Form an LLC in Minnesota

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.

• 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.

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)

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.

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.

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.

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.

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.

Improperly signing a document as yourself and not as a representative of the business can leave you open to personal liability. When signing legal documents on behalf of your company, you could follow this formula to avoid problems:

1. Formal name of your business
2. Your signature
3. Your name
4. Your position in the business as its authorized representative

See the image below for an example.

This ensures that you are signing on behalf of your LLC and not as yourself.

Do I need business licenses and permits?

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.

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.

• Form 1065 Partnership Return (most multi-member LLCs use this form)
• Form 1040 Schedule C (most single-member LLCs use this form)

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. 

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.

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 workspace

Find out more information from the Minnesota Employment and Economic Development website. 

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.

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.

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.

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.