Thinking of starting an LLC in Minnesota? It's a solid destination for planting a business flag.
Minnesota offers top-notice small business community support. And forming a limited liability company (LLC) in Minnesota also comes with financial perks.
The state has its angel investor financing group that can provide funding beyond the SBA loans. Plus, Minnesota offers a 25% tax credit for investors. And you’ll get the usual LLC personal asset protection and simple tax structure.
This easy-to-follow guide to forming an LLC in Minnesota will kickstart your business ownership journey.
Table of contents:
- Step 1: Name your LLC
- Step 2: Appoint a registered agent
- Step 3: Submit the Minnesota LLC articles of organization
- Step 4: Get an Employer Identification Number (EIN) from the IRS
- Step 5: Register with the Minnesota Department of Revenue
- Step 6: Create an LLC operating agreement
- Final steps
- Summary of Filing Fees
Step 1: Name Your LLC
A great starting point is deciding on your LLC’s name. Minnesota is pretty lenient with LLC naming requirements.
Your company name must be different from other businesses. And you can only use numbers or letters with no special characters (meaning 0-9, A-Z only).
Use the business search tool from the Minnesota Secretary of State to see if the name you want is available.
Reserving your name
Maybe you aren’t ready to launch your LLC quite yet, but you found a name that matches your brand to the dot. You can reserve the name for up to 12 months. You can file:
- Online or in person for $55 (includes expedited service fee)
- By mail for $35 (longer processing time)
You can extend it for another 12 months if needed.
You might want to consider using an assumed name to gain flexibility with branding. This common tool is also called a doing-business-as (DBA) name or trade name.
For example, “Bob Enterprises LLC” could use “Bob’s Burgers” as an assumed name to operate under. Customers will know exactly what you’re selling.
You can also operate several branches under different names, all owned by one LLC.
To use one, file the assumed name form. There’s a $30 fee for mailed-in submissions or $50 for online applications. You must also publish your “Certificate of Assumed Name” in at least 2 local newspapers.
You must renew DBAs annually. There’s no fee as long as your company remains in good standing.
If you don’t renew on time, you can reinstate an assumed name by filing the current year's renewal and paying a $45 fee for online or in-person filings. It’s $25 for mailed-in documents.
Step 2: Appoint a Registered Agent
Your Minnesota LLC must have a registered agent.
You need to appoint a registered agent to receive legal documents on behalf of your company. This can include court summons, tax notices, or other essential correspondence.
All Minnesota LLC registered agents must have a physical address in Minnesota. P.O. Boxes are not accepted. The agent must be available during standard business hours.
You can act as a registered agent yourself. It can save some money upfront, but there are some downsides:
- It lacks privacy and increases junk mail because your address becomes public information
- It’s hard to take time off or travel since you need to be around during business hours
- You could receive a lawsuit notice in front of customers
Many experienced owners avoid these problems by hiring a registered agent service. It costs around $50-$200 a year. It’s a small price to pay to remove many headaches.
Step 3: Draft and submit the Certificate of Formation
Filing the articles of organization officially creates your Minnesota LLC. Your new business will take its first breath after this form is processed.
On the Minnesota filing form, you provide:
- LLC members (owners) details
- Registered agent information
- Primary type(s) of business activity
- Number of employees (if any)
- Contact information
The cost of filing Minnesota articles of organization is $155 for online or in-person filings. It’s $135 for mail submissions.
Electronic and in-person submissions are usually processed in 3 to 5 business days. The review process for mailed-in documents can take longer.
Registering a foreign LLC in Minnesota
If you have an LLC from another state and want to operate in Minnesota, you can register as a foreign LLC.
The process is similar. Fill in the state form called the Certificate of Authority to Transact Business in MN (LLC).
Note: If your registered company name is not available in Minnesota, you’ll have to register under an alternate name.
Step 4: Get an Employer Identification Number (EIN)
An Employer Identification Number (EIN) is required for federal tax purposes. The IRS uses them to track your tax information.
All multi-member LLCs must obtain this number from the IRS.
Some single-member LLCs without employees don’t need an EIN. They can use the owner’s Social Security number instead. But many choose to get one anyway as they’re needed for things like a business bank account.
The best way to get an EIN is through the IRS’s online application. This part of the Minnesota LLC formation process is free.
Step 5: Register with the Minnesota Department of Revenue
You also will need to register with the Minnesota Department of Revenue if your Minnesota LLC:
- Sells taxable goods or services
- Files tax returns as an S-corporation or partnership
- Has any in-state employees (so you can pay withholding)
If you fall into any of these categories, you need a Minnesota tax ID. You’ll file your state taxes using this 7-digit number.
The online tax ID application process is simple.
Step 6: Create an LLC operating agreement
Minnesota LLCs aren’t required to have an operating agreement. But it’s best practice to have one. And they are very important for any multi-member LLC.
An operating agreement lays out how the business functions and handles many situations. Without one, your LLC will use Minnesota law to resolve disputes.
Experienced entrepreneurs use operating agreements to protect their interests. A well-drafted one covers details like:
- Ownership percentages and contributions
- Rights and duties of members and managers
- Distribution of profits or losses
- Ways to add or remove members
- How to end the LLC
You can create your own operating agreement using free or low-cost online templates. Having one drafted by an attorney can help protect yourself from issues you haven't considered.
At this point, you’ve formed a Minnesota LLC and are nearly ready to start operating. There are a few final details to wrap up first.
Business bank account
Open a business bank account to keep your business and personal finances separate. Failing to do so risks the personal asset protection LLCs usually provide.
Monthly fees can be waived if you meet certain deposit minimums. Others charge around $25 or less per month.
Note: Business credit cards may come without any monthly costs, but pay attention to the annual fees.
Personal Income and Sales Tax Rates
Summary of Filing Fees
- Minnesota Secretary of State Filing Fee: Use the articles of organization form and pay $155 for online/in-person filings or $135 for mail-ins. This is the only mandatory cost of starting an LLC in Minnesota.
- Reserving a Business Name: Use the name reservation form and pay $55 for online/in-person or $35 for mail-ins.
- Obtaining a DBA: Use the assumed name form and pay $50 for online/in-person or $30 for mail-ins.
- Renewing DBA: Free if renewed on time. Reinstate an expired one by filing the current year's renewal and paying a $45 fee for online/in-person or $25 for mail-ins.
- Registered Agent Fee: Be your own for free or hire a registered agent service for about $50-$200 a year.
- Operating Agreement: Free or low-cost templates, or pay $1,000 or more to have an attorney draft one.
- GRAND TOTAL: $135 to $1,460 or more.
Licenses and permits
Depending on your business activities, you may need to get approval from state, city, or county authorities.
The Minnesota eLicensing portal is a great place to start.
Connect with the business community
Joining the Minnesota Chamber of Commerce can expand your professional circle. It will also help you understand the challenges the local business community faces.
If you’re ready to turn your business dreams into reality, now’s the time to move forward. Starting an LLC in Minnesota starts with checking to see if your LLC name is available. Then keep checking off the items on this list.
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