If you’re looking for a reliable DIY guide for starting an LLC in Minnesota, look no further.
Below you’ll find all the information you need to launch your business and handle any associated costs.
Follow each step carefully and your LLC will be established and ready to hit the ground running. We’ve also included helpful resources along the way.
Need Help Starting Your LLC?If you want to make sure your LLC is formed correctly, hire an LLC service. Below are the top two that will take care of all the legal paperwork:
ZenBusiness – $39: If getting the most value out of an LLC service is your priority, choose ZenBusiness. They charge one of the lowest rates online and include all the most important features when starting a business. IncFile – $0: If you're on a strict budget and prefer using the cheapest LLC service, choose IncFile. They will form an LLC for free (plus state filing fee) and give you great features along the way.
ZenBusiness – $39: If getting the most value out of an LLC service is your priority, choose ZenBusiness. They charge one of the lowest rates online and include all the most important features when starting a business.
IncFile – $0: If you're on a strict budget and prefer using the cheapest LLC service, choose IncFile. They will form an LLC for free (plus state filing fee) and give you great features along the way.
Step 1: Name Your LLC
What’s in a name? Quite a bit, actually. Your business name is your Minnesota LLC’s identity, its personality, and its reputation. Find a name that sticks in customers’ minds – while conveying your brand qualities – and you’ve struck gold. A unique, memorable name can draw in new customers and keep existing ones coming back.
Your LLC name is going to appear everywhere: business cards, marketing collateral, websites, legal contracts, bank accounts, invoices, directories, and much more. So be sure that it conveys your product, service, brand, and values.
While you can (and should) be creative with your business name, there are certain state requirements that it must follow.
According to Minnesota law, your LLC name must include the words “limited liability company” or “professional limited liability company,” or the abbreviations LLC or PLC, and not include the words “corporation” or “incorporated,” or any abbreviations of those words. On top of that, your name shouldn’t suggest a business purpose other than the one you state on your Articles of Organization.
And you could follow all of these rules carefully, but your name won’t be valid if it’s already in use. It must be distinguishable from every other business name reserved or registered with the state. When attempting to distinguish a name, making changes to the following components will NOT be effective:
- Punctuation and special characters
- Capitalization and spacing
- Articles (“a,” “an,” and “the”)
- Conjunctions (like “and,” “but,” and “or”)
- Business type designators like LLC, Ltd., Inc., or Corp.
You must add, remove, rearrange, or otherwise alter the name’s keywords to make it distinguishable.
Consider this: your friend Fanny wants to open a flower shop in Moorhead, Minnesota. The name she wants, Flowers by Fanny, LLC is already in use. So she comes up with a new one: Fanny’s Florals and Design, LLC. This name is similar to the original but includes new words, distinguishing it in the state’s records.
Determine the Name is Available
Of course, you will only need to make distinguishable changes if your name is already taken. Don’t make the mistake of ordering business cards, creating advertisements, and using a name on documents like the Articles of Organization without first confirming it’s available. Use the Secretary of State’s business filing search to see if there’s an existing business using your desired name.
Maybe you pegged a distinguishable name right away, or maybe it took some modifications, but either way, once you have a unique name, you can lock it down by filing a name reservation.
Optional: Name Reservation
You may have fallen in love with a particular name, but you still have some preparation and paperwork to sort out before starting your LLC, and you’re worried that someone will swipe it in the meantime. To calm your nerves, you can reserve that name in Minnesota for a year.
Think about Fanny. After making her name distinguishable, she’s ready to make it official, but if she’s waiting on some paperwork to start her LLC, she can place a hold by filing a name reservation request either online or by mailing a hard copy to:
Minnesota Secretary of State – Business Services
Retirement Systems of Minnesota Building
60 Empire Drive, Suite 100
St Paul, MN 55103
You can also deliver your completed form in person at the same address. Oddly enough, there are different fees associated with this filing: $55 for online or in-person submissions, or $35 via mail. If you file online or in person, the state will process your filing immediately, but mailed filings take 5-7 business days.
Step 2: Choose a Registered Agent
Fanny’s LLC is quickly taking shape, and if it’s going to operate in Minnesota, she’ll need a go-between for state and legal communications. This is called the registered agent.
A registered agent is a key component of your budding LLC, handling all of its sensitive communication with the state so you don’t have to. But maintaining an agent isn’t just a convenience, it’s required.
According to Section 5.36 of the Minnesota Statutes, “A business entity formed under the laws of another jurisdiction must designate a registered agent when registering to do business in Minnesota. The registered agent may be a natural person residing in this state, a domestic corporation, or limited liability company, or a foreign corporation or foreign limited liability company authorized to transact business in this state.”
Taxes, lawsuits, maintenance requirements, and more – the registered agent takes care of it all. If you had to do this yourself, it would pile additional tasks onto your already-full plate. Plus, your agent makes your business available to receive documents even when you’re out of town or away from the office. This is especially important if your physical office is outside Minnesota.
Now for the practical application, the “how-to.” Fortunately, declaring a registered agent is easy. All you need to do is list the agent’s name and address on your Articles of Organization and that information will become part of your LLC’s public record.
You have two options for who can serve as a registered agent: an individual or a company.
Individual as Registered Agent
You may think that an individual registered agent would need specialized training or experience, but this isn’t the case. Anyone can serve as your registered agent, as long as they are a Minnesota resident and have a physical address in the state. You can even serve as your own LLC’s agent, provided you meet these requirements.
Third parties like attorneys, accountants, or consultants can be good options, but friends and family are valid choices too.
Registered Agent Service
It can be a lot easier, though, to use an LLC formation service like ZenBusiness (or even IncFile and Northwest), so we highly recommend it. Not only will they take care of business formation requirements, but they’ll also include a free registered agent service. Or, if you’d rather start your LLC on your own, you can use registered agent services to cover your agent duties.
During the life of your LLC, you may, at some point, need to change your registered agent. Perhaps you want to switch from an individual to a professional service, or maybe your existing registered agent resigns. Either way, you’ll want to make the change as soon as possible because operating without an agent on file can lead to administrative dissolution.
Step 3: File the Formation Documents with the State
This is where the LLC formation process kicks into high gear. Let’s check back in with Fanny.
She’s reserved her unique business name, designated a registered agent, and she’s ready to get her LLC off the ground. It’s time for Fanny to take on the most important LLC document: the Articles of Organization. This filing creates a record for Fanny’s Florals and Design, LLC with the Minnesota Secretary of State, giving it authorization to commence business in the state.
You can file your Articles of Organization online, by mail, or in person, so whether you prefer the expediency of electronic filings or the tactile reliability of a paper form, there’s an option for you. This form costs $135 to file by mail or $155 to file online or in person.
Complete the digital form found on the Secretary of State’s online filing system. You can complete the entire process, including payment and expedited requests, through the filing portal.
Download and complete the paper form, then mail it – with your payment – to:
Minnesota Secretary of State – Business Services
Retirement Systems of Minnesota Building
60 Empire Drive, Suite 100
St Paul, MN 55103
If you feel like going out for a drive, hand-deliver your form as part of your weekly errands to the same address listed above.
In-person and online filings are typically processed immediately, while mailed filings can take 5-7 business days.
Step 4: Create an Operating Agreement
The operating agreement is the framework that holds up an LLC, the vital underpinning that establishes processes for its procedures, activities, and conduct. Essentially, it serves as your company’s bylaws.
Your LLC is not technically required to adopt an operating agreement in Minnesota. There’s no state law that mandates it. But that doesn’t mean it’s in your best interest to go without one. Creating an operating agreement doesn’t just entrench your LLC’s procedures, but it protects your assets in legal disputes and legitimizes your company in front of banks, courts, government agencies, and more, so we strongly recommend having one.
Let’s say our friend Fanny sells a percentage of her company to two other owners. Her operating agreement could stipulate how the LLC’s assets would be distributed among them in the case of dissolution.
But if she decides to maintain sole ownership, the agreement could be used in court as evidence that the LLC’s assets are separate from her personal ones. These are just two examples, but the operating agreement governs everything from member duties to tax structures.
If you’ve decided to draft an agreement, there are two ways to go about it:
- Write it yourself. Don’t be intimidated by this option. There are plenty of free online templates that serve as helpful guides. You can create an effective document from most of the templates out there, but we recommend getting one through ZenBusiness, which includes a free LLC operating agreement with every package. This will save you a lot of time and money.
- Hire an attorney. If you want to be absolutely sure that you don’t miss any important details, an attorney can write or review the agreement for you, ensuring that it complies with state law, includes all necessary information, and avoids the state’s default laws.
What are default laws?
Each state has its own set of generic, baseline laws for how LLCs should operate. These laws, however, only govern matters not included in your operating agreement. Take dissolution, for example. If your LLC ever dissolves, your operating agreement would determine what happens to its remaining assets and debts. But if you fail to include it in the agreement, the state will make that decision for you.
Because default laws are broad and not tailored to your specific business, they often aren’t in your LLC’s best interest, so it’s best to avoid them by being as comprehensive as possible in your agreement.
Step 5: Get an EIN
There’s simply no way to avoid taxes. In fact, it’s illegal to try, so don’t do it.
Federally, LLCs are classified as “pass-through” entities, businesses that don’t file corporate tax returns, but whose owners include income and losses on their individual returns. Still, there are certain circumstances that require LLCs to pay federal taxes, like classifying as a corporation or partnership, hiring employees, or selling merchandise. So, in Fanny’s case, if she plans on hiring additional florists and selling bouquets, she will need to apply for an EIN.
The Employer Identification Number (EIN) is a nine-digit number that the IRS will use to identify your company’s tax accounts, so if you pay any business taxes, it’s extremely important to have one. Click the “Do I need an EIN?” link on this page to see if you fall into this category. If so, apply for an EIN one of three ways:
Need to get this done quickly? File online – it’s by far the most efficient method. You can only complete the process between 7 a.m. and 10 p.m. EST, Monday through Friday, but you’ll receive your number immediately upon finishing the digital form. Keep in mind that you will need to provide a valid individual taxpayer number (like a Social Security Number) as part of the process.
You might prefer the feel and security of a paper form. In this case, download Form SS-4, complete it, and fax it to (855) 641-6935. You will receive your EIN within four business days.
Or, there’s always trusty postal mail. However, this is the slowest option, as processing typically takes around four weeks. If that doesn’t deter you, fill out Form SS-4 and send it to:
Internal Revenue Service Operation
Attn: EIN Operation
Cincinnati, OH 45999
Okay, so you’ve filed the Articles of Organization, designated a resident agent, adopted an operating agreement, and filed for an EIN. Time to start doing business, right? Sorry, there are a couple of additional steps you may need to take first. But don’t worry, you’re almost there!
Step 6: Taxes, Licensing, & Income Reporting
For all intents and purposes, most LLCs will be official after completing all the prior steps. Still, it’s important for business owners like Fanny to keep looking ahead, as there are certain maintenance requirements to keep a Minnesota LLC running smoothly and in good standing with the state.
Before you start doing business, create a plan for the following potential LLC requirements:
As mentioned earlier, LLCs are almost always classified as “pass-through” entities, which means that they don’t pay income taxes directly to the federal government. That responsibility falls instead on the owners, who must include business income and losses on their personal 1040 tax returns and/or Schedule C. LLCs are flexible with tax structure, so you can choose to have yours taxed like a corporation instead. In this case, it would need to file a separate corporate tax return.
Like federal income taxes, Minnesota’s income taxes pass through to LLC owners’ personal returns (unless the LLC is classified as a corporation for tax purposes). And you won’t have to worry about paying a “franchise” or “privilege” tax either, because Minnesota doesn’t require them.
This doesn’t mean, however, that your LLC won’t have any state taxes. Do you hire employees? If so, your LLC will owe a Withholding Tax and Unemployment Tax. Do you sell any merchandise? Then your LLC will be responsible for a Sales Tax and/or Use Tax. Register for any of these taxes through the Department of Revenue.
Plus, depending on your LLC’s location, it may owe a local tax to its city, municipality, or county. Consult your local government’s website to find out.
The Articles of Organization may have already made your business legitimate, but your LLC might still need to obtain a license before doing business. This all depends, however, on the type of business you run.
Our friend Fanny, for example, may need to obtain a license from the Department of Agriculture before opening her flower shop’s doors. And if she wanted to serve pastries to her customers, she would need a food service license too. If you’re unsure whether your LLC will need any particular licenses, you can search the database by letter or scroll through each agency to find the relevant department.
Certain cities and counties require their own specific licenses on top of any state ones, so you should also check with your local government.
Once you’ve taken all the steps to start your LLC, you’ll be off and running, making deals and growing the company. But when you’re rolling along and things are moving 100 miles per hour, don’t forget that Minnesota requires all of its businesses to submit one important recurring filing: the Annual Renewal.
Mark it on your calendar, your planner, or in your phone – your LLC will need to file an Annual Renewal once per calendar year, and you will also need to pay a filing fee: $25 if filed by mail or $45 if filed online or by hand. The state will send your registered agent a reminder before the deadline so you have plenty of time to complete it.
When you’ve finished the form, you can submit it online, or you can mail or hand-deliver it to the addresses listed in the Articles of Organization section. And don’t forget! If you fail to file on time, your LLC can lose its good standing with the state.
And we’ve come to the end. It’s a long process, and not always easy, but the reward is well worth it. If you’ve made it this far, congratulations! Your Minnesota LLC is ready for takeoff. So go ahead and start with that big sale, promotional campaign, or business deal. Maybe you’ll see Fanny out there in the business world, selling her beautiful floral creations.
Need Help Creating Your LLC?
If you even skimmed this guide to look over the steps, you likely got a sense of how many moving parts there are when starting an LLC. Can you do it all yourself? Absolutely. We have complete confidence in you.
But if you’d rather hand it off to someone else and not have to worry about it again, we recommend using business formation services. This way, you can go about your other business responsibilities with the confidence that everything will be submitted correctly and punctually.
Plus, an LLC formation service can handle maintenance items like annual renewals, so you can take them off your to-do list. And on top of that, many services also provide a registered agent.