An LLC can be an excellent business model in many cases. Depending on the type of business being operated and the needs of the owners of that business, an LLC may be chosen for the protection it provides. Additionally, it is possible to choose an LLC because of tax implications or other factors. Protection for the owners is not always the only reason an LLC would be formed. Choosing Minnesota as the place of formation means following the laws of that state, which involve both the creation and the operation of the LLC as a whole.

Getting Started

Naming the LLC

Every LLC needs a name, and selecting something that stands out and is easy to remember may be important. Some LLCs choose owners’ names or a combination of them, while others look for a word or two that makes a statement, or a name that implies what they do. For those looking to create an LLC in Minnesota, they can choose the name with an online search that shows what has already been taken. They can also see what words are restricted or prohibited, and avoid trying to use those words in their LLC name. Limited Liability Company or its abbreviation must be in the name, and it’s important to check to see if the domain name is available, as well.

Selecting a Registered/Statutory Agent

Every LLC should have a registered agent who can accept official correspondence on their behalf. This has to be someone who is a resident of Minnesota or a corporation that is authorized to do business there. No other person or entity will be acceptable. However, it is legal for the owner of the LLC to designate themselves or another individual in the company as registered agent. That keeps everything in-house, but also ensures that requirements are met by having a registered agent for the LLC.

Filing Articles of Organization

The Articles of Organization needed to make an LLC official can be filed online. There is a fee of $155 for this service. If the owner prefers to mail in the Articles, the fee for filing that way is $135. There is no right or wrong when it comes to which way things should be filed. There are only options and preferences. Filing online could mean faster processing, but the overall process for creation of the LLC will be the same.

Creating an Operating Agreement

Minnesota does not require an operating agreement for an LLC. Many people who form LLCs still create these documents for their own information and protection, but the state doesn’t require access to that document, or for it to exist at all, in order to have a legal LLC.

Running Your Business

Getting Your EIN

What’s an EIN?

An EIN is an employee identification number, issued by the Internal Revenue service. Sometimes it is also called a Federal Tax Identification Number. It’s a unique number issued to each business.

You’ll need an EIN to

  1. Open a business bank account.
  2. File Federal and State Taxes
  3. Hire employees.

Before you get your EIN:

  1. Make sure your new business has been properly formed before applying.
  2. Be wary of paid sites. EINs are free direct from the IRS.

How do I get an EIN?

  1. Apply online: The easiest way is to apply online for an EIN. Note, the IRS website has office hours, and is only available Monday through Friday, 7am to 10pm. Yes, we also agree this is one of the most ridiculous things we’ve ever seen.
  2. Call: You can call 1-800-829-4933, between 7am to 7pm of your time zone, Monday to Friday.
  3. Snail Mail – You can download the form and mail it in.

Keep Business and Personal Accounts Separate

  1. Get a business bank account for your business. This will help you protect your personal assets from potential creditors and lawsuits, and will also make life A LOT easier come tax time.
  2. Get a business credit or debit card. This will help you keep your expenses separate and easier to track.

Accounting

No matter what business you run, accounting software and processes is a must for any small business. If you have an accountant, ask them which software they work with and recommend.

A good accounting system is necessary to:

  1. Track income and expenses, so you can easily see if you’re making money
  2. Makes filing income taxes so much easier.

Always try and find something that will:

  1. Sync with all of your bank and credit card accounts automatically – not just downloads, but auto sync.
  2. Automatch vendors, customers and other accounts.
  3. Let you accept credit cards and ach drafts with ease.

Minnesota LLC Taxes

When creating an LLC in Minnesota, there are a number of issues to consider.

Unemployment

Unemployment insurance tax is required by the state for any LLC.

Sales Tax

Any company that offers taxable goods or services for sale has to pay sales tax on those items.

Income Tax

The employee withholding tax is used to ensure that taxes are paid at the right time and to the correct agency.

Other Taxes and Fees

The franchise tax, additional industry taxes, and licensing all have to be addressed, as well, as these are some of the main issues that affect businesses there. Depending on the type of LLC being operated, though, licensing requirements may be small and there may be little to no additional industry tax. Despite that, it’s very important to thoroughly explore whether any of those taxes or other requirements apply to the LLC being created.

Getting Insurance for your LLC

Minnesota requires LLCs that hire employees to have workers’ compensation insurance. That protects the business, and also protects the employees. If an LLC doesn’t have any additional employees, the state may not require them to carry this kind of insurance. However, it is always best to check into the issue before making a decision, so that an informed choice will be made and an LLC will not take the risk of ending up on the wrong side of the law.

Keeping Your LLC Compliant

To stay compliant with Minnesota law there are some things an LLC must do. Hiring requirements are a very important part of the issue, because they protect employees from unfair practices and also reduce the number of people hired who are not legally allowed to be working in the US. An annual report is also necessary, and is due by December 31st every year. There is no fee to file the report. There is a Certificate of Good Standing that companies can get, as well, for a $15 fee, and the franchise tax must be paid. The fee for that varies depending on several factors unique to the situation.

How to File a Foreign LLC in Minnesota

A foreign LLC is possible in Minnesota. The fee for filing is $185.