STEP 1: Name your LLC
Choosing a company name is the first and most important step in starting your LLC. Be sure to choose a name that complies with Minnesota naming requirements and is easily searchable by potential clients.
1. Follow the naming guidelines:
- Your name must include the phrase “limited liability company” or one of its abbreviations (LLC or L.L.C.).
- Your name cannot include words that could confuse your LLC with a government agency (FBI, Treasury, State Department, etc.).
- Restricted words (e.g. Bank, Attorney, University) may require additional paperwork and a licensed individual, such as a doctor or lawyer, to be part of your LLC.
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For a complete list of naming rules in Minnesota, you can read Minnesota's Availability Guidelines.
2. Is the name available in Minnesota? Make sure the name you want isn't already taken by doing a name search on the State of Minnesota website.
3. Is the URL available? We recommend that you check to see if your business name is available as a web domain. Even if you don't plan to make a business website today, you may want to buy the URL in order to prevent others from acquiring it.
After registering a domain name, consider setting up a professional email account (@yourcompany.com). Google's G Suite offers a business email service that comes with other useful tools, including word processing, spreadsheets, and more. Try it for free
FAQ: Naming an LLC
What is an LLC?
LLC is short for Limited Liability Company. It is a simple business structure that offers more flexibility than a traditional corporation while providing many of the same benefits. Learn more here.
Watch our 2 minute video: What is an LLC?
Do I need to get a DBA or Trade Name for my business?
Most LLCs do not need a DBA. The name of the LLC can serve as your company’s brand name and you can accept checks and other payments under that name as well. However, you may wish to register a DBA if you would like to conduct business under another name. Learn more here.
STEP 2: Choose a Registered Agent
You are required to nominate a Registered Agent for your Minnesota LLC.
What is a Registered Agent? A registered agent is an individual or business entity responsible for receiving important legal documents on behalf of your business. Think of your registered agent as your business' point of contact with the state.
Who can be a Registered Agent? a Registered Agent must be a resident of Minnesota or a corporation authorized to transact business in Minnesota. You may elect an individual within the company including yourself.
Learn more about the role of a registered agent and why you should consider hiring a professional service.
TIP
Recommended: Incfile provides the first year of registered agent service free with LLC formation ($49 + State Fees)
FAQ: Nominating a Registered Agent
Can I be my own Registered Agent?
Yes. You or anyone else in your company can serve as the registered agent for your LLC. Learn more here.
Is a Registered Agent service worth it?
Using a professional Registered Agent service is an affordable way to manage government filings for your LLC. For most businesses, the advantages of using a professional service significantly outweigh the annual costs. Learn more here.
STEP 3: File the Articles of Organization
To register your LLC, you will need to file the Articles of Organization with the Minnesota Secretary of State. This can be done online, by mail, or in person.
Now is a good time to consider whether your LLC will be member-managed or manager-managed. We recommend learning more about these two options before you file.
File the Articles of Organization
OPTION 1: File Online with the State of Minnesota
OR
OPTION 2: File by Mail or In-Person
State Filing Cost: $155 Online, $135 By Mail, Payable to the Secretary of State (Nonrefundable)
Mail to:
Minnesota Secretary of State - Business Services
Retirement Systems of Minnesota Building
60 Empire Drive, Suite 100
St Paul, MN 55103
If you’re expanding your existing LLC to the State of Minnesota, you will need to form a Foreign LLC.
FAQ: Filing LLC Documents
What is the processing time to form my Minnesota LLC?
One to two weeks online or by mail.
What is the difference between a domestic Minnesota LLC and foreign LLC?
An LLC is referred to as a "domestic LLC" when it conducts business in the state where it was formed. Normally when we refer to an LLC we are actually referring to a domestic LLC. A foreign LLC must be formed when an existing LLC wishes to expand its business to another state. If you are filing as a Foreign Minnesota LLC learn more here.
STEP 4: Create an Operating Agreement
In Minnesota, LLCs are not required to have an operating agreement, but it's a good practice to have one.
What is an operating agreement? An operating agreement is a legal document outlining the ownership and operating procedures of an LLC.
Why are operating agreements important? A comprehensive operating agreement ensures that all business owners are on the same page and reduces the risk of future conflict.
For more information on operating agreements, read our Minnesota LLC operating agreement guide.
Recommended: Use our free Operating Agreement Tool to draft a customized operating agreement for your LLC.
FAQ: Creating an Operating Agreement
Do I need to file my operating agreement with the state?
No. The operating agreement is an internal document that you should keep on file for future reference. However, many states do legally require LLCs to have an operating agreement in place.
STEP 5: Obtain an EIN
What is an EIN? The Employer Identification Number (EIN), or Federal Tax Identification Number, is used to identify a business entity. It is essentially a social security number for the company.
Why do I need an EIN? An EIN is required for the following:
- To open a business bank account for the company
- For Federal and State tax purposes
- To hire employees for the company
Where do I get an EIN? An EIN is obtained from the IRS (free of charge) by the business owner after forming the company. This can be done online or by mail.
NOTE
FOR INTERNATIONAL APPLICANTS: You do not need an SSN to obtain an EIN. Learn more here.
Get an EIN
Option 1: Request an EIN from the IRS
OR
Option 2: Apply for an EIN by Mail or Fax
Mail to:
Internal Revenue Service
Attn: EIN Operation
Cincinnati, OH 45999
Fax:
(855) 641-6935
Fee: Free
FAQ: Getting an EIN
How do I get an EIN if I don’t have a social security number?
An SSN is not required to get an EIN. You can simply fill out IRS Form SS-4 and leave section 7b blank. Then call the IRS at 267-941-1099 to complete your application. Learn more here.
What tax structure should I choose for my LLC?
When you get an EIN, you will be informed of the different tax classification options that are available. Most LLCs elect the default tax status.
However, some LLCs can reduce their federal tax obligation by choosing S corporation status. We recommend consulting with a local accountant to find out which option is best for you.
Considering Using an LLC Formation Service?
We reviewed and ranked the top 5 LLC formation services.
Find out which is best for you.
State Taxes for your Minnesota LLC
Depending on the nature of your business, you may be required to register for one or more forms of state tax.
SALES TAX
If you are selling a physical product, you’ll typically need to register for a sellers permit through the Minnesota Department of Revenue website.
This certificate allows a business to collect sales tax on taxable sales.
Sales tax, also called "Sales and Use Tax," is a tax levied by states, counties, and municipalities on business transactions involving the exchange of certain taxable goods or services.
Read our sales tax guide to find out more.
EMPLOYER TAXES
If you have employees in Minnesota, you will need to register for Unemployment Insurance Tax through the Minnesota Department of Employment and Economic Development website. You will also need to sign up for Employee Withholding Tax through the Minnesota Department of Revenue website.
FAQ: Additional Taxes
What is the Minnesota Partnership Tax?
There is a Partnership Tax for multi-member LLCs formed in Minnesota which varies depending upon your LLC’s income, learn more here.
Business Banking for Personal Asset Protection
Using dedicated business banking and credit accounts is essential for personal asset protection.
When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your LLC is sued. In business law, this is referred to as piercing your corporate veil.
You can protect your business with these two steps:
1. Opening a business bank account:
- Separates your personal assets from your company's assets, which is necessary for personal asset protection.
- Makes accounting and tax filing easier.
Recommended: Compare the best small business checking options in this review from Startup Savant.
2. Getting a business credit card:
- Helps you separate personal and business expenses.
- Builds your company's credit history, which can be useful to raise capital later on.
Accounting for your LLC
It’s critical to get your books in order-- even if you haven’t officially opened for business. A well managed accounting system will help you:
- Track your business finances, including bills, expenses, and income.
- Simplify your annual tax filings.
The right software makes accounting easy. Look for software that:
- Syncs with your bank automatically.
- Matches transactions to invoices, bills and purchase orders.
- Can be accessed from your phone.
Recommended: Consider hiring a reliable service to help simplify your bookkeeping, accounting and tax filing. We recommend two accounting services:
- Mazuma ($95/month)
- Financepal ($99/month)
To operate your LLC you must comply with federal, state, and local government regulations. For example, restaurants likely need health permits, building permits, signage permits, etc.
The details of business licenses and permits vary from state to state. Make sure you read carefully. Don't be surprised if there are short classes required as well.
Fees for business licenses and permits will vary depending on what sort of license you are seeking to obtain.
Find out how to obtain necessary licenses and permits for your business or have a professional service do it for you:
Federal: Use the U.S. Small Business Administration (SBA) guide.
State: Use the State of Minnesota's Government ELicensing Website.
Local: Contact your local county clerk and ask about local licenses and permits.
Recommended: If you are a first-time entrepreneur, consider having a professional service research your business’ licensing requirements. Our friends at Startup Savant have reviewed and ranked the top five license research services.
Insuring Your Business
Business insurance helps you manage risks and focus on growing your business. The most common types of business insurance are:
- General Liability Insurance: A broad insurance policy that protects your business from lawsuits. Most small businesses get general liability insurance.
- Professional Liability Insurance: A business insurance for professional service providers (consultants, accountants, etc.) that covers against claims of malpractice and other business errors.
- Workers' Compensation Insurance: A type of insurance that provides coverage for employees’ job-related illnesses, injuries, or deaths. In Minnesota, businesses with one or more employees, excluding business owners, are required by law to have workers' compensation insurance. Get a free quote with ADP.
How much will the right insurance cost you? Click here to find out.
Hiring Employees
If you plan to hire employees, stay compliant with the law by following these steps:
- Verify that new employees are able to work in the US
- Report employees as "new hires" to the State
- Provide workers' compensation insurance for employees
- Withhold employee taxes
- Print compliance posters and place them in visible areas of your work space
Find out more information from the Minnesota Employment and Economic Development website.
Recommended: A payroll service saves you time and makes it easier to follow these requirements.
FAQ: Hiring Employees
What is the minimum wage in Minnesota?
The minimum wage in Minnesota is $7.87 per hour for businesses with gross annual revenue of less than $500,000 per year. The minimum wage for businesses with gross annual revenue of $500,000 or more a year is $9.65.
How often do I need to pay employees?
In Minnesota, most employees are only required to be paid monthly. Employees in "transitory employment" or who work for public service corporations must be paid within 15 day intervals.
We understand that creating an LLC and getting your business up and running comes with many challenges. To help you succeed, we compiled the best local resources in every major metro area in Minnesota. You can get free assistance in the following areas:
Minnesota requires LLCs to file an annual report with the Secretary of State. An annual report in Minnesota is also referred to as an annual renewal.
File your Annual Report
OPTION 1: File Online with the State of Minnesota
OR
OPTION 2: File by Mail
Fee: Free
Mail to:
Minnesota Secretary of State - Business Services
Retirement Systems of Minnesota Building
60 Empire Drive, Suite 100
St Paul, MN 55103
Due Date: Due by December 31st each year.
Late Filings: Minnesota immediately dissolves LLCs that do not file on time.
Minnesota imposes a Partnership Tax on multi-member LLCs with property, annual payroll, and annual sales totaling more than $970,000 (indexed annually for inflation). Multi-member LLCs with revenue below that threshold are exempt from paying the minimum fee, but still need to file Minnesota form M3. This form can be filed online or by mail.
File Partnership Tax with the State of Minnesota
OPTION 1: File Online with the State of Minnesota
OR
OPTION 2: File by Mail
Fee: Free
Mail to:
Minnesota Partnership Tax
Mail Station 1760
St. Paul, MN 55145
Due Date: Form M3 must be filed by April 18th of the year following the tax year.
Late Filing: Late filing will incur penalty interest on any unpaid tax.
FAQ: Minnesota Partnership Tax
What are the LLC income brackets for the Partnership Tax?
- If annual sales for your business in Minnesota total less than $970,000, you owe $0 in partnership tax
- If annual sales for your business in Minnesota total between $970,001 and $1,959,999, you owe $200 in partnership tax
- If annual sales for your business in Minnesota total between $1,960,000 and $9,769,999, you owe $590 in partnership tax
- If annual sales for your business in Minnesota total between $9,770,000 and $19,539,999, you owe $1,960 in partnership tax
- If annual sales for your business in Minnesota total between $19,540,000 and $39,079,999, you owe $3,910 in partnership tax
- If annual sales for your business in Minnesota total $39,080,000 or more, you owe $9,770 in partnership tax
Minnesota Nonresident Withholding Tax
If any of your LLC’s partners are not residents of Minnesota, and they receive at least $1,000 in distributive income from the partnership, the partnership must withhold 9.85% of the non-resident’s income.
How to Obtain a Certificate of Good Standing
A Certificate of Good Standing verifies that your LLC was legally formed and has been properly maintained. Several instances where you might need to get one include:
- Seeking funding from banks or other lenders
- Forming your business as a foreign LLC in another state
- Obtaining or renewing specific business licenses or permits
You can order a Minnesota LLC Certificate of Good Standing onilne or by mail.
Order a Certificate of Good Standing
OPTION 1: Request a Certificate Online from the State of Minnesota
OR
OPTION 2: Order a Certificate by Mail.
Fee: $15 online, $5 by mail, payable to the Secretary of State (Nonrefundable)
Instructions: Search for your business entity, click one your business, and place your order.
Dissolve Your Minnesota LLC
If at any point in the future you no longer wish to conduct business with your LLC, it is important to officially dissolve it. Failure to do so in a timely fashion can result in tax liabilities and penalties, or even legal trouble. To dissolve your LLC, there are two broad steps:
- Close your business tax accounts
- File the Articles of Dissolution
When you are ready to dissolve your LLC, follow the steps in our Minnesota LLC Dissolution Guide.
More Information
Report LLC Income
Most LLCs will need to report their income to the IRS each year using:
- Form 1065 Partnership Return (most multi-member LLCs use this form)
- Form 1040 Schedule C (most single-member LLCs use this form)
Read our LLC Tax Guide to learn more about federal income taxes for LLCs.
Avoid Automatic Dissolution
LLCs may face fines and even automatic dissolution when they miss one or more state filings. When this happens, LLC owners risk loss of limited liability protection. A quality registered agent service can help prevent this outcome by notifying you of upcoming filing deadlines and by submitting reports on your behalf.
Recommended: Incfile offers a reliable registered agent service and excellent customer support.
Forming a foreign LLC allows your company to operate as one entity in multiple states. If you have an existing LLC and want to do business in Minnesota, you will need to register as a foreign LLC. This can be done online or by mail.
Register as a Foreign LLC in Minnesota
OPTION 1: File Online with the State of Minnesota
OR
OPTION 2: File by Mail
Fee: $205 online, $185 by mail, payable to the Secretary of State (Nonrefundable)
Online Instructions: Create or log into an account on the Minnesota Secretary of State website, use the "File Online" link given above and scroll down to select "Limited Liability Company (Foreign)".
