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How to Form an LLC in Minnesota

A Limited Liability Company (LLC) is a popular business formation because of the (1) limited liability to its members; (2) simplicity in management; and (3) favorable tax considerations.  This is a quick guide to forming a LLC in Minnesota. The steps may be more complicated based on your specific situation.

1.) Choose your Name

In Minnesota, a LLC must contain the words "Limited Liability Company" or the abbreviation "LLC" in its name (e.g., Holt Law, LLC).  The name must be different from all other business names already filed.  Take a look at the Minnesota Business Name Database to see if your proposed business name is already taken.  If you have a great business name idea but are not ready to start the business, you can reserve a name for 12 months.  There may be additional naming requirements based on your business industry.  

2.) File Articles of Organization

To make the business official, articles of organization must be filed with the Minnesota Secretary of State.  Online filing is $155 as of January 1, 2014.  The articles of organization should include: the business' name and address; its purpose; the name and address of the business’ registered agent; the name and address of at least one organizer; and whether the business' duration will be perpetual or for a specified period of time.  

The registered agent is responsible for service of process (i.e., able to accept legal papers.)  The registered agent must be a Minnesota resident, a Minnesota business entity, or a foreign business entity authorized to do business in Minnesota. The LLC cannot be its own agent.

Minnesota LLCs must file an annual renewal.  The renewal can be filed online or by mail.  

3) Create an Operating Agreement (Optional, but highly recommended)

A LLC operating agreement is not required in Minnesota.  It does not need to be filed with the Articles of Organization.  An operating agreement provides the rules for the business.  Rules are important to avoid costly legal disputes.  Terms may include:

·         how the LLC will be managed

·         the members’ ownership interest in the LLC

·         the members’ rights and responsibilities

·         the members’ voting powers

·         how profits and losses will be handled

·         rules for holding meetings

·         buy-sell provisions to spell out what happens if a member becomes disabled, dies, or wants out of the business

4) Follow Tax and Other Industry Regulations

You will need to determine how to pay taxes for your business.  For example, as a single member LLC you may elect “pass-through” taxation where the LLC taxation is included with your taxes and SSN.  If your LLC has two or more members, you must obtain an IRS Employer Identification Number (EIN).  You may obtain an EIN by completing an online application on the IRS website for free.  

Industry Regulations: Your LLC may need to obtain other local and state business licenses and insurance.

Contact us if you have any questions about filing a LLC or to discuss your specific circumstance.

 

Terrance Zawacki