Do you want to start a Minnesota LLC? It’s not difficult to launch a Minnesota LLC. In 2021, nearly 60.000 LLCs were established in the state. Although the process for setting up LLCs is the same across the United States there are important differences between states. Minnesota’s laws and requirements are important to be aware of for members and business owners who want to form a new entity.
We have put together a detailed guide to help you start an LLC in Minnesota. Here are the essential facts.
Minnesota LLC Formation
Before you move forward with establishing an LLC, here are some things to remember and important steps to follow.
Your LLC name should be available
The name of your LLC is the most important thing. Before you settle on a name, make sure it is available for use in Minnesota. If your out-of-state LLC is not available in Minnesota, then you might need to use or a fictitious name.
A search for business names can be used to determine their availability. This is available at the Secretary of States’ (SOS) website. You can file a name reservation form to reserve your name for one year if you have settled on a name, but you are not ready to form an LLC. For expedited or online filings, the fee is $55 and $35 each by mail. If necessary, name reservations can be extended up to 12 months.
Choose a Registered Agent
Minnesota law requires all LLCs to have a registered address. A street address is the registered office. It is not a post office. A street address (not a post office) is where legal notices and documents can be sent on behalf of your company. You can also designate a person (the ” registered agents”) to whom documents may be sent.
Minnesota has many businesses that can provide agent and registered office services. You can expect to pay between $50 and $300 per year, but it is worth looking for a service that will not only be affordable but also provide the services you require.
Tip: Visit our guide on the Best Registered Agent Services in Minnesota
Filing Your Minnesota LLC Documents
To create an LLC in Minnesota submit Articles Of Organization to The Office of the Secretary. You must include the full mailing address of each organizer in your document. The process can be completed online, sent by mail, or in person.
Minnesota charges $155 to submit online applications or in-person. This is because the process will be faster. If you file by mail, you will be charged $135
Foreign entities can also apply for a Certificate Of Authority to Transact in Minnesota form. If you send the form by mail, it costs $185. You can also submit it online or in person for $205.
Send completed forms to 332 Minnesota Street Suite N201 Saint Paul, Minnesota 55101 Make checks payable to the MN Secretary Of State.
What to do after you have established your LLC
There are still some things you need to do after your LLC paperwork has been filed. Here are some additional tasks you can do to maintain your LLC for the long-term.
Correct Any Errors
Do not panic if you file your Minnesota LLC documents and later discover that there were mistakes. You can update incorrect information by using the Amendment form. You can pay $35 to file by mail, or $55 online.
File Your Minnesota Annual Renewal
Minnesota LLCs are required to file an annual renewal. Also known as an Annual Report. All reports must be submitted by December 31st to the Secretary-of-State’s Business Services office. This is essential to maintain your LLC’s good standing. Annual renewals are required for all businesses. However, there are currently no filing fees.
Pay your taxes
In addition to annual renewals, timely payments of tax can also be helpful in maintaining good standing. The filing status of an LLC for Minnesota state taxes is determined by its federal tax filing status. LLCs are generally taxed as sole proprietorships or partnerships. Income and expenses are reported on the owners’ individual tax returns. However, LLCs can be taxed like S or C-corporations. C corporations will have to pay a flat 9.8% corporate tax. To get a better understanding about your options and obligations, consult a small business accountant.
Make an LLC Operating Agreement
Although LLC operating agreements do not have to be created, it is a good idea. They will help avoid any future disputes with business partners. An operating agreement outlines the management structure of your company, the voting rights and roles of owners and how profits will be split. An operating agreement can be prepared by a lawyer or an online legal service provider. It’s a smart idea to learn about Minnesota’s LLC laws before you start writing your own agreement.
Employer Identification Number (EIN).
EINs are required for most businesses. Sometimes called Federal Tax Identification Numbers (FTIN), or Federal Employer Identification Numbers (FEIN), If your LLC is only one member, however, an EIN is not required. You can instead use your Social Security Number.
An EIN may be a good alternative to your Social Security number. It will keep it private and secure. EINs can be obtained free of charge through the Official IRS Website.
Most Frequently Asked Questions
What is an LLC?
A limited liability company combines the flexibility and ease of a sole proprietorship or partnership structure with the greater risk protection offered by a corporate structure. LLC owners, also known as “members”, have limited liability. This means that their personal liability to the company is limited to what they have invested. It does not cover losses or debts beyond that amount.
Members of an LLC are subject to taxes by default. This is the same as for owners of a general partnership or sole proprietorship. This structure is commonly referred as a “pass through” tax structure. If the LLC meets certain criteria, it can choose to be taxed either as a C corporation (C-corporation) or an S corporation (Scorporation). Small business owners prefer LLCs because of their simplicity and flexibility.
What is the cost of starting an LLC in Minnesota
Minnesota’s filing fee for domestic LLCs amounts to $135 by post and $155 if filed online or in person. Minnesota law requires foreign LLCs to pay $185 for registration by mail, $205 online or in-person.
Minnesota LLCs must pay taxes
LLCs are usually pass-through entities. This means that members can report their business profits and losses on personal tax forms. Profits from business are subject to the personal tax rates of the owners. If an LLC chooses to be taxed under the C corporation model, it will have to pay federal corporate income tax as well as a flat 9.8% Minnesota corporate franchise fee.
Can I be my own registered agent for Minnesota?
You can be a registered agent if you are at least 18 and have a physical address in Minnesota that can serve the purpose.
What is the average time it takes to create an LLC in Minnesota
After you have completed your LLC paperwork and submitted the filing fee, it may take up to two weeks for your LLC submissions to be approved by mail. Online and in-person requests can be expedited. They are usually approved in a matter of days.