How to Start an LLC in Minnesota

If you’re wondering how to start a Minnesota LLC, this article will help you take the first steps.

After you finish reading this, you’ll know:

• The steps you need to take to start an LLC in Minnesota
• Additional tasks you should tackle once you register your company
• How much money you will need to spend, and how long it will take from start to finish

With our easy step-by-step guide, you can learn what you need to do to establish your own LLC.

Last updated: Sep 2024

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Step 1: Name your Minnesota LLC

Before you can start your LLC, you’ll need to pick a business name. However, there are rules about the names you can choose for your business. For instance, some words are banned, while others are mandatory.

Words You Have to Use

LLC names have to make it clear that the business’s liability is limited. For this reason, Minnesota Statutes Section 322C.0108 requires LLC names to include the words “limited liability company” or the abbreviation “LLC.”

According to Section 319B.05, if your company is a professional limited liability company, you can also use the phrase “Professional Limited Liability Company” or the abbreviations “P.L.L.C” or “P.L.C.”

Words You Can’t Use

There are also some words your LLC name can’t include.

For example, Section 322C.0108 also says that your LLC name can’t contain the words “corporation” or “incorporated” or any abbreviations of those words.

You also can’t name your LLC something that makes it seem like you commit crimes or do something you’re not allowed to do. 

In the case of a job that requires you to be licensed or accredited, your LLC name can’t make it seem to your customers as though you offer those services if you can’t provide them legally.

Your LLC’s name also needs to be unique or “distinguishable” from any other names that are registered with the Minnesota Secretary of State. This helps prevent confusion by keeping two different companies from having the same name.

Research the LLC Name You Want

When you decide on a name, you can use the Minnesota Secretary of State’s Business Filing Search to check if it’s available.

If someone else has already claimed your chosen LLC name, you generally can’t use it unless you get the other business owner’s written consent. But, you can also use the name if you get a court order saying you have the right to use it.

If the name you want to use is available, Minnesota Statutes Section 322C.0109 lets you reserve it for renewable 12-month periods. To claim your name, you must submit a name reservation to the Minnesota Secretary of State.

You can mail a completed form and a $35 filing fee to the following address:

If you want expedited processing, you can also submit the form online or in-person with a $55 filing fee.

Minnesota DBA: Using an Assumed Name

If you’d rather not use your business’s formal legal name, you can also use a “doing business as” or “DBA” name to run your LLC. In fact, LLC owners often use a DBA in their day-to-day business instead of their company’s official name.

With a DBA, your Minnesota limited liability company can use a different name out in the real world.

For example, you can put a DBA on your signs, your website, and your business cards. This means you won’t have “LLC” visibly in the name of your business. You will only have to use your LLC’s legal name in official documents.

In Minnesota, DBAs are called “assumed names.” If you want to use a DBA for your business, Minnesota Statutes Section 333.01 says you need to file a Certificate of Assumed Name with the Secretary of State.

You can submit the form by mail with a $30 filing fee or file online or in-person with a $50 filing fee.

Step 2: Appoint a Registered Agent for your LLC

A registered agent is the person or business responsible for receiving legal documents and other important papers on behalf of an LLC.

Minnesota Statutes Section 5.36 says that every LLC in the state must have a registered office in the state where someone who represents the business can be found. And while it is not required, LLCs can name a specific registered agent to accept service of process.

If you appoint a registered agent for your LLC, they must be located at your Minnesota registered office. Your LLC’s agent also needs to be available to receive papers during regular business hours. As long as these two rules are followed, any person or business can be your Minnesota registered agent.

Many new business owners think that it’s best to serve as their own LLC’s registered agent or just list a registered address without appointing an agent.

But in reality, this can create a lot of unnecessary stress and problems. Experienced business owners know that it’s a better idea to hire a professional registered agent service to accept service of process for their LLCs.

You might think it’s a good plan to serve as your LLC’s registered agent because: 

• It’s cheap: You’re not paying someone else to do it for you.
• It’s easy: The only address and contact information you have to keep current is your own.
• It’s reliable: You will receive all important documents personally.

However, we recommend that you do not take on the role of a registered agent for your company.

Here are a few reasons why:

• No privacy: Your name and address will be published on the Secretary of State’s website. This means that anyone with an internet connection can find your personal information. 
• Junk mail/spam: You will get a ton of junk mail in addition to a small amount of real mail and any service of process.
• No breaks: You also must be available at all times during regular business hours to receive documents. This means no vacations, sick days, or leaving the office for lunch.
• Business interruptions: Client meetings can be interrupted by people serving process. That could be embarrassing or hurt your reputation.
• It’s your fault if you miss something: You always have to make sure your address is correct and up to date. If you make a mistake or miss something, you are held responsible.

Hiring a professional registered agent typically does not cost more than $100 a year. They’ll also immediately tell you when you receive any documents, usually by email. Given the benefits, it’s easy to see why experienced LLC owners prefer to do it this way.

If you plan to conduct business in other states besides Minnesota, we suggest you hire a national registered agent service.

If you want to conduct business in another state, you must register as a foreign LLC and appoint a registered agent in that state. With a national service, you can just use a single business as your agent in every state instead of juggling different service providers in each state.

Step 3: File Your Minnesota LLC Articles of Organization

Articles of organization are the legal document you’ll need to file if you want to start an LLC. They contain basic details about your business and must be submitted to the Minnesota Secretary of State.

What to include in my Minnesota Articles of Organization?

Minnesota Statutes Section 322C.0201 requires your articles of organization to contain the following information:

• The LLC’s name.
• The name and address of the registered agent.
• The name and address of each person organizing the LLC.

You can file your new LLC’s Articles of Organization by mailing them to the Secretary of the State. However, we suggest you file online or in-person for faster processing.

Minnesota LLC Filing Fee

According to the Minnesota Secretary of State’s fee schedule, the filing fee for your Minnesota Articles of Organization is $155 if you file online and $135 if you file by mail.

Read More: How Much Does It Cost to Form an LLC in Minnesota

Minnesota LLC Processing Time

Online and in-person filings are processed when they are submitted. To file in person, you can schedule an appointment in advance. During your 25-minute appointment, your documents will be processed while you wait.

Filings received by mail are processed on a non-expedited basis in the order they are received.

Step 4: Draft your Minnesota LLC Operating Agreement

An Operating Agreement is a formal contract between members of an LLC. It outlines the rules that are in place for the business and defines each person’s responsibility within this LLC.

Minnesota does not require you to make a written operating agreement for your LLC. Still, it is always a good idea to have one to help you form and run your new business.

A formal contract can be useful for an LLC because it makes sure each member (LLC owner) knows their role in the business and agrees to a set of rules. This can help with difficult situations that might come up later.

For instance, take what happens when one member wants to sell their membership interest in the LLC. The operating agreement should state the process for buying them out as well as who should take over their job or how this should be decided.

Here are some other reasons why operating agreements can be helpful:

• They determine the rights and duties of LLC members. If one LLC member is responsible for running the business or managing the books, the operating agreement should say so. 
• They say what the manager has the right to do. Managers also have special duties to the company and the members. The operating agreement should state these.
• They outline what the LLC is legally able to do. The operating agreement should also set down how the company is allowed to conduct its business from day to day.
• They say how new members can join the company. They also have rules about how exiting members can leave.
• They set down how and when profits are paid to members. They can also create different types of membership and payment schemes.
• They say whether members or managers are in charge. They also say how to hire and fire managers.
• They say how and under what circumstances the LLC should end. You might not want to dissolve your business structure now, but you might in the future. It’s best to think about it and plan before it becomes an issue.
• They say how to change the rules. You may need to amend your operating agreement in the future. The operating agreement should set down the rules for making changes.

LLC members have a lot of flexibility when drafting an operating agreement, but Minnesota Statutes Section 322C.0110 lists some things that can’t legally be included. Double-check your contract to make sure it does not violate the law.

In general, operating agreements are important to LLCs because they ensure the owners are on the same page when it comes to running the business. The members should all be involved in the development of the contract so that they fully understand and agree to its terms. And make sure you keep a copy for your records!

Step 5: Get an EIN (Employer Identification Number) for Your Minnesota LLC

An Employer Identification Number (EIN) is a nine-digit ID number issued by the Internal Revenue Service. EINs can be used to file taxes and conduct other transactions with the government. They are similar to SSNs but for LLCs instead of people.

Here are the most common times when you need an EIN:

• Does your LLC have more than one member? 
• Does your LLC have any employees? 
• Is your LLC taxed as a C corporation or S corporation?

If you answered yes to one or more of these questions, you’d need to get an EIN.

If you file taxes for a single-member LLC, you don’t need an EIN because you can use your SSN. However, having an EIN might still be advantageous in certain circumstances. For instance, it can help you keep your business and personal funds separated and avoid fraud.

Plus, you will likely need an EIN to open up a new bank account for your LLC.

Getting an EIN is quick and easy. Apply for one through the IRS website or by filling out IRS Form SS-4 and mailing it in.

It’s easy to request an EIN online, and you can do it yourself in just 5 minutes or less. You should never pay a company to apply for an EIN for you except as part of a larger LLC formation service package.

Read More: How to Get an Employer Identification Number in Minnesota

First Tasks After Registering your Minnesota LLC

Once you set up your LLC, there are some additional tasks you should take care of before you open your doors to the public. Following these steps will ensure that you’re ready for business.

Open a Business Bank Account

You don’t technically need a business bank account to set up an LLC. Still, having one does make it easier to keep track of your business expenses. A business account also helps separate your personal assets from those of the LLC. That way, if there are any legal claims against your business, they won’t affect you personally.

A business bank account can offer benefits like:

• Convenience: Keeping things separate makes your LLC’s bookkeeping much simpler.

• More business opportunities: Your LLC can only receive credit card payments through a business account. You can also do business with people who won’t take personal payments. 
• Personal asset protection: Mixing your personal and business funds could cause you to be held responsible for the LLC’s debts. 

The third advantage, asset protection, is vital.

In general, the owner of an LLC can’t be held personally liable for business debts. This means that assets from your personal bank account or non-business investments can’t be accessed by your LLC’s creditors if they win a lawsuit against it.

The legal concept that you and your LLC are different entities is called the “corporate veil.” When you “commingle” your personal assets with LLC funds, the corporate veil can be “pierced” if your LLC gets sued. And if the corporate veil is pierced, you can be required to pay the LLC’s debts with your own money.

For this reason, we recommend that you open a business bank account and use it exclusively for the LLC. This will help protect your personal assets.

Get Business Insurance For Your Minnesota LLC

It’s important to get the right insurance policies for your business. If you don’t have sufficient coverage in place, then in the event of a disaster, you just might be left with nothing.

Think about what type of insurance you might need for your business before purchasing a policy. It’s important to consider the specific threats that are most relevant to you and your industry in order to ensure that your LLC is thoroughly covered.

The most common types of business insurance include:

• General liability insurance: You’ll need this if there’s an injury on your property. It pays for damages and a lawyer if you need one.
• Commercial automobile insurance: This works like your own car insurance. It covers drivers and vehicles for your business.
• Workers’ compensation insurance: Minnesota law requires all employers to carry workers’ compensation insurance. You can buy a policy from a private insurer or become self-insured.
• Commercial property insurance: This protects your property in the event of damage. Keep in mind that flood insurance is often a separate policy.
• Professional liability insurance: Lawyers, doctors, architects, and other professionals need this insurance. It provides coverage and legal defense in the event of a malpractice case.
• Business income insurance: If you have to close for some time, business income insurance can pay back the loss of income. Policies vary, though. Make sure that you know exactly what kinds of losses will be covered.

Keep Your Minnesota Company Compliant

As the owner of an LLC, you are bound by certain rules and regulations that govern how your company must be run. For example, you might need to get a business license or file taxes every year.

We recommend staying up-to-date on local laws that may affect your LLC. Doing this will help you ensure that you’re able to stay compliant with the relevant laws and keep your business running smoothly.

Minnesota Business Permits and Licenses

While many businesses can be started in Minnesota without any special permissions, some industries are more closely regulated. This means you may need to get a license or permit to operate legally. You can review the Minnesota government’s guide to Business Licenses and Permits to learn more.

Minnesota Tax Requirements

LLCs that have two or more members and file taxes as a partnership are subject to Minnesota partnership taxes if their in-state property, payroll, and sales reach a certain threshold. For the 2020 tax year, this number was $1,040,000, but the amount is adjusted for inflation each year.

Federal LLC Tax Filing Requirements

For federal tax purposes, LLCs are a type of “pass-through” legal business entity. This means the profits and losses from your LLC will be reported on Schedule C of your personal income tax return. The LLC itself won’t pay any federal income taxes.

You also need to pay social security and medicare taxes for your LLC even if you don’t hire any employees. If you have employees, you’ll need to withhold payroll taxes from their checks.

Annual Report and other Filing Requirements 

To keep your LLC active, Minnesota Statutes Section 322C.0208 says you must renew your registration with the Secretary of State every year. You can file online or submit an annual renewal form by mail or in person. There is no filing fee for this renewal.

Minnesota Business Formation Quick Links

• IRS — apply for an EIN online
• IRS information regarding the federal tax treatment of LLCs
• Business Filing Search (SOS)
• Online Filing (SOS)
• Name Availability Guidelines (SOS)
• Fee Schedule (SOS)
• Starting a Business
• Forming a Limited Liability Company
• Business Licenses and Permits
• Partnership Taxes and Minimum Fee

Statutes:

• Name Guidelines: Minnesota Statutes Section 322C.0108
• Name Reservation: Minnesota Statutes Section 322C.0109
• Assumed Name: Minnesota Statutes Section 333.01
• Registered Office: Minnesota Statutes Section 5.36
• Articles of Organization: Minnesota Statutes Section 322C.0201
• Operating Agreement: Minnesota Statutes Section 322C.0110