How Much Does an LLC Cost in Minnesota (Pricing Breakdown)
You must submit legal documentation to the state of Minnesota along with filing costs when establishing a Minnesota LLC.
As a Mergers and Acquisitions specialist with a Master's Degree in tax law, I've assisted 20+ businesses and individuals with forming limited liability companies and creating joint organizations in Minnesota last year.
Together with business experts in the state, we’ll provide a complete overview of the startup costs for an LLC in Minnesota and any additional charges you could incur when running this business structure.
As you consider launching an LLC, opting for the services of a professional LLC company in Minnesota can be a safeguard against errors that might delay the start of your Minnesota LLC.
Quick Summary
- An LLC in Minnesota costs $135 to file the Articles of Organization by mail and $155 if done online or in person.
- Once your LLC has been approved, additional expenses you may have to shoulder include a registered agent service, licenses and permits, taxes, and other legal documentations.
- LLC owners opting for corporate tax status face a 9.8% state and 21% federal corporate tax rate, according to the IRS and Minnesota Department of Revenue.
- A Minnesota LLC offers pass-through taxation and liability protection, making it the most popular business structure for small business owners in the state.
Cost to Start an LLC in Minnesota
Before an LLC could operate in the state, there are mandatory expenses and optional costs owners should cover.
1. LLC Filing Fee ($135/Mail - $155/Online - Mandatory)
The Minnesota filing fee for a domestic LLC is $135 by mail and $155 when you submit the registration papers in person or online [1]. This amount covers submitting your registration papers, including the Minnesota Articles of Organization.
The LLC filing fee covers administrative processing and official registration of your business entity with the state.
The standard processing time for the Articles of Organization is 1 to 4 weeks. However, I availed of the expedited service to shorten the approval period to 1-5 business days.
In person expedited filings are processed within the same day while online accelerated submissions are approved within 3-5 business days for a $20 fee.
Learn more about how long does it take to process an LLC in Minnesota.
2. Registered Agent Fee ($80-$300 – Optional)
The state requires all LLCs to appoint a registered agent.
A registered agent has to be reachable during all regular operating hours and has a postal work address in Minnesota to receive legal and commercial documents.
You can serve as the registered agent in Minnesota or employ the services of one for $80 to $300 annually.
3. Name Reservation Fee ($35/Mail - $55/Online - Optional)
The Name Reservation form costs $35 by mail ($55 online or in person) and can be used to reserve your preferred business name.
The state will hold it for you for a maximum of twelve months, after which you can renew it for an additional twelve months with the same amount.
Before filing a name reservation form, I make sure that the company name is available and that it follows state regulations.
Learn how to rename an LLC in Minnesota.
Expenses Following the Approval of Your LLC
Additional expenses you may have to cover include the following:
1. Business License (Depending on the Line of Business - Mandatory)
The state of Minnesota does not require LLCs to acquire a general business license. However, your company may need specific business licenses and permits depending on the industry and location.
You can search for required business licenses through the Minnesota Department of Employment and Economic Development's License Minnesota portal.
I had a client whose main line of business is in boat rentals. They were required to obtain a Lake Service Provider Permit and Certification, which costs $50.
I recommend verifying all required business licenses before launching operations to avoid compliance penalties.
2. LLC Taxes (Depending on Income Bracket - Mandatory)
In Minnesota, single and multi-member LLCs fall under the entities of the pass-through taxation system.
This means all business income is taxed at the individual state income tax of 5.35% to 9.85%, depending on your income bracket.
There's also a federal self-employment tax rate of 15.3% (12.4% covers social security, and 2.9% is for Medicare).
However, if LLC owners set their businesses to be taxed like a corporation, they'll be subject to a 9.8% corporate tax rate plus a 21% federal corporate tax rate, according to the Minnesota Department of Revenue and the Internal Revenue Service.
3. Annual Renewal ($0 - Mandatory)
The Minnesota Annual Renewal is a yearly report that Minnesota LLCs are required to submit. Every limited liability company registered in Minnesota must file this renewal to maintain active status with the Secretary of State.
As long as you submit your Annual Renewal by the deadline, December 31st, each year commencing the year after you incorporate your LLC, there is no filing fee ($0).
But, if you fail to submit your Annual Renewal by the deadline, the state will dissolve your company. And to revive your LLC, you'll have to pay a reinstatement fee of $25 by mail or $45 if you apply online or in person.
4. Operating Agreement ($100 - $200 - Optional, but Recommended)
When creating a Minnesota LLC, an operating agreement is a valuable document, since it
- Set expectations for how members will govern the company
- Provide guidelines and standards for resolving disputes
- Modify the distribution of gains and losses
If your LLC does not have a governing operating agreement, it must adhere to Minnesota's LLC-specific laws and regulations.
For clients who don’t have budget to spare, I advise them to avail of a template from reputable online LLC formation services which only costs $100-$200.
5. Employer Identification Number ($0 - Optional but Recommended)
In Minnesota, all business firms must have Employer Identification Numbers (EINs) to file their federal taxes.
You can file for an EIN for free ($0) by submitting relevant documents to the IRS. Alternatively, you can hire an LLC formation service to register an EIN on your behalf for a fee of $50-$100.
"An Employer Identification Number (EIN), also known as a Federal Employer Identification Number (FEIN), is required for filing income taxes, opening an LLC bank account, and hiring employees, if necessary."
- Jon Morgan, CEO, Co-Founder & Editor-in-Chief of Venture Smarter
6. Certificate Of Assumed Name ($30/Mail - $50/Online or In Person - Optional)
An assumed name is a different trade name that your Minnesota business entity operates under other than the legal name.
The Minnesota LLC cost for registering an assumed name is $30 by mail or $50 online or in person.
Once the Secretary of State approved the DBA name I filed for a client, they issued a Certificate of Assumed Name that let my client legally transact business in Minnesota.
7. Certified Document Copies ($8/Mail - $18/Online - Optional)
The Minnesota Secretary of State charges $8 for certified copies of business documents ordered by mail or $18 for online filings.
Certified copies are duplicates of the original documents, verified and sealed by the Minnesota Secretary of State.
For various reasons, such as to open a Minnesota business bank account, obtain a line of credit, or register your company in another country, you need a certified copy of your articles of incorporation.
You can also preserve your certified document copies for internal management reasons.
8. Certificate Of Good Standing ($5/Mail - $15/Online - Optional)
A Certificate of Good Standing in Minnesota costs $5 by mail and $15 online. It is a recognized state document that attests to your company's existence in Minnesota.
When clients ask the importance of obtaining this document, I simply tell them that a Certificate of Good Standing could be used to pursue potential investors, open a bank account, and obtain loans.
9. Business Insurance Premiums ($1-$100 - Optional but Recommended)
You must legally get workers' compensation insurance from a private company if you have staff for your LLC. Failure to get this insurance can result in fines of up to $1,000 per worker each week the individual remains uninsured.
The cost of this insurance will differ based on the insurance provider you select and the degree of risk associated with the workers' jobs.
Low-risk employees often pay $1 per $100 of payroll, whereas high-risk individuals typically pay $25 per $100 on average.
FAQs
Does a Minnesota LLC Pay Sales Taxes?
A Minnesota LLC pays sales taxes depending on income. The state sales tax rate is 6.875%. Although this is the standard tax rate, the amount may be more because certain municipal taxes are levied at the district levels.
Is There A Penalty For Paying My Taxes Late In Minnesota?
There is a penalty for paying your taxes late in Minnesota. Late payments and filings are penalized with a fine of 6% and 5% of the taxes due.
Can You Pay Minnesota State Taxes with a Credit Card?
You can pay Minnesota state taxes with a credit card. The state accepts Visa, American Express, Discover, and MasterCard.
References:
- https://www.sos.state.mn.us/business-liens/business-forms-fees/business-filing-certification-fee-schedule/
