How to Start an LLC in Minnesota? (Step by Step Guide)

Starting an LLC in Minnesota is a smart way for small businesses to protect their personal assets from legal and financial risks.

To set up your LLC smoothly, you’ll need to follow the correct steps and file the required documents with the Secretary of State.

Our business and legal experts have tested the full process to help you get started quickly and confidently. You can also use a professional Minnesota LLC service to handle the paperwork for you.

Quick Summary

• Starting a Minnesota LLC requires a business name, registered agent, and EIN.
• LLC benefits include liability protection, pass-through taxation, and flexible structure.
• In 2023, nearly 90,000 LLCs were formed in Minnesota, showing strong business growth.
• Forming an LLC in Minnesota gives entrepreneurs a secure and flexible way to grow.

How to Form an LLC in Minnesota

To form a limited liability company in Minnesota, you must follow a few key steps.

Seek professional guidance to ensure your LLC meets all legal requirements.

You’ll need to provide your organizer’s name, address, signature, your LLC’s email, and a phone number.

1. Choose the Type of Your LLC (Mandatory)

When forming an LLC in Minnesota, you’ll choose between a Single-Member or Multi-Member LLC.

Single-Member LLC:

• Pros:
  • Simple setup and management.
  • Full control over decisions.
  • Fewer formalities.
• Cons:
  • Limited resources and expertise.
  • Greater risk of personal liability in certain cases.

Multi-Member LLC:

• Pros:
  • More capital and skills from members.
  • Shared responsibilities.
  • Flexible profit-sharing options.
• Cons:
  • More complex management.
  • Potential for internal disputes.

Each structure has trade-offs, so choose based on your business’s size, goals, and preferred management style.

2. Choose a Name for Your Minnesota LLC (Mandatory)

Choosing a name for your Minnesota LLC requires checking availability on platforms like Facebook and domain registrars.

Use free tools or get legal advice to ensure it’s unique and compliant with state rules.

Keep formatting consistent across official documents and marketing materials.

Choosing a unique LLC name in Minnesota is key to avoiding confusion and building a strong brand.

A distinct name sets your business apart and supports long-term success.

Read our article to learn how to look up an LLC in Minnesota.

3. Select a Registered Agent (Mandatory)

Your business needs an LLC registered agent to receive legal documents on behalf of your Minnesota LLC.

The agent must be located in Minnesota and available during business hours. They can be anyone, but must respond promptly and share documents with you quickly.

It’s best that registered agents don’t have close ties to your business to avoid conflicts of interest. For example, owners or employees shouldn’t act as registered agents.

A Minnesota registered agent is a person or service that receives official government documents for your LLC. These documents are sent directly to the agent, who is usually located in the same state as your business.

4. File Articles of Organization (Mandatory)

LLC Articles of Organization are used to register a business with the state and become public records once filed with the Secretary of State.

To file them online, it's best to create a free BSO account, which takes just a few minutes if your documents are ready.

Articles of Organization must be filed with the Minnesota Secretary of State [1]. You can file by mail, online, or in person using the official form.

The form requires your LLC’s name, registered agent and address, organizer’s name and signature, email, and phone number.

Filing fees are \$155 online or in person, and \$135 by mail. Learn more about Minnesota LLC costs here.

Steps to Take After Forming an LLC in Minnesota

5. Create a Minnesota LLC Operating Agreement (Optional, but Recommended)

A Minnesota LLC operating agreement outlines how your company will be managed. It serves as a roadmap for internal operations and structure.

In my experience, it’s especially valuable for multi-member LLCs, clarifying roles, responsibilities, and profit distribution to help avoid disputes.

While not legally required, having one promotes smooth operations and long-term stability.

Decide if your LLC will be member- or manager-managed. Legal advice can help you make the best choice.

With over 525,000 small businesses in Minnesota [2], a clear operating agreement is vital.

Outline ownership, roles, contributions, and profit distribution. All members should sign, but filing isn’t required. Update as needed, and if filing, include a cover sheet and all attachments together.

6. Apply for an Employer Identification Number (EIN) (Optional, but Recommended)

An employer identification number (EIN), also known as a federal tax ID, is an identifying number that all companies use to open bank accounts and report taxes with the Internal Revenue Service. It is required by both federal and Minnesota law for all Minnesota LLCs.

This nine-digit number is assigned to businesses by the Internal Revenue Service (IRS) and used for tax purposes like reporting income, filing annual returns, and opening accounts with financial institutions like banks and credit unions.

"Starting from January 2024, LLC owners are required to submit a Beneficial Ownership Information (BOI) Report to the US Financial Crimes Enforcement Network (FinCEN). Existing LLCs have from January 1, 2024, to January 1, 2025, to file their report, whereas new LLCs must do so within 90 days following their formation."

-Jon Morgan, Co-Founder & Chief Editor of Venture Smarter

7. Open an LLC Bank Account (Optional, but Recommended)

Every LLC business needs a business bank account which should be separate from any personal accounts.

Having company and personal finances in the same place can make it challenging to monitor spending and keep up with payments and generate confusion about profits and losses between business and family members.

8. File Your Minnesota LLC Annual Report

All LLCs in Minnesota must file an annual report by December 31 to stay in good standing.

Include your LLC’s name, address, and manager info. File online or by mail.

Fees: \$45 online, \$55 by mail (check the official site for updates).

Keep a copy for your records and update it if your LLC details change.

9. Obtain business Licenses and Permits

Your business license is a legal registration required to operate. It includes key details like location, duration, and permit numbers tied to your LLC.

In Minnesota, you may need a general business license before starting operations. I always advise checking for any required state or local licenses or permits.

Some cities or counties may also require a general LLC business license to operate legally.

Some businesses must also follow local ordinances based on their industry. Always check with your local county clerk before launching your business.

In Minnesota, service-based startups like CPAs, architects, and engineers need licenses—even if they work from home.

10. Assumed Name Registration (Mandatory)

In Minnesota, if your LLC operates under a name different from its registered name, you must register an Assumed Name (DBA) for legal and branding purposes.

Key Points:

• Purpose: Use a different name for branding without changing the legal LLC name.
• Availability: Search the Minnesota Secretary of State’s website to ensure the name isn’t already taken.
• Filing: File a Certificate of Assumed Name online or by mail. Provide the assumed name, your LLC’s legal name, and business address.
• Fee: \$50 online or \$30 by mail (as of April 2023). Check for current rates.
• Updates: While registration doesn’t expire, amendments are required for changes like address updates.

11. Choosing Your Tax Structure

Choosing the right tax structure in Minnesota is key to managing liability, taxes, and growth potential:

• Sole Proprietorships: Easy to start, full control, but no liability protection.
• Partnerships: Simple for multiple owners, pass-through taxation, but no liability protection.
• LLCs: Provide liability protection and flexible tax options—ideal for many small businesses.
• Corporations: Strong liability protection and ideal for raising capital, but face double taxation and more rules.
• S Corporations: Avoid double taxation; profits pass to shareholders. Must meet eligibility and file by March 15.

Benefits and Drawbacks of an LLC in Minnesota

Benefits:

• Limited Liability Protection: Shields owners from personal liability for business debts and obligations.
• Flexible Taxation: Choose to be taxed as a sole proprietorship, partnership, or corporation.
• Ease of Formation and Maintenance: Fewer formalities and paperwork than corporations.
• No Double Taxation: Profits pass through to owners' personal tax returns.
• Credibility: Boosts trust with clients and investors. In 2024, nearly 90,000 LLCs were formed in Minnesota, reflecting the structure’s popularity [3].

Drawbacks:

• State Fees: Formation and annual renewal fees may be higher than those for sole proprietorships.
• Growth Limits: LLCs can’t issue stock, which may restrict fundraising and going public.
• Tax Complexity: Electing corporate taxation can complicate filings and may require professional help.
• Self-Employment Tax: LLC profits may face higher taxes compared to corporate structures.
• Ownership Transfers: Changing owners in an LLC is often more complex than in a corporation.

DIY vs. Professional LLC Formation

DIY LLC Formation:

Pros:

• Low Cost: No professional service fees.
• Hands-On Learning: Gain insight into legal and state procedures.
• Full Control: Manage the entire process yourself.

Cons:

• Time-Intensive: Researching requirements takes effort.
• Error-Prone: Higher chance of mistakes without legal help.
• Limited Expertise: Risk of overlooking legal or compliance issues.

Professional LLC Formation Service:

Pros:

• Expertise: Professionals are knowledgeable about legal requirements and can navigate complex state laws.
• Time-Saving: Saves you time by handling most of the paperwork and filing process.
• Compliance Assistance: Helps ensure all legal and state-specific requirements are met.
• Peace of Mind: Reduces the risk of errors and provides confidence that the process is handled correctly.

Cons:

• Cost: More expensive than DIY due to service fees.
• Less Personal Involvement: Less hands-on experience with the formation process.
• Generic Solutions: Some services may offer one-size-fits-all solutions that might not suit specific business needs.

FAQs

---

References:

1. https://www.sos.state.mn.us/media/1824/llcarticlesoforganization.pdf
2. https://advocacy.sba.gov/wp-content/uploads/2023/11/2023-Small-Business-Economic-Profile-MN.pdf
3. https://www.sos.state.mn.us/business-liens/business-liens-data/new-business-filings-2023/