dissolution by the state. The annual renewal can be filed online. It can also be mailed or delivered to the following address:

Minnesota Secretary of State – Business Services

Retirement Systems of Minnesota Building

60 Empire Drive, Suite 100

St Paul, MN 55103

When all of the mechanics of setting up an LLC in Minnesota have been completed, someone like Fanny can get down to the business of setting up a website, creating a logo…or purchasing flowers!

 

Need Help Creating Your LLC?

We recommend LLC formation services because it allows you to knock off an important thing off your checklist so you can focus all your energy on actually starting a business.

Can you do it yourself? Absolutely.

However, a service that forms an LLC for you will help with ongoing maintenance and keep you notified of any requirements you should adhere to.

As we mentioned earlier, IncFile and Northwest Registered Agent are the top LLC services available. If you’re not familiar with them, as a point-of-reference many of our readers like to compare them to the most well known LLC service, LegalZoom.

IncFile vs LegalZoom or Northwest Registered Agent vs LegalZoom