Key Takeaways

  • Minnesota’s LLC laws, governed by Chapter 322C, offer flexibility in management, liability protection, and contractual freedom.
  • The 2015 New LLC Act significantly changed governance rules, default provisions, and member rights, emphasizing the importance of customized operating agreements.
  • Choosing a compliant business name, appointing a registered agent, and filing Articles of Organization are foundational steps.
  • Drafting an operating agreement — though not required — is essential for defining management roles, dispute resolution, and ownership terms.
  • Ongoing compliance includes maintaining licenses, renewing registrations, filing annual renewals, and adhering to state tax obligations.

To form a state of MN LLC, follow these steps:

  1. Name your business.
  2. Select a registered agent.
  3. File Articles of Organization with the state.
  4. Create an operating agreement.
  5. Obtain an EIN and all necessary licenses and permits.

Steps to Form an LLC in Minnesota: Your LLC Name

An LLC, or limited liability company, combines features of both partnerships and corporations.

Naming your LLC is one of the first and most important things you'll do when creating a business. Do some research to choose a name that is suitable for your particular business type and that potential clients can easily remember and find. Adhere to the naming guidelines in Minnesota. You'll have to include a designator on your business name that identifies it as an LLC. Use LLC, L.L.C., or Limited Liability Company.

Certain words are restricted, such as “University” or “Attorney.” You'll have to submit additional paperwork to use restricted words. You may also need a licensed individual, such as a lawyer or doctor, to be part of your business to use such words. Other words are prohibited because they can mislead the public about an association between your business and a state or federal agency, like the U.S. Treasury Department or the FBI.

Conduct a name search on the State of Minnesota website to check the availability of your desired business name. Once you know your business name is available, you might wish to reserve a domain name for it. Even if you're not planning to create a business website right away, securing a domain name for your LLC prevents someone else from using it.

Your Registered Agent

You must choose a registered agent for your business. This is also known as an agent for service of process, statutory agent, or resident agent. It's an individual or company that accepts and sends legal documents on your business's behalf. The type of paperwork your registered agent may handle includes service of process in case your LLC is sued, as well as state filings.

Your registered agent has to be a state resident who has a physical street address. Alternately, it must be a company with authorization to conduct business in Minnesota. You may select someone within your company to act as your registered agent or fill the role yourself.

Your Formation Documents

You'll file formation documents with the state, called the Articles of Organization. Before filing your Articles, you'll have to decide if members or managers will be in charge of company management.

In your Articles, you'll include the following:

  • Your business name and address
  • Your registered agent's name and address
  • Each organizer's name and address
  • Whether your LLC will be managed by members or managers
  • Articles drafter name

You'll file your Articles of Organization with the state, and you can do so by mail or online. Fees to submit Articles are non-refundable. The fee for submitting by mail is $135, and the fee for submitting online or in person is $155.

Understanding Minnesota’s New LLC Act

Minnesota’s LLC laws underwent significant changes with the adoption of the New LLC Act (Minnesota Statutes Chapter 322C) in 2015. This modernized framework replaced the previous statute and fundamentally altered how LLCs are created, managed, and governed. It aligns Minnesota more closely with the Revised Uniform Limited Liability Company Act (RULLCA), providing greater contractual freedom and flexibility for business owners.

Key features of the updated LLC Minnesota laws include:

  • Contractual Flexibility: The operating agreement is now the primary document governing the rights and duties of members and managers, overriding most default statutory provisions unless expressly prohibited.
  • Default Management Rules: By default, Minnesota LLCs are member-managed. However, this can be changed to manager-managed through the operating agreement or Articles of Organization.
  • Fiduciary Duties Clarified: The Act outlines fiduciary duties of loyalty and care owed by members and managers but allows certain modifications in the operating agreement, provided they don’t eliminate these duties entirely.
  • Third-Party Protections: The statute enhances protections for third parties dealing with LLCs, ensuring transparency regarding authority and governance structures.
  • Enhanced Governance Provisions: The Act introduces default rules for voting, member withdrawal, dissolution, and dispute resolution — all of which can be customized within the operating agreement.

Your Operating Agreement, EIN, and Permits and Licenses

You should create an operating agreement for your company, although you don't have to file it with the state. It's a legal document that outlines your LLC's ownership and operating procedures. Although the state doesn't require you to have one, it's still a good idea to create one for your own records.

You'll need an EIN, also known as an Employer Identification Number or Federal Tax ID Number, from the IRS. It's a nine-digit number assigned to your company. While people use Social Security Numbers, businesses use EINs. You'll need an EIN to file your taxes, and in most cases, you'll need it to open a business banking account. After you form your company, you can apply for an EIN free of charge, by mail or online.

You may also need certain city, county, and/or state permits and business licenses, depending on your location. You'll need these before you can legally conduct business.

Many people are able to form an LLC quickly and inexpensively without the help of an attorney. Small business owners may prefer this business type because it offers them liability protection as well as a flexible management style.

Ongoing Compliance and Annual Obligations

Forming your LLC is just the first step — staying compliant with Minnesota law is equally important. After formation, your company must meet several ongoing requirements:

  • Annual Renewal: Minnesota LLCs must file an annual renewal with the Secretary of State by December 31 each year. This renewal is free and ensures that your business remains in good standing.
  • Business Licenses and Permits: Depending on your industry and location, you may need additional state, county, or municipal licenses to operate legally.
  • Tax Obligations: Register with the Minnesota Department of Revenue for sales tax, withholding tax, or other applicable state taxes.
  • Record-Keeping: Maintain accurate business records, including meeting minutes (if applicable), tax filings, and financial statements.
  • Operating Agreement Updates: Review and amend your operating agreement periodically, especially when adding new members or changing business structures.

Failing to comply with these obligations can lead to administrative dissolution, fines, or loss of liability protection under LLC Minnesota laws.

The Critical Role of an Operating Agreement

While Minnesota does not legally require an operating agreement, it is one of the most important documents your LLC can have. Under the new LLC laws, the operating agreement acts as the cornerstone of your company’s governance and can override many default statutory provisions.

An effective operating agreement typically addresses:

  • Ownership Structure: Defines each member’s ownership percentage, capital contributions, and voting rights.
  • Management and Decision-Making: Specifies whether the LLC is member-managed or manager-managed and how major decisions are approved.
  • Profit and Loss Allocation: Outlines how profits and losses will be distributed among members.
  • Transfer and Buyout Provisions: Establishes rules for transferring membership interests, buy-sell agreements, and exit strategies.
  • Dispute Resolution: Provides a framework for resolving internal conflicts, reducing the risk of litigation.
  • Dissolution Procedures: Details how the company will wind up its affairs if dissolved.

Without an operating agreement, Minnesota’s default LLC rules will govern your business, which may not reflect your intentions or business strategy. For example, profits might be split equally among members regardless of their contributions, or management decisions might require unanimous consent, slowing operations.

Frequently Asked Questions

  1. Are operating agreements required for Minnesota LLCs?
    No, but they are strongly recommended. An operating agreement customizes how your LLC operates and can override many default legal provisions.
  2. What is the default management structure under Minnesota LLC laws?
    By default, Minnesota LLCs are member-managed, but you can opt for a manager-managed structure through your operating agreement or Articles of Organization.
  3. How are profits and losses distributed if there’s no operating agreement?
    If not specified, Minnesota law typically distributes profits and losses equally among members, regardless of their capital contributions.
  4. What happens if I fail to file the annual renewal?
    Failure to file may result in administrative dissolution, meaning your LLC loses its legal status and protections until reinstated.
  5. Can fiduciary duties be limited under an operating agreement?
    Yes, but not entirely eliminated. Members and managers can adjust the scope of fiduciary duties within legal limits to suit their business model.

If you need help starting an LLC in Minnesota or another state, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.