How to start a Minnesota LLC

An LLC is a type of business that helps protect its owners (called members). This means that if the business owes money or gets sued, the members' personal assets, like their house or car, are usually safe. 

In the state of Minnesota, an LLC is defined as “a business structure that blends some of the characteristics of corporations and partnerships.”

If that sounds like a lot of legal jargon - that's because it is! What you need to know is that LLCs are popular with business owners because they are simple and flexible to run. They have fewer rules compared to comportations and the owners can choose if they want to manage the business themselves or appoint managers to do it. 

Another benefit is how taxes work: LLC owners can pay taxes through their own personal tax returns, or they can choose to have the business pay taxes separately, like a corporation. This gives owners more choices in how they handle taxes as their business grows.

Why should I register for an LLC in Minnesota?

You may want to register for an LLC in Minnesota when:

• You own or want to start a business in Minnesota, or want to expand an existing business into Minnesota, and want to stay legally compliant. 
• You own or want to start a business, and want more flexibility on how you will manage the business or pay taxes than a corporation would provide.
• You want to protect your personal assets from potential liability resulting from business you conduct in the state of Minnesota. 
• You own or want to start a business, and want to register in Minnesota to open accounts, lease or buy property, secure funding, or hire employees.

Do I need to file my LLC in Minnesota if I live in another state?

Any LLC that does business in Minnesota must file with the State of Minnesota. Minnesota does not outline any specific actions that constitute transacting business, however, these actions, among others, are not considered to be doing business in Minnesota:

• Maintaining or defending any action or suit or any administrative or arbitration proceeding, or effecting the settlement thereof or the settlement of claims or disputes.
• Holding meetings of its managers, governors, or members or carrying on other activities concerning its internal affairs.
• Maintaining bank accounts.
• Maintaining offices or agencies for the transfer, exchange, and registration of its securities, or appointing and maintaining trustees or depositaries with relation to its securities.
• Holding title to and managing real or personal property, or any interest therein, situated in this state, as executor of the will or administrator of the estate of any decedent, as trustee of any trust, or as guardian of any person or conservator of any person's estate.
• Making, participating in, or investing in loans or creating, as borrower or lender, or otherwise acquiring indebtedness or mortgages or other security interests in real or personal property.
• Securing or collecting its debts or enforcing any rights in property securing them.
• Conducting an isolated transaction completed within a period of 30 days and not in the course of a number of repeated transactions of like nature.

LLCs based in Minnesota are called "domestic LLCs," and out-of-state LLCs are called "foreign LLCs." Foreign LLCs and domestic LLCs may have different filing and compliance requirements -- Rocket Lawyer can help you navigate foreign LLC registration, regardless of where you live.

How to start an LLC in Minnesota

1. Find a unique name for your Minnesota LLC

The state of Minnesota requires that the names of all LLCs in the state:

• Be in the English language or in any other language expressed in English letters or characters.
• Contain the words "limited liability company," or must contain the abbreviation "LLC."
• Not contain the word "corporation" or "incorporated" and must not contain the abbreviation of either or both of these words.
• Not contain a word or phrase that indicates or implies that it is organized for a purpose other than a permitted purpose.
• Are not too similar to existing LLCs in the state. You can search the state of Minnesota's database of business entities in the state to ensure your business' name is unique.

Rocket Lawyer can help you determine whether your business' name is eligible for registration in Minnesota and may be able to help you reserve the name before you file your LLC.

2. Include your other LLC members (if any)

In Minnesota, you can in fact form as a one-person LLC. In this case, the LLC would be referred to as a single-member LLC (SMLLC), whereas if there is more than one owner, the LLC may be called a multi-member LLC. 

The main difference between single-member and multi-member LLCs lies in ownership structure and management. With a single-member LLC, you have full control over the business. In contrast, a multi-member LLC has multiple owners, each with a specific percentage of ownership as defined in the operating agreement. This means that in a multi-member LLC, owners share profits, losses, and tax responsibilities based on their ownership percentage.

3. Provide an Minnesota address

This will be used as your official LLC address. The address that you list may either be your home, an office, or another physical location, but it cannot be a PO box.

4. Choose a Registered Agent

A Registered Agent is the person or business responsible for receiving tax, legal, and government documents during regular business hours. It's important that every business has one. You can either serve as your own registered agent (if you have an Minnesota address) or choose one to do that service for you (if you are not located in Minnesota or would like an extra layer of privacy).

5. Register your LLC with the state of Minnesota

Once you have a business name and registered agent, you can register your business as an Minnesota LLC with the state of Minnesota by filing your Articles of Organization. This document may be referred to informally as an LLC's "Articles," or in other states, it may be called a "Certificate of Organization," "Certificate of Filing," or "Certificate of Formation."

6. Get an Employer Identification Number (EIN)

Minnesota LLCs are required to have a Federal EIN tax number. Think of your tax ID as the social security number for your company. It will be important for business contracts, tax filings, and all manner of documents down the line. Every company should have one to remain in good standing.

7. Pay the state filing fee

Every state has different fees for forming an LLC, which can also vary from one year to another.

Congratulations! After you have completed all these steps, you have formed your Minnesota LLC.

What to do after forming an Minnesota LLC

There are a few steps you need to take to maintain your Minnesota LLC:

1. Create an Operating Agreement: while not mandatory, this is very advisable. We can help you create your Minnesota LLC Operating Agreement online.
2. Hold a meeting: a first meeting with members of an LLC is not required by law, but it is highly suggested in order to get organized. Also, unlike corporations, LLCs are also not required to maintain Meeting Minutes, but these documents are also recommended as they provide records for important decisions made.
3. Pay taxes according to how you chose to be taxed: traditionally, LLCs are "pass-through entities." This means that you pay your business taxes on your personal tax form. That said, you can elect to be taxed like a corporation, if you choose to do so.
4. File an Annual Report: this is required of all LLCs in Minnesota.

What is needed to keep records for my Minnesota LLC

The state of Minnesota has no statutes requiring the recordkeeping of any specific documents pertaining to your LLC, but it may be helpful to keep documents regarding governance, management, taxes and other important affairs for your LLC.

Still have questions? Rocket Lawyer can help you with the process of forming an Minnesota LLC. Get started today!

  

Key takeaways Registering an LLC in Minnesota can give you a lot more flexibility than a corporation, as well as protection for your personal assets from potential liabilities. Even if you live in another state, you must register your LLC in Minnesota if you do regular business there, like selling things or having employees. After starting your LLC, it's advisable to create an Operating Agreement and hold a first meeting. You will also need to file an Annual Report. Keep records of your Minnesota LLC, like the names of all members, tax documents, and your business rules. These help you stay organized and follow the law.

Additional resources

Learning how to enforce a contract is just one step. Explore these additional topics to learn more and take the next steps.

• What is an LLC
• How are LLCs taxed
• How to start an LLC
• Do I Need a Registered Agent?
• How and when to file an Annual Report