Starting an LLC in MN: Everything You Need to Know
Starting an LLC in MN begins with selecting a company name and you have to choose a name that satisfies Minnesota's naming requirements.3 min read
Starting an LLC in MN begins with selecting a company name. Make sure to choose a name that satisfies Minnesota's naming requirements and is quickly searchable online.
Limited Liability Company (LLC)
The LLC business structure merges the limited liability of a corporation with the pass-through taxation of a sole proprietorship or partnership, creating the best of both worlds for business owners. First-time business owners often recognize the benefits of this business structure, such as tax advantages, business deductions, personal liability protection, income tracking, and the fact that LLCs do not pay business taxes.
Main Advantage to Forming an LLC
Individuals concerned about losing their personal assets to creditors of the business will find comfort in the structure of an LLC. This is because LLCs protect the personal assets of the members from the debts of the organization.
Steps to Forming an LLC
In order to form an LLC in Minnesota, the owners of the business must file the articles of organization with the Secretary of State (SOS). An example form of the articles of organization may be found on the SOS website.
When selecting the name of an LLC it's important that it adheres to the following criteria:
- The name of the LLC must be distinguishable from any name currently registered or reserved or with the SOS and from any federal or state agency.
- The name may not use words that imply that the LLC is organized for anything other than a lawful business purpose.
- The name may not use the words "incorporated," "incorporation," or any abbreviation of either word.
- The name must contain the words "professional limited liability company," "limited liability company," "LLC," or "PLC."
- The name must either be in English or in a language that uses the English alphabet.
The LLC name must be distinguishable from other businesses in the area. It also must indicate that the business is an LLC. Consider that the most important step in forming an LLC is to appropriately name it. Taking the time to choose a name that is well-suited for your business and is easily searchable online will pay off in the long run. Business names must end in "Limited Liability Company" or some variant of its abbreviation.
An optional form is available to secure the LLC name for a period of up to 12 months. The filing fee is $35 in-person or $55 online. It's important to make sure the online presence of the business will be consistent with the chosen company name. Therefore, before finalizing the LLC name it's important to verify that the desired URL is available.
Many states require businesses to nominate a registered agent for their LLC. A registered agent is responsible for sending and receiving legal papers on behalf of the LLC. Although the state of Minnesota does not require a registered agent, it may be worth researching to determine if this is something that your business may be interested in procuring.
Articles of Organization
In order to create an LLC, a certificate of formation or articles of organization will need to be filed within the state of creation. In most states, this paperwork will need to be filed with the SOS. Although the filing of the required documents is fairly easy, there will most likely be a filing fee charged by the SOS. The articles of organization will include such things as:
- The name and address of the LLC.
- The name and address of the registered agent.
- The names and address of the members of the LLC.
- The filing fee, which is $135. However, the fee increases to $155 when requesting an expedited service in person or if filing online.
LLC Operating Agreement
An LLC operating agreement is considered to be the most significant document of the LLC because it draws up the framework and roles of the business. More specifically, this agreement outlines the working and financial relationships among the managers and members of the company.
The agreement identifies the rules agreed to by all members of the LLC in managing profit distribution and disputes. It's significantly more important for a multi-member organization to have an operating agreement, rather than a single-member LLC. The agreement can be written or oral. In case there is a future dispute, written agreements are recommended because they acknowledge what actions the members agreed to perform.
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